The competent authority's finding of no violation under FEMA precludes a lawful issuance of a show cause notice, necessitating review of the proceedings from that stage following an appeal's outcome.

JUDGMENT :

Sandeep Mehta, J.

1. Heard.

2. Leave granted.

3. This batch of appeals arises out of the common judgment and final order dated 23rd July, 2024 passed by the Division Bench of the High Court of Judicature at Madras¹[Hereinafter, referred to as the “High Court”.] in W.A. Nos.3520 to 3524 of 2023 and C.M.P. Nos.28745, 28749, 28748, 28750, 28756 of 2023 and 2240 of 2024.

4. The appellants herein had approached the learned Single Judge of the High Court, assailing the order/show cause notice²[For short, ‘SCN’.] dated 22nd December, 2021 issued by the Adjudicating Authority under the provisions of the Foreign Exchange Management Act, 1999³[For short, ‘FEMA’.], and the consequential corrigendum dated 13th March, 2023.

5. The writ petitions instituted by the appellants assailing the said SCN and corrigendum came to be dismissed by the learned Single Judge vide common final order dated 30th November, 2023. The intra-Court appeals preferred against the said order also stand rejected by the impugned judgment dated 23rd July, 2024. It is in these circumstances that the appellants are before us by way of these appeals with special leave.

6. Since all the appeals involve identical questions of fact and law, they were heard analogously and are being decided by this common judgment.

Background: -

7. The appellants herein are the Company named M/s. Accord Distilleries & Breweries Pvt. Ltd. and its Directors. The allegations against the appellants in the questioned SCN emanate from a transaction of acquisition of 70 lakh shares of an entity named M/s. Silver Park International Pte. Ltd., a Singapore based Company, registered as per the laws of Singapore and subsequent transfer/distribution of these shares.

8. The transactions referred to above triggered the proceedings for violation of provisions of FEMA against the appellants herein. The foundational facts of these proceedings are that the appellant in Civil Appeal @ SLP (C) No.34269 of 2025, J. Sundeep Anand, an Indian citizen, being the Director of M/s. Accord Distilleries & Breweries Pvt. Ltd. had subscribed to and acquired shares/foreign securities (without consideration) in M/s. Silver Park International Pte. Ltd. allegedly without the requisite approval of the Reserve Bank of India⁴[For short, ‘RBI’.] and in violation of the provisions of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004⁵[For short, ‘FEMA Rules’.]. The said shares were subsequently transferred to the other appellants, who are the wife and children of J. Sundeep Anand, also without the requisite regulatory approval. Consequently, the appellants were alleged to have contravened the provisions of Section 4 of FEMA, read with the aforesaid Regulations, on the premise that they had acquired and held shares of a foreign entity without the requisite approval and in violation of the statutory framework. As a result, the Authorised Officer seized the properties of the appellants vide order dated 11th September, 2020 under Section 37A(1) of FEMA.

9. Pursuant to the initiation of proceedings, the Authorised Officer-respondent No.2⁶[Hereinafter, referred to as the “Authorised Officer”.] herein, resorting to the procedure provided under Section 37A(2) of FEMA moved the Competent Authority, i.e., the Commissioner of Customs (Appeals-I),