DMK MP Jagathrakshakan, son Sundeep Anand of TVK move Madras High Court over ₹161.12-crore FEMA case

DMK Lok Sabha member S. Jagathrakshakan, his son J. Sundeep Anand of the TVK, and his daughter J. Sri Nisha have approached the Madras High Court against the seizure of properties worth ₹45.34 crore by the Directorate of Enforcement (ED) for an alleged contravention to the tune of ₹161.12 crore under the Foreign Exchange Management Act (FEMA) of 1999.The First Division Bench of Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan admitted the individual civil appeals filed by the three family members and ordered notice to the ED. The appellants had challenged an order passed by a FEMA appellate tribunal, located in New Delhi, on May 21, 2026, partly confirming a seizure order issued by the central agency.What is the case about?The issue dates back to the incorporation of Silver Park International Pte. Limited in Singapore on June 15, 2017. The Memorandum of Articles disclosed that Mr. Jagathrakshakan held 70 lakh equity shares, his son Mr. Anand held 20 lakh shares, and another individual named V.T. Thiagarajan had 10 lakh shares with a nominal value of 1 Singapore dollar (SGD) each.The ED had initiated the inquiry under FEMA after the Member of Parliament disclosed, in his election affidavit, of having been a director of Silver Park International Pte. Limited between June 15, 2017, and September 15, 2018. The initial inquiries revealed that the Reserve Bank of India (RBI) had no information whatsoever with respect to Silver Park of Singapore.Hence, the ED summoned the MP, representing the Arakkonam constituency, for inquiry and learnt that he had gifted 45 lakh shares to his wife Anusuya (since dead), 22.50 lakh shares to his daughter, and 2.5 lakh shares to his son on September 15, 2018. Ms. Anusuya, in turn, had transferred all her shares equally to their son and daughter for a consideration of one SGD each on May 2, 2019.However, all the family members told the ED that they did not obtain RBI permission either for subscribing to the shares, gifting them, or transferring them, since they believed that such permission was required only when the money gets paid, and not before that. The ED rejected their contention and arrived at a conclusion that the family members had contravened Section 4 of FEMA.The central agency on September 11, 2020, passed an order seizing the family’s immovable properties worth ₹89.17 crore in India for the alleged contravention of ₹161.12 crore under FEMA. Nevertheless, the Commissioner of Customs, in his capacity as the competent authority under FEMA, set aside the seizure order in toto on February 3, 2021.Appellate tribunal orderWhen the competent authority’s order was taken on appeal to the appellate tribunal, the latter highlighted that the financial statement of Silver Park disclosed that the share capital of the company stood at 1 crore SGD through the issuance of shares.“Even if the value of 1 SGD per share is regarded as nominal value, it cannot be stated that the shares were of zero value,” the tribunal said and disagreed with the conclusion arrived at by the competent authority that the appellants held no share of any value in Singapore and therefore, the property seizure order was liable to be set aside.The tribunal had also said: “Without acquisition and holding on to the subscription of shares, the allotees could not have been appointed as Directors of the Company. It is also on record that the subscription of shares was transferred as gift, which in itself demonstrates value inherent in the subscription of shares.”Nevertheless, the tribunal had refused to confirm the seizure order with respect to properties worth ₹89.17 crore and instead, confined it to those that were worth ₹45.34 crore.“We reject the argument of the appellant department (ED) that acquisition of foreign security and transfer of foreign security are two independent transactions effected between different persons at different material points of time and hence, the contravention under Section 4 of FEMA needs to be treated separately for each such transaction,” the tribunal had concluded.It had refrained from drawing a firm conclusion that it was the family members who had paid for the shares and yet, confirmed the seizure order, partly leading to the present appeal before the High Court.