Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(SC) 1612

SUPREME COURT OF INDIA
Vikram Nath, Sandeep Mehta, JJ
Sri Nisha – Appellant
Versus
Special Director, Adjudicating Authority, Directorate of Enforcement – Respondent
CIVIL APPEAL NO. OF 2026 (Arising out of SLP(Civil) No. 23415 of 2025) | CIVIL APPEAL NO. OF 2026 (Arising out of SLP(Civil) No. 34269 of 2025) | CIVIL APPEAL NO. OF 2026 (Arising out of SLP(Civil) No. 23416 of 2025) | CIVIL APPEAL NO. OF 2026 (Arising out of SLP(Civil) No. 23417 of 2025)

Advocates:
For the Appellants/Petitioners: Siddharth Luthra, Harin P. Raval
For the Respondents: Anil Kaushik

An Adjudicating Authority cannot override the findings of a Competent Authority rendered under Section 37A of FEMA by effectively deciding the merit of pending appeals, and adjudication proceedings based on an SCN should await the outcome of statutory appeals against related seizure orders.

Headnote:The case involves the interpretation of Section 37A of the Foreign Exchange Management Act, 1999 (FEMA), which permits the seizure of assets equivalent to foreign assets held in contravention of Section 4. The appellants challenged a show cause notice (SCN) issued by the Adjudicating Authority following an earlier order by the Competent Authority which set aside an order of seizure for lack of evidence. The High Court dismissed the challenge, prompting the present appeal. The core issue was whether an Adjudicating Authority can proceed with adjudication while an appeal against an order under Section 37A(3) is pending, and whether the High Court’s observations potentially prejudiced the administrative proceedings. The Court held that when the Competent Authority finds no 'reason to believe' for a seizure, it effectively creates a substantive finding that must be addressed through the appellate process before the Adjudicating Authority can rely on findings that contradict the Competent Authority’s original order of non-confirmation. The Supreme Court set aside the impugned orders of the High Court and the final adjudication order, directing that the Appellate Authority first decide the appeal against the Competent Authority's order, after which the SCN proceedings may be resumed.

Table of Content
1. procedural background of the appeals against the high court order. (Para 1 , 2)

J U D G M E N T

Mehta, J.

1. Heard.

2. Leave granted.

Signature Not Verified SHIPRA NARANG Date: 2026.04.02

10:08:02 IST Reason:

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 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 notice, For short, ‘SCN’. dated 22^nd December, 2021 issued by the Adjudicating Authority under the provisions of the Foreign Exchange Management Act, 1999, For short, ‘FEMA’., and the consequential corrigendum dated 13^th 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 30^th 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

1 Hereinafter, referred to as the “High Court”.

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 India, For short, ‘RBI’. and in violation of the provisions of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 20045. 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 11^th September, 2020 under Section 37A(1) of FEMA.

9. Pursuant to the initiation of proceedings, the Authorised Officer-respondent No.2, 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.,

5 For short, ‘FEMA Rules’.

the Commissioner of Customs (Appeals-I), for seizure of the assets of the appellants herein.

10. The Competent Authority, exercising powers under Section 37A(3) of FEMA after due consideration of the material placed before it, came to a conclusion that there was no proof that any of the appellants had ever paid for the shares floated by M/s. Silver Park, since the said company never made a call for the same. Consequently, no contravention of Section 4 was made out, and the provisions of Section 37A were held to be inapplicable. Accordingl

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2026 Supreme(Online)(SC) 1612

An Adjudicating Authority cannot override the findings of a Competent Authority rendered under Section 37A of FEMA by effectively deciding the merit of pending appeals, and adjudication proceedings based on an SCN should await the outcome of statutory appeals against related seizure orders.

Cases Referred (1)