CHENNAI: The Madras High Court has dismissed the petitions filed by DMK MP Jagathrakshagan and his family members challenging the show cause notices issued by ED in connection with the violation of the Foreign Exchange Management Act, 1999 in acquiring shares of a Singapore company without the approval of the RBI.
The ED’s case is that Jagathrakshagan acquired 70 lakh shares of Silver Park International Pvt. Ltd., a Singapore company, without RBI approval by paying `32.69 crores in June 2017 and thereby committed violations of sections 3, 4, 8 and 15 of FEMA and regulations of Foreign Exchange Management Regulations, 2004.
He transferred 45 lakh shares to his wife Anusuya, 22.5 lakh shares to daughter Sri Nisha and 2.50 lakh shares to son Sundeep Anand in September 2018, according to Additional Solicitor General (ASG) AR L Sundaresan, who represented the ED.
In this background, the ED served them show cause notice in 2022 and a corrigendum was issued on March 2023 to the effect that section 13 (1A) of FEMA be replaced with 13 (2). During a personal hearing on the corrigendum by the ED, they challenged both the show-cause notice and the corrigendum.
Senior counsel V Ragavachari, appearing for the petitioners, contended that the ED could not proceed with the issuance of notices after the Commissioner of Customs found that there were no transactions of money to the Singapore company as it had not called for share sale for want of evidence, even though ED had challenged it. The judge reasoned that provisions of the law were altered through the corrigendum without altering the foundational facts, and so, the petitioner could not cry foul.
Referring to the decision of the Commissioner of Customs against the seizure of properties, the judge noted that the power to decide the seizure only is vested with him and not to go into adjudication. He ruled, “The fact that both these powers are vested in different authorities, does not make the order passed by the Competent Authority, vis-a-vis the seizure of assets, any superior as to interfere with the power of adjudication of the adjudicatory authority (ED). It is a question on jurisdiction, and it cannot be expanded interpretatively.” The judge said for the foregoing reasons the petitions filed by Jagathrakshagan and his family are ‘not entertainable’ and the ED can now resume the enquiry.