In Brief
A company and its directors were accused of acquiring shares in a Singapore entity without Reserve Bank approval, violating the Foreign Exchange Management Act (FEMA). Two parallel proceedings were initiated: one to seize domestic assets, and another for penalty adjudication. The Competent Authority (Customs Commissioner) found no evidence of violation and refused to confirm the seizure. Despite this, the enforcement agency issued a show-cause notice for penalties. The Supreme Court held that when a statutory authority determines foundational facts do not support an alleged violation, that finding binds parallel proceedings. The Court set aside the penalty order and directed that the seizure appeal be decided first, after which adjudication may proceed.
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