Major FEMA Enforcement: ED Confirms ₹89.19 Crore Asset Confiscation, ₹908 Crore Penalty in High-Profile Case
(Judicial Quest News Network)
New Delhi 28,08,2024
The Directorate of Enforcement (ED) in Chennai has achieved a significant victory in a high-profile FEMA investigation involving Jagathrakshakan, a prominent Tamil Nadu businessman and Member of Parliament. The probe cantered on Jagathrakshakan, his family, and associated entities, culminating in the confirmation of a substantial asset seizure and a hefty penalty.
The investigation led to a Seizure Order dated September 11, 2020, under Section 37A of FEMA, freezing assets valued at approximately ₹89.19 crore owned by Jagathrakshakan and his family. However, this order was overturned by the Competent Authority on February 3, 2021. The ED, contesting this reversal, filed an appeal with the Hon’ble Appellate Tribunal, which remains pending.
On December 1, 2021, the ED lodged a FEMA complaint against Jagathrakshakan, his family, and their related companies. The complaint alleged violations of FEMA provisions, including an investment of ₹42 crore into a Singapore-based shell company and transactions involving foreign shares and investments totalling approximately ₹9 crore in Sri Lanka. The complaint also sought the confiscation of the assets seized earlier.
Following the complaint, a Show Cause Notice was issued on December 22, 2021, with hearings conducted thereafter. Despite challenges from the Notices, including Writ Petitions and Appeals to the Hon’ble High Court of Madras, the court upheld the ED’s authority in the case. The Writ Appeals were dismissed on July 23, 2024.
On August 26, 2024, the Adjudicating Authority concluded the proceedings. After a detailed examination of the alleged violations and the responses from the Noticees, the Authority confirmed the infractions and ordered the confiscation of the ₹89.19 crore in seized assets. Additionally, a penalty of approximately ₹908 crore was imposed, marking a decisive outcome in this major enforcement action.
