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Court Questions 12-Year Delay in FEMA Case Against CCD CEO
6 Oct
Summary
- Karnataka High Court questions 12-year delay in FEMA proceedings.
- Proceedings initiated over alleged 2010 foreign exchange violations.
- Court extended interim protection for Cafe Coffee Day CEO.
The Karnataka High Court has raised serious questions regarding the Enforcement Directorate's (ED) decision to initiate proceedings under the Foreign Exchange Management Act (FEMA) against Malavika Hegde, the CEO of Cafe Coffee Day. These proceedings pertain to transactions that allegedly occurred in 2010, more than 12 years prior to the ED's action.
During a hearing on 2026-10-06, Justice KS Hemalekha observed that legal actions must typically be taken within a reasonable timeframe. Hegde, the widow of Cafe Coffee Day founder VG Siddhartha, is contesting a FEMA show-cause notice. The court had previously stayed the proceedings and extended interim protection for her on Tuesday.
The bench examined the applicability of Section 43 of FEMA, which concerns the continuation of liabilities against legal representatives. The ED's counsel stated the case involved alleged foreign exchange use for share purchases, violating FEMA in 2010, and that proceedings aimed for recovery and penalties.
Hegde's counsel argued that initiating proceedings years after Siddhartha's death unfairly burdens the current CEO with defending past actions without personal knowledge. The counsel also noted a discrepancy where a 2022 show-cause notice reportedly reached Hegde only in 2026.
The court acknowledged the matter's current stage at the show-cause notice level and deferred the ultimate decision on liability to the adjudicating authority. The ED requested three weeks to submit its objections, with the next hearing scheduled for November 4.
