Sat Feb 01 06:17:43 UTC 2025: ## Flipkart Founders’ FDI Case Dismissed by Madras High Court
**Chennai, February 1, 2025** – The Madras High Court dismissed writ petitions filed by Flipkart founders Sachin Bansal and Binny Bansal, along with several others, challenging allegations of Foreign Direct Investment (FDI) policy violations totaling ₹23,451 crore. Justice S. Sounthar rejected the petitions, which had been pending since 2021, stating the petitioners should have first responded to show-cause notices issued by the Directorate of Enforcement (ED) before approaching the court.
The court’s decision stems from a 2021 complaint alleging that Flipkart, initially a proprietorship concern, circumvented FDI regulations in the retail sector through a complex structure involving several entities, including WS Retail, which allegedly served as a “dummy company.” The complaint alleged that the Bansals channeled FDI into Flipkart through various subsidiaries, utilizing a cash-and-carry wholesale model to ultimately sell goods through the Flipkart retail platform, violating regulations limiting sales to group companies.
The ED’s show-cause notices, issued in July 2021, sought explanations for potential violations of the Foreign Exchange Management Act (FEMA). The High Court ruled that the petitioners have 30 days to submit their explanations to the ED, which will then decide whether to initiate adjudication proceedings under FEMA. The court clarified that any subsequent decisions can be challenged through the established FEMA appeals process, deeming this avenue sufficient to address the petitioners’ concerns. The case highlights concerns over potential FDI violations within India’s rapidly growing e-commerce sector.
First Piper 