Twelve years on from the transactions, the Karnataka High Court has asked the Enforcement Directorate how FEMA proceedings can be pressed against the legal heir of a deceased person after such a delay.
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Bengaluru: The Karnataka High Court has questioned the Enforcement Directorate (ED) over the timing of its proceedings under the Foreign Exchange Management Act (FEMA) against Cafe Coffee Day CEO Malavika Hegde, extending its earlier stay on the proceedings and giving the agency three weeks to file objections [Malavika Hegde v. Enforcement Directorate].
The petition came up before Justice K.S. Hemalekha on October 6, 2026. Special Public Prosecutor Madhu N. Rao appeared for the ED and Advocate Shristi for Ms Hegde. The next hearing is on November 4, 2026.
The Court’s questions
Justice Hemalekha asked whether proceedings could be started after so many years, observing orally that the delay must be reasonable.
You cannot do something after so many years.
The Court also noted: “What is reasonable is reasonable for all acts. It shall not be an unreasonable delay.” Two issues are before the Bench. One is whether Section 43 of FEMA, which deals with the devolution of liability on legal heirs, can apply to proceedings begun after an unreasonable delay. The other is whether vicarious liability can be fastened on the legal heir of a deceased person.
What the ED alleges and what the petitioner says
The ED alleges contraventions of FEMA in foreign exchange transactions of 2010 involving the late V.G. Siddhartha, founder of Cafe Coffee Day, who was Ms Hegde’s husband. A show-cause notice is stated to have been issued in 2022, but Ms Hegde says it reached her only in 2026, more than 12 years after the transactions and years after Mr Siddhartha’s death. These are the ED’s allegations and the petitioner’s contentions; neither has been tested, and the Court has recorded no finding on the merits.
Where the matter stands
The Court’s remarks came during the hearing. The petition is still pending, the stay stays in force until the next date, and the ED has yet to file its objections.
Case Title: Malavika Hegde v. Enforcement Directorate
Bench: Justice K.S. Hemalekha, Karnataka High Court
Date of Hearing: October 6, 2026
Next Date: November 4, 2026
Appearances: Special Public Prosecutor Madhu N. Rao for the ED; Advocate Shristi for the petitioner