Madras High Court Rejects Flipkart Founders' Review Plea Against ED Show-Cause Notice In FEMA Case

Justice S Sounthar dismissed the review application filed by the duo. A detailed order copy is awaited.

The petitioners along with some other companies had approached the High Court challenging the complaint made by the Deputy Director of the ED and the show cause notices. The allegation against the petitioners was that they had contravened the provisions of Section 6 (3) (b) r/w Section 47 of the Foreign Exchange Management Act, 1999 r/w Regulations 3, 4 and 5 and para-3 and para 9(1) (B) (i) of Schedule 1 of TISPRO Regulations 2000 and annexure – B to para 2 of Schedule – 1 of TISPRO Regulations 2000 r/w consolidated FDI Policies dated 01.04.2010 and 01.10.2010.

The petitioners had argued that the show cause notice was issued by the Adjudicating Authority in 2021, for an alleged violation that took place during 2009-2011 and thus there was an unreasonable delay of 10 years in initiating the proceedings. it was also argued that the show cause notice was issued without any authority of law as during that time Section 6(3) of the FEMA was omitted by Section 139 of the Finance Act of 2015 with effect from October 15, 2019.

The petitioners had also argued that the omission would completely obliterate the effect of the omitted provision even during its existence and thus, the authorities could not have initiated action under the provision even though it was in existence at the time of the alleged offense.

On the other hand, the ED had argued that the writ petition itself was not maintainable against a mere show cause notice when the petitioners had the option to submit their explanation and participate in the adjudication process. The ED also pointed out that if the petitioners were aggrieved by the order of the Adjudicating Authority, they could approach the Appellate Authority under Section 16 of the Act and thereafter could approach the High Court under Section 35 of the Act.

The ED had also pointed out that the Act did not prescribe a time limit for filing a complaint. Though it agreed that the complaint had to be filed within a reasonable time, it was argued that what was a reasonable time would depend upon the case which had to be looked into by the Adjudicating Authority and the same could not be questioned by the High Court while exercising writ jurisdiction.

While dismissing the petitions, the High Court had observed that the petitioners had an alternative remedy of raising their objections before the adjudicating authority. The court noted that as per the Act, the petitioners had a remedy not just before the civil court but also had an option for a second appeal before the High Court under Section 35 of the Act.

Case Title: Sachin Bansal v The Directorate of Enforcement

Citation: 2026 LiveLaw (Mad) 257

Case No: Rev Aplw 64 of 2025