Flipkart co-founder challenges ED notice issued after 12 years

When the plea came up for hearing on Friday, Justice R Mahadevan wondered why the authorities failed to take action against the alleged violation for the past 12 years. The court adjourned the plea after granting the ED three weeks to file its response for the inordinate delay.

Bansal submitted in his plea that it was a matter of record that he proactively participated and cooperated in the investigation for alleged non-compliance with a condition under the FDI policy pertaining to shares issued by certain Flipkart group companies to foreign investors during 2009 to 2014. The investigation had commenced nine years ago, in 2012.

Given the substantial lapse of time following the enquiry, he has conducted himself under the belief that the agency had concluded after due study of the materials that no action was warranted in the matter.

Based on this, he also effected bonafide transfers to third parties in the intervening period and has exited from Flipkart group in 2018. But to his shock, he was served with the notice on August 5 claiming that he (jointly with Flipkart co-founder Binny Bansal) were personally responsible for the alleged violation involving a staggering amount of approximately Rs 23.000 crore, Bansal said.

Terming the 12 years’ delay as unreasonable, the petition contended that it was in breach of the settled position of law by the Supreme court that a regulatory authority cannot invoke jurisdiction beyond a reasonable period of time.

Also, noting that the delay has deprived his rights to a fast-track adjudication process statutorily mandated under FEMA, he said the delay in initiating the proceedings coupled with petitioner’s exit from Flipkart has significantly impaired his ability to defend himself.