J. SRI NISHA versus THE SPECIAL DIRECTOR, ADJUDICATING AUTHORITY, DIRECTORATE OF ENFORCEMENT AND ANR.

Citation: [2026] 4 S.C.R. 313 · Decided: 01-04-2026 · Supreme Court of India · Bench: VIKRAM NATH · Disposal: Disposed off

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Judgment (excerpt)

[2026] 4 S.C.R. 313 : 2026 INSC 309
J. Sri Nisha 
v. 
The Special Director, Adjudicating Authority,  
Directorate of Enforcement and Anr.
(Civil Appeal No. 4167 of 2026)
01 April 2026
[Vikram Nath and Sandeep Mehta,* JJ.]
Issue for Consideration
The writ petitions instituted by the appellants assailing the show 
cause notice (SCN) issued by the Adjudicating Authority under 
Foreign Exchange Management Act, 1999, came to be dismissed. 
Whether the impugned order passed by the High Court is liable 
to be set aside.
Headnotes†
Foreign Exchange Management Act, 1999 – ss.4, 37A – 
Foreign Exchange Management (Transfer or Issue of any 
Foreign Security) Regulations, 2004 – Appellants alleged to 
have contravened the provisions of s.4 of FEMA, r/w. FEMA 
Regulations, on the premise that they had acquired and held 
shares of a foreign entity without the requisite approval and 
in violation of the statutory framework – Properties seized by 
the Authorised Officer – Competent Authority held that there 
was no contravention of s.4, provisions of s.37A were held 
inapplicable and prayer for confirmation of seizure of assets 
was rejected – Parallelly, Adjudicating Authority issued show 
cause notice (SCN) alleging violation of the provisions of FEMA 
along with allied regulations – A corrigendum was issued to 
the SCN – Writ petitions were filed by the appellants – The 
High Court dismissed the writ petitions – Correctness:
Held: A prima facie satisfaction was recorded by the Competent 
Authority that there was no evidence of the appellants being involved 
in foreign security transactions having any value – Consequently, 
there did not exist the “reasons to believe” referred to in s.37A(1) – 
This Court has consistently held that although ordinarily a writ 
petition against an SCN may not be entertained, however, the said 
proposition is not an inviolable rule – Interference at the stage of 
* Author
314
[2026] 4 S.C.R.
Supreme Court Reports
SCN is permissible in exceptional circumstances, such as where 
the notice suffers from patent lack of jurisdiction, reflects non-
application of mind, is issued with a pre-determined or premeditated 
approach, amounts to an abuse of the process of law, or results in 
a violation of the principles of natural justice – Thus, the rejection 
of challenge laid by the appellants to the SCN on the ground of 
non-maintainability was not justified in the peculiar facts of the 
case at hand – The High Court repeatedly referred to the effect 
of the seizure order passed by the Authorised Officer u/s.37A of 
FEMA and the scope of consideration thereof by the Adjudicating 
Authority while passing the final order u/s.16 – The observations 
made by the Division Bench impliedly efface the findings recorded 
by the Competent Authority while refusing to confirm the seizure, 
thereby foreclosing the outcome of the appeal pending before the 
appellate authority – In effect, the Adjudicating Authority has undone 
the order of the Competent Authority even while the appeal against 
the said order is pending – Such a course of action tantamounts 
to abdicating the powers of the Appellate Authority, even when the 
order of the Competent Authority was still under challenge in appeal 
at the instance of the department – The impugned order passed by 
the High Court and the order passed by the Adjudicating Authority 
imposing penalty and ordering confiscation of the property held by 
appellants are declared to be arbitrary and contrary to law – The 
same are hereby set aside – The proceedings are revived from 
the stage of the SCN. [Paras 32, 33, 35, 38, 39]
Case Law Cited
Union of India v. VICCO Laboratories [2007] 12 SCR 534 : (2007) 
13 SCC 270 : 2007 SCC OnLine SC 1420 – referred to.
List of Acts
Foreign Exchange Management Act, 1999; Foreign Exchange 
Management (Transfer or Issue of any Foreign Security) 
Regulations, 2004; Constitution of India.
List of Keywords
Show cause notice (SCN); Corrigendum; Seizure of assets; 
Acquisition of shares in foreign entity; Reason to believe; 
Adjudicating Authority; Confiscation of the property; Section 37 
of Foreign Exchange Management Act, 1999; Abuse of process; 
Foreign securities.
[2026] 4 S.C.R. 
315
J. Sri Nisha v. The Special Director, Adjudicating Authority,  
Directorate of Enforcement and Anr.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4167 of 2026
From the Judgment and Order dated 23.07.2024 of the High Court 
of Judicature at Madras in WA

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