FEMA Case: Karnataka High Court Stays ED Adjudication Against Coffee Day Enterprises, Questions Delay and Procedure
Bengaluru: The Karnataka High Court has granted interim relief to Coffee Day Enterprises Limited (CDEL) by staying the adjudication proceedings initiated by the Enforcement Directorate (ED) under the Foreign Exchange Management Act (FEMA), 1999.
The order was passed by Justice B.M. Shyam Prasad while hearing Writ Petition No. 1157/2026 (GM-RES) filed by Coffee Day Enterprises, challenging a Show Cause Notice dated November 23, 2022, issued by the Adjudicating Authority, and a subsequent hearing notice dated January 7, 2026, issued under Rule 4(3) of the FEMA (Adjudication Proceedings and Appeal) Rules, 2000 CCD Coffee day.
Key Legal Arguments by Coffee Day
Senior Advocate Sajan Poovayya, appearing for the petitioner, contended that the proceedings suffer from inordinate delay, as the alleged contravention dates back to 2009, while the complaint was initiated only in November 2022. The delay, he argued, is fatal to the continuation of adjudication.
He further submitted that under Section 13 of FEMA, an inquiry can proceed only after the Adjudicating Authority records a reasoned opinion justifying why adjudication should be initiated against the noticee.
Citing a Technical Circular dated September 26, 2014, issued pursuant to the disposal of a Special Leave Petition by the Supreme Court against a Bombay High Court judgment, counsel argued that the Authority is legally bound to:
- Form an opinion to proceed,
- Record reasons in writing, and
- Furnish a copy of such reasons to the noticee.
In the present case, Coffee Day Enterprises was never served with the recorded reasons, rendering the adjudication process procedurally impermissible, the court was told.
High Court’s Interim Order
After considering the submissions, the High Court granted an interim stay, directing the second respondent (ED) to defer the adjudication proceedings scheduled for January 30, 2026, until further orders.
The court issued notice to the first to third respondents, represented by Standing Counsel Madhu N. Rao, while dispensing with notice to the fourth respondent at the petitioner’s request. The matter has been re-listed for February 23, 2026 for further hearing CCD Coffee day.
What Lies Ahead
The interim protection granted to Coffee Day Enterprises will remain in force until the next date of hearing, when the High Court will examine the legality of the Show Cause Notice and the procedural compliance by the Adjudicating Authority under FEMA.
ಇದನ್ನೂ ಓದಿ: ಫೆಮಾ ಪ್ರಕರಣ: ಕಾಫಿ ಡೇ ಎಂಟರ್ಪ್ರೈಸಸ್ ವಿರುದ್ಧದ ಇಡಿ ಕ್ರಮಕ್ಕೆ ಕರ್ನಾಟಕ ಹೈಕೋರ್ಟ್ ತಡೆ, ವಿಳಂಬ ಮತ್ತು ಪ್ರಕ್ರಿಯೆಯ ಕುರಿತು ಗಂಭೀರ ಪ್ರಶ್ನೆ
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