Delhi High Court
Dinesh Kothari & Ors vs Union Of India & Ors on 16 April, 2018
$~8
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 692/2016 & CM No.2826/2016
% Date of decision : 16th April, 2018
DINESH KOTHARI & ORS ..... Petitioners
Through : Ms. Sanjana Srikumar, Adv.
versus
UNION OF INDIA & ORS ..... Respondents
Through : Ms. Mrinalini Sen and
Ms. Kritika Gupta, Advs.for
R-1 to 4
Mr. C. Mukund, Mr. M.B.
Elakkunanan and Ms. Geethika
Mitta, Advs. for R-5
CORAM:
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE C.HARI SHANKAR
JUDGMENT (ORAL)
GITA MITTAL, ACTING CHIEF JUSTICE
1. This writ petition was filed on 28th November, 2015 complaining
of violations of the provisions of Foreign Exchange Management Act,
1999 (FEMA) and the FDI Policies framed by the Department of
Industrial Policy and Promotion (DIPP) (respondent no.2 herein)
seeking the following prayers :
"1. Conduct an inquiry/investigation into the
affairs and transactions of all FDI recipient
companies/websites regarding violation indulged
in by them through various mechanisms directly
or indirectly or even clandestinely with their
closely held business entities,
2. Direct that the FDI recipient companies/
websites who are directly/indirectly carrying out
the business activities in E-Commerce Retail
sector in India, in violation of the extant FDI
policy/FEMA guidelines, be restrained/stopped
from operating.
3. Direct that the required legal action be
initiated as per the law against the companies/e-
commerce sites/entities who have violated of the
provisions of FEMA and the rules/bye-
laws/guidelines framed there under,
4. Direct the Respondents to place on record
the Action Taken Report before this Hon'ble
Court."
2. It appears that during the pendency of the writ petition, the
Government of India has clarified the FDI Policy. In the counter
affidavit which has been filed by the respondent no.2 (at page 454), it is
stated that the Government of India has since put in place a strong and
latest policy framework on foreign investments which have been
arrived at after detailed consideration with all stakeholders; that a
review of the FDI Policy is an on-going process and significant changes
have been effected in such policy from time to time to ensure that India
remains a desired investment destination. So far as violation of the
policy and action which is taken by the respondents is concerned, the
same is set out in para 8 of the counter affidavit thus :
"Detailed FDI policy on various sectors indicating
therein sector-wise FDI limits is provide in
'Consolidated FDI Policy Circular of 2016,
hereinafter referred as FDI Policy, as amended
from time to time. Para 3 of Annexure 6 of the
Consolidated FDI Policy Circular of 2016
stipulates that FDI is a capital account transaction
and any violation of FDI regulations are covered
by the penal provisions of the FEMA. Reserve Bank
of India administers the FEMA and Directorate of
Enforcement under the Ministry of Finance is the
authority for the enforcement of FEMA. True copy
of the FDI policy is annexed and marked as
ANNEXURE A-1."
3. The counter affidavit filed on record would show that for
violation of the declared FDI Policy, the Enforcement Directorate has
taken action against the violators. The Enforcement Directorate has
also filed a counter affidavit (page 662) pointing out that it is inquiring
into e-commerce entities which are guided by self gain or motive other
than in public interest and that the Bangalore Zonal office of the
answering respondent had initiated enquiries against ten (10) e-
commerce entities and in 5 out of these 10 of those enquiries,
investigations are reported to be underway. Chargesheets have been
prepared in 4 out of 5 cases in which investigation has been completed
and the same are pending consideration. Besides that, enquiries were
also initiated against Firstcry.com and Infibeam.com by the Mumbai
and Ahmedabad offices respective of the answering respondent and the
same are under progress.
4. It would appear that therefore the respondents are conscious of
their responsibilities and are taking action for violation of the applicable
FDI Policy. Needless to say, the required action upon completion of the
investigation would have to abide by the procedure prescribed by law.
5. In view thereof, no further orders are called for in the present writ
petition which is hereby disposed of.
CM No.2826/2016
In view of the disposal of the petition, this application does not
survive for adjudication and is dismissed.
ACTING CHIEF JUSTICE
C.HARI SHANKAR, J
APRIL 16, 2018/kr
