Full Text
HIGH COURT OF DELHI
Date of Decision: 12th March, 2026
CITIBANK N.A. .....Appellant
Through: Mr. Rajeev K. Virmani, Sr.
Adv, Ms. Rashmi Virmani, Mr. Krishan Tewary, Ms. Shriya Gambhir, Ms. Diva Saigal, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
HONGKONG AND SHANGHAI BANKING CORPORATION LTD. .....Appellant
Through: Mr. Ateev Mathur, Mr. Amol Sharma, Mr. Sanjay Gupta Mr. Anmol Mehta & Ms. Tanya Baijla, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
CITIBANK, N.A. .....Appellant
Through: Mr. Rajeev K. Virmani, Sr.
Adv., Ms. Rashmi Virmani, Mr. Krishan Tewary, Ms. PRUTHI 11:20
Shriya Gambhir, Ms. Diva Saigal, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
THE BANK OF TOKYO MITSUBISHI, UFJ LTD. .....Appellant
Through: Mr. Varun Chandiok, Mr. Yashwant Sanenbam, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
THE BANK OF TOKYO MITSUBISHI, UFJ LTD. .....Appellant
Through: Mr. Varun Chandiok, Mr. Yashwant Sanenbam, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
CITIBANK .N.A .....Appellant
Through: Mr. Rajeev K. Virmani, Sr.
Adv., Ms. Rashmi Virmani, Mr. Krishan Tewary, Ms. Shriya Gambhir, Ms. Diva PRUTHI
11:20
Saigal, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE
CITI BANK N.A. .....Appellant
Through: Mr. Rajeev K. Virmani, Sr.
Adv., Ms. Rashmi Virmani, Mr. Krishan Tewary, Ms. Shriya Gambhir, Ms. Diva Saigal, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
STATE BANK OF INDIA NRI BRANCH .....Appellant
Through: Mr. AP Singh, Mr. Varnit Vashistha, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
STATE BANK OF INDIA, MAIN BRANCH..... Appellant
Through: Mr. AP Singh, Mr. Varnit PRUTHI 11:20
Vashistha, Advs.
Through: Mr. Vivek Gurnani, Panel Counsel, Mr Kanishk Maurya
Adv. for DoE.
HON'BLE MR. JUSTICE RAVINDER DUDEJA NAVIN CHAWLA, J. (ORAL)
JUDGMENT
1. These appeals have been filed under Section 35 of the Foreign Exchange Management Act, 1999, challenging the orders passed by the learned Appellate Tribunal for Foreign Exchange, New Delhi in the appeals reference of which is being given in the form of chart herein under. Appeals listed before us. Original Criminal Appeal Appeals before the learned Tribunal and date of impugned order MISC.
APPEAL (FEMA) 25/2025 CRL.A. 510/2009 Appeal No. 183/2008 Date: 28.05.2009 (FEMA) 26/2025 CRL.A. 609/2009 Appeal No. 210/2008 (FEMA) 27/2025 CRL.A. 610/2009 Appeal No. 987/2004 Date: 30.06.2009 (FEMA) 28/2025 CRL.A. 673/2009 Appeal No. 189/2008 PRUTHI 11:20 MISC.
APPEAL (FEMA) 25/2025 & Conn. Matters (FEMA) 29/2025 CRL.A. 674/2009 Appeal No. 209/2008 (FEMA) 30/2025 CRL.A. 741/2009 Appeal No. 184/2005 Date: 28.07.2009 (FEMA) 31/2025 CRL.A. 1007/2009 Appeal No. 961/2004 Date: 16.09.2009 (FEMA) 7/2026 CRL.A. 8/2010 Appeal No. 187/2008 (FEMA) 8/2026 CRL.A. 9/2010 Appeal No. 188/2008
2. As all the appeals raise same question of law on the maintainability of the proceedings, they are being disposed of by this common judgment.
3. The learned Senior Counsel appearing for the appellants in MISC.
APPEAL (FEMA) 25/2025, MISC.
APPEAL (FEMA) 27/2025, MISC.
APPEAL (FEMA) 30/2025, MISC.
APPEAL (FEMA) 31/2025 and the learned counsels appearing for the appellants in the other appeals, jointly submit that the common issue of law that arises for consideration in the present appeals is whether the Show Cause Notice(s) issued to the appellants for the alleged contravention of various provisions of The Foreign Exchange Regulation Act, 1973( FERA Act, 1973 ), as well as of Para 13B.22 of Chapter 13 of the Exchange Control Manual, 1993 in some of the appeals, are liable to be quashed on the ground of delay alone. In support of their plea, they have placed reliance on a judgment of the PRUTHI 11:20 Supreme Court in Union of India and Anr. Vs. Citi Bank N.A.,
4. On the other hand, the learned counsel for the respondent submits that the above judgment would have no application on the facts of the present case, inasmuch as the inquiry against the appellants had been initiated in the year 1995 itself. The appellants, therefore, cannot take the plea of destruction of the records in terms of the applicable rules, as they were required to preserve the same for the purposes of the inquiry. He submits that the judgment of the Supreme Court, therefore, would not apply to the facts of the present case.
5. We have considered the submissions made by the learned counsels for the parties.
6. We would first, in form of a chart, display the period of the alleged transactions and the date of the issuance of the Show Cause Notice(s) to the appellants in each of the appeals as under: Appeals Period of Transaction Issuance Date of Show Cause Notices (FEMA) 25/2025 08.08.1992 to 10.05.1994 04.04.2002 (FEMA) 26/2025 17.09.1992 to 18.07.1994 (FEMA) 27/2025 24.01.1992 to 01.02.1992 15.03.2002 (FEMA) 28/2025 21.04.1994 to 24.08.1994 PRUTHI 11:20 (FEMA) 29/2025 22.03.1993 to 01.02.1995 (FEMA) 30/2025 21.11.1989 to 30.03.1992 25.02.2002 (FEMA) 31/2025 02.02.1990 to 21.11.1992 20.05.2002 (FEMA) 7/2026 24.07.1993 to 28.08.1994 (FEMA) 8/2026 12.01.1993 to 30.07.1994
7. The Supreme Court in Citi Bank (supra) in a batch of appeals was also considering the case where a Show Cause Notice dated 25.02.2002 had been issued to the bank alleging contravention for a period from October, 1992 to January, 1993. The Supreme Court after considering the submissions made by the counsels for the parties held that, even where a period of limitation is not provided in the statute, the authorities are required to initiate the proceedings within a reasonable period; the reasonable period would depend upon the facts and circumstances of each case. The Supreme Court then relied upon Rule 2, 3 and 4 of the Banking Companies (Period of Preservation of Records) Rules, 1985 and held that as the said rules require the preservation of records for a period of 5/8 years unless otherwise directed by the Reserve Bank of India for the record to be preserved for a longer period. The Show Cause Notice(s) issued therein were held to be liable to be quashed on the ground of delay alone. We quote PRUTHI 11:20 MISC.
APPEAL (FEMA) 25/2025 & Conn. Matters from the judgment as under:
8. In the present batch of appeals, though for some the period in question is extending till August, 1994, the initial period ranges from January, 1990 onwards. The Show Cause Notice(s), the dates of which have been mentioned hereinabove, have been issued just before expiry of the sunset period of the FERA Act. Therefore, in our view, these appeals are covered by the judgment of the Supreme Court in Citi Bank (supra).
9. The submission of the learned counsel for the respondent that inquiries had been initiated in the year 1995, would not come to the aid of the respondent inasmuch as it has not been shown that any instructions were also issued to the appellants to preserve their records while the inquiry is ongoing. Even otherwise there is a further delay of almost seven years between 1995 to 2002 for issuing the Show Cause Notice(s).
10. The impugned orders passed by the learned Appellate Tribunal are hereby quashed.
11. The learned counsels for the parties submit that pursuant to the interim orders passed by the learned Appellate Tribunal, and as extended by this Court in the appeals as were originally numbered, the appellants had provided Bank Guarantees for the amount of penalty imposed on them. As the appeals have been allowed, the Bank Guarantees are hereby discharged. They shall be released by the Adjudicating Authority forthwith to the appellants.
PRUTHI 11:20
12. The appeals, along with pending applications, if any, accordingly stands disposed of in terms of aforesaid orders.
NAVIN CHAWLA, J RAVINDER DUDEJA, J MARCH 12, 2026/lks/sk/pb/ik PRUTHI 11:20