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The Enforcement Directorate (ED) has imposed a hefty penalty of ₹908 crore on S. Jagathrakshakan, a Member of Parliament from the Dravida Munnetra Kazhagam (DMK) representing Arakkonam, for violations of the Foreign Exchange Management Act (FEMA). This penalty order was issued on Monday, building upon a previous Seizure Order dated September 11, 2020, under Section 37A of FEMA. This earlier order resulted in the seizure of various movable and immovable assets held by Jagathrakshakan and his family members, valued at a total of ₹89.19 crore.
The ED's decision to impose the penalty follows a series of legal proceedings. The Madras High Court, in a ruling delivered on July 23 of this year, dismissed writ appeals filed by Jagathrakshakan, paving the way for the ED to proceed with the penalty. Earlier, on November 30, 2022, the High Court declined to interfere with the ED's actions, confirming that the agency had adhered to due process in issuing show cause notices to Jagathrakshakan and his family members on December 22, 2021.
The ED's accusations against Jagathrakshakan and his family members center on violations of several FEMA provisions. Specifically, the ED alleges that they invested ₹42 crore into a shell company incorporated in Singapore during 2017, acquired and held Singaporean foreign shares, and subsequently transferred these shares among family members, all in contravention of FEMA regulations. The ED also uncovered violations concerning investments totaling ₹9 crore made into a Sri Lankan entity.
This case highlights the ED's commitment to enforcing FEMA regulations and preventing financial irregularities. The hefty penalty imposed on Jagathrakshakan sends a clear message that such violations will be met with serious consequences. It remains to be seen how Jagathrakshakan and his family members will respond to this penalty and whether they will pursue further legal options.
Source: ED orders penalty of ₹908 crore on MP Jagathrakshakan for FEMA violations