Delhi High Court - Orders
Fiserv India Private Limited & Anr vs The Joint Director Adjudication 3, ... on 2 September, 2025
Author: Sachin Datta
Bench: Sachin Datta
$~99
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 13036/2025 and CM APPL.53327/2025
FISERV INDIA PRIVATE LIMITED & ANR. .....Petitioners
Through: Mr. Pawan Sharma, Ms. Anuradha
Dutt and Mr. Nishant Varun, Advs.
versus
THE JOINT DIRECTOR ADJUDICATION 3, ADJUDICATING
AUTHORITY, DIRECTORATE OF ENFORCEMENT & ORS.
.....Respondents
Through: Mr. Annirudh Sharma and Ms. Shriya
Chanda, Advs. for R-1 and 2.
Mr. Jagdish Chandra Solanki, CGSC
and Mr. Sankalp Mishra, GP for R-3.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
ORDER
% 02.09.2025
1. The present petition assails a Show Cause Notice (SCN) dated 21.12.2020, issued by the respondent no.2 and Call Notice(s) dated 25.072025, issued by the respondent no.1, under the Foreign Exchange Management Act (FEMA), 1999.
2. It is submitted that the Directorate of Enforcement (ED) initiated an inquiry against the petitioner no.1 vide inquiry letter dated 19.04.2017, requiring petitioner no.1 to inter-alia furnish documentary evidence showing export of goods against which petitioner no.1 received 10 advances in its bank account through its authorized dealer bank during financial year 2005-2006. It is submitted that the said inquiry was initiated approximately 12 years after the transactions were carried out.
3. It is submitted that the petitioner had duly complied with the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/09/2025 at 21:52:24 requirements of FEMA at the relevant time and software exports were duly effected and necessary formalities were complied with, such as filing of SOFTEX forms with STPI and ICICI Bank (the authorized dealer bank). The inward remittances were duly received through banking channels. It is further submitted that these exports were reflected in audited financial statements and also accepted by the income tax authorities granting export- linked exemptions.
4. It is submitted that despite passage of an inordinately long period of time and despite the petitioner's compliance with all the regulatory requirements, the respondent no.2 mechanically issued a SCN dated 21.12.2020, more than 15 years after the transactions took place.
5. It is emphasized that the alleged contravention in respect of the 10 inward remittances pertain to export of software during the financial year 2005-06 and 2 outward remittances relating to imports in financial year 2007-08, which are at present, 20 years and 18 years old respectively.
6. Reliance is placed on a judgment of Supreme Court in Union of India and Anr. vs. Citi Bank, N.A.; 2022 SCC OnLine SC 1073, wherein the Supreme Court has emphasized that the authorities cannot subject the affected parties to such proceedings beyond a reasonable period of time. The relevant observations of the Supreme Court are as under:
"19. It is a settled proposition of law that when the proceedings are required to be initiated within a particular period provided under the statute, the same are required to be initiated within the said period. However, where no such period has been provided in the statute, the authorities are required to initiate the said proceeding within a reasonable period. No doubt that what would be a reasonable period would depend upon the facts and circumstances of each case.
20. Reference in this respect could be made to the judgment given by a three-Judge Bench of this Court in State of Gujarat v. Patil Raghav This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/09/2025 at 21:52:24 Natha [State of Gujarat v. Patil Raghav Natha, (1969) 2 SCC 187] , wherein this Court has held thus : (SCC p. 193, para 11) "11. The question arises whether the Commissioner can revise an order made under Section 65 at any time. It is true that there is no period of limitation prescribed under Section 211, but it seems to us plain that this power must be exercised in reasonable time and the length of the reasonable time must be determined by the facts of the case and the nature of the order which is being revised."
21. In State of M.P. v. Bani Singh [State of M.P. v. Bani Singh, 1990 Supp SCC 738 : 1991 SCC (L&S) 638] , this Court found that the departmental proceedings initiated in the year 1987 for the alleged irregularities that took place between the years 1975-1977 could not be permitted to be continued as it would be unfair and unreasonable.
22. In Union of India v. Citedal Fine Pharmaceuticals [Union of India v. Citedal Fine Pharmaceuticals, (1989) 3 SCC 483 : 1989 SCC (Tax) 464] , validity of Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, which did not provide for a period of limitation for initiating proceedings for recovery of escaped duty, was challenged. This Court in the said case observed [Union of India v. Citedal Fine Pharmaceuticals, (1989) 3 SCC 483 : 1989 SCC (Tax) 464] thus : (SCC p. 487, para 6) "6. The learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article 14 of the Constitution, as it does not provide for any period of limitation for the recovery of duty. He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12, the officer may act arbitrarily in recovering the amount after lapse of long period of time. We find no substance in the submission. While it is true that Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the rule is to be made, but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard-and-fast rules can be laid This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/09/2025 at 21:52:24 down in this regard as the determination of the question will depend upon the facts of each case."
23. In Mohd. Kavi Mohamad Amin v. Fatmabai Ibrahim [Mohd. Kavi Mohamad Amin v. Fatmabai Ibrahim, (1997) 6 SCC 71] , suo motu proceedings were initiated in September 1976 by the mamlatdar questioning the validity of sale deeds executed in December 1972. In the said case, this Court, after noticing the earlier decisions on the issue, observed thus : (SCC pp. 72-73, para 2) "2. ... where no time-limit is prescribed for exercise of a power under a statute it does not mean that it can be exercised at any time; such power has to be exercised within a reasonable time. We are satisfied that in the facts and circumstances of the present case, the suo motu power under Section 84-C of the Act was not exercised by the Mamlatdar within a reasonable time."
24. Admittedly, in the present cases, the alleged transactions had taken place during Financial Years 1992 and 1993. Show-cause notices for the said transactions were issued in the year 2002 and that too just before the sunset period of FERA was to expire i.e. on 1-6-2002. We are therefore of the considered view that show-cause notices and the proceedings continued there under are liable to be set aside on this short ground."
7. Issue notice.
8. Learned counsel, as aforesaid, accepts notice on behalf of the respondents. He vehemently opposes the present petition, and in response to the petitioner's prayer for interim relief, submits that no limitation period is prescribed under Rule-4 of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. However, it is not disputed that the transactions forming the basis of the adjudication proceedings were carried out more than two decades ago.
9. Let a reply be filed by the respondents within a period of two weeks. Rejoinder thereto, if any, be filed within one week thereafter.
10. Prima facie, the impugned the proceedings have been initiated beyond a reasonable period of time and therefore the observations of the judgment This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/09/2025 at 21:52:24 of the Supreme Court in Union of India and Anr. vs. Citi Bank, N.A. (supra) squarely apply. In the circumstances, till the next date of hearing, there shall be a stay of further proceedings pursuant to the impugned SCN dated 21.12.2020 and impugned Call Notice(s) dated 25.07.2025.
11. List on 13.10.2025.
SACHIN DATTA, J SEPTEMBER 2, 2025/cl This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/09/2025 at 21:52:24