Business EconomyPosted at: Oct 6 2026 2:55PM


Karnataka HC questions ED over 16-year-old FEMA case against Malavika Hegde

Bengaluru, Oct 6 (UNI) The Karnataka High Court on Tuesday came down hard on the Enforcement Directorate over its belated FEMA proceedings against Cafe Coffee Day CEO Malavika Hegde, questioning how the agency could initiate action over foreign exchange transactions dating back 16 years.
Hearing Malavika's petition challenging the ED proceedings, Justice KS Hemalekha questioned the rationale behind the delay and whether proceedings could be sustained when initiated against the legal heir of a deceased person after such a prolonged period.
“You cannot do something after so many years,” the Court observed orally, making it clear that any delay in initiating proceedings must be reasonable and cannot be arbitrary.
The Court is examining a crucial legal question on whether Section 43 of the Foreign Exchange Management Act, dealing with devolution of liability on legal heirs, can be invoked when proceedings themselves are initiated after an unreasonable delay.
It is also examining whether a legal heir can be saddled with vicarious liability for alleged FEMA violations attributed to a deceased person.
The case relates to alleged FEMA violations in foreign exchange transactions involving late VG Siddhartha, founder of Cafe Coffee Day and husband of Hegde. The transactions allegedly took place in 2010.
Malavika has contended that although the ED issued a show-cause notice in 2022, it reached her only in 2026 -- more than a decade after the transactions and several years after Siddhartha’s death.
The High Court has not expressed any final opinion on the allegations or their merits.
The Court’s intervention came as the ED sought time to place its objections. Special Public Prosecutor Madhu N Rao appeared for the agency, while advocate Shristi represented Hegde.
The High Court extended its earlier stay on the ED proceedings and granted the agency three weeks to file its objections.
The matter will come up next on November 4.
The proceedings could have wider implications for the question of how far liability under FEMA can be pursued against legal heirs when enforcement action is initiated years after the underlying transactions and after the death of the person allegedly responsible.
UNI BDN
Tags: #Karnataka HC questions ED over 16-year-old FEMA case against Malavika Hegde
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