Karnataka High Court Asks ED To Defer Personal Hearing In FEMA Case Against Café Coffee Day

The Karnataka High Court on Wednesday (January 21) deferred personal hearing scheduled for January 30 in respect of popular coffee chain 'Cafe Coffee Day' subsequent to a 2022 complaint lodged by the ED under the Foreign Exchange Management Act.

Appearing for CCD, senior advocate Sajjan Poovaya submitted that the ED complaint was filed in 2022 for an alleged act in 2009 and delay would be fatal to entire proceedings. He submitted that for purpose of adjudication under Section 13 FEMA, an inquiry must be held in terms of technical circular dated 26-9-2014.

He submitted that adjudicating authority must form an opinion on why it intends to proceed against the noticee and that such opinion must be reduced into writing with copy furnished to the concerned. But in the present case, the petitioner has not been served with the reasons to proceed with the adjudication and in absence of it inquiry is impermissible.

Issuing notice on the petition, Justice BM Shyam Prasad in his order dictated:

"...interim order granted calling upon respondent 2 to defer proceedings scheduled to be held on 30-1-2026..."

The petitioner had challenged a show cause notice of 23-11-2022 under FEMA and a notice dated 7-1-2026 under Rule 4(3) of the The Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000

Section 13 of FEMA pertains to penalties stating that if any person contravenes any provision of this Act, or any rule, regulation, notification, direction or order etc., he will upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable. Where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.

Notably on Monday the High Court had stayed proceedings initiated against CEO of CCD Malavika Hegde subsequent to the same 2022 complaint.

Case title: COFFEE DAY ENTERPRISES LIMITED v/s ENFORCEMENT DIRECTORATE AND OTHERS

WP 1157/2026