ED slaps DMK MP Jagathrakshakan with Rs.908 crore penalty over FEMA violation

ED penalizes DMK MP in forex violation case

On Wednesday, the Enforcement Directorate (ED) said a penalty of Rs.908 crore had been imposed on DMK MP S Jagathrakshakan and his family members in a case related to the alleged violation of foreign exchange rules. The anti-money laundering agency issued a statement that said properties worth Rs.89.19 crore, seized in September 2020, have been confiscated following an adjudication order issued on August 26 under the Foreign Exchange Management Act (FEMA).

Former Central Minister Jagathratchakan, 76, represents the Arakkonam Lok Sabha seat in Tamil Nadu. He was Minister of State for Information and Broadcasting in the Union government during the UPA regime.

The agency said a FEMA violation probe was initiated against the MP, a businessman from Tamil Nadu, his family members, and a related Indian entity.

This investigation resulted in the passing of a seizure order, dated September 11, 2020, under Section 37A of FEMA, for various movable and immovable properties in the name of the MP and his family members. These are valued at Rs.89.19 crore. “The properties worth Rs.89.19 crore which were seized in terms of section 37A of FEMA were also ordered for confiscation, and penalty of Rs.908 crore is levied vide Adjudication Order dated 26/08/2024,” the ED said.

The 2020 seizure order was “set aside” by the Competent Authority (under the FEMA) in February 2021 and the ED challenged it before the Appellate Tribunal where, the ED said, the “appeal is pending”. Later, the ED filed a complaint in December 2021 before the FEMA Adjudicating Authority against the MP, his family, and a linked company “charging them for violations of various FEMA provisions, particularly in respect of their investment to the tune of Rs.42 core in a shell company incorporated in Singapore in 2017″.

The accused were also charged by the agency with “acquisition and holding” of Singapore foreign shares and its subsequent transfer amongst the family members “in defiance of” extant provisions of FEMA, and also with regard to the investment of around Rs.9 crore made into a Sri Lankan entity. This complaint was filed with a prayer to confiscate the properties seized under the order dated September 11, 2020, it said.

The ED said the noticees (Jagathratchakan and family) filed individual writ petitions before the Madras High Court. “Hearing both sides, the Hon’ble Single Bench (of Madras HC) vide order dated 30.11.2023 holding inter alia that the order passed by the Competent Authority vis-Ã -vis the seizure of the assets will not interfere with the power of Adjudication of the Adjudicating Authority,” the ED said.

The noticees subsequently filed Writ appeals before the same HC and a Division bench which, after hearing both sides, dismissed their plea on July 23 this year, it said. “Consequently, the Adjudication proceedings under FEMA were completed after following the due process of law. Upon careful examination of the alleged violations by the noticees vis-Ã -vis the written replies filed by the noticees, it was found that the alleged violations were clearly proved,” said ED.

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