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Flipkart Co Founder Sachin Bansal Challenges Enforcement Directorate Probe in FDI Case

Flipkart Co-Founder Sachin Bansal Challenges Enforcement Directorate Probe in FDI Case

Flipkart has previously said it was "in compliance with Indian laws and regulations" and would cooperate with authorities.

By Reuters | Updated: 4 September 2021 15:29 IST

Flipkart Co-Founder Sachin Bansal Challenges Enforcement Directorate Probe in FDI Case

Photo Credit: Reuters

Flipkart co-founder urged a state court to quash the Enforcement Directorate's notice

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Highlights

Flipkart co-founder has mounted a court challenge against the ED
Sachin Bansal argued that the notice was issued after an inordinate delay
Flipkart and Amazon are under ED's investigation for years

Sachin Bansal, co-founder of e-commerce giant Flipkart, has mounted a court challenge against India's financial crime-fighting agency, which has accused him and others of violation of foreign investment laws, court records showed.

The agency, the Enforcement Directorate, had in July issued a so-called show cause notice to Flipkart, its founders and some investors asking them to explain why they should not face a penalty of $1.35 billion (roughly Rs. 9,850 crores) for alleged violation of foreign investment laws between 2009 and 2015, Reuters reported last month.

Court records and media reports on Saturday showed Sachin Bansal has urged a state court in the southern state of Tamil Nadu to quash the agency's notice, arguing that it was issued after an inordinate delay.

Invoking 'Quit India', Minister Welcomes Amazon, Flipkart Ruling

The judge in the case, R Mahadevan, heard the matter on Friday and asked the Enforcement Agency to file a response, reports said.

Sachin Bansal, the Enforcement Directorate, and Flipkart did not immediately respond to requests for comment. Flipkart has previously said it was "in compliance with Indian laws and regulations" and would cooperate with authorities.

The Enforcement Directorate has been investigating e-commerce giants Flipkart and Amazon.com for years for allegedly bypassing foreign investment laws that strictly regulate multi-brand retail and restrict such companies to operating a marketplace for sellers.

Flipkart Challenges Court Order on Antitrust Probe on Select Seller Promotion

Walmart took a majority stake in Flipkart for $16 billion (roughly Rs. 1,16,800 crores) in 2018, its biggest deal ever. Sachin Bansal sold his stake to Walmart at that time, while the other co-founder, Binny Bansal, retained a small stake.

The case concerned an investigation into allegations that Flipkart attracted foreign investment and a related party, WS Retail, then sold goods to consumers on its shopping website, which was prohibited under the law, Reuters has reported.

In February, a Reuters investigation based on Amazon documents showed it had given preferential treatment for years to a small group of sellers, publicly misrepresented ties with them and used them to bypass Indian law. Amazon says it gives no preferential treatment to any seller.

Amazon, Flipkart Bid to Stall Antitrust Probe Squashed by Karnataka High Court

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