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The court clarified that it was not deciding at this stage whether Genpact had ultimately violated FEMA. That question has been left to the competent authority under Section 37A.
The entire ₹4,600 crore was transferred by Empower India on the same day towards acquisition of the remaining 51% stake in Genpact India. (Representative image)
The Karnataka High Court has upheld the Enforcement Directorate’s action under the Foreign Exchange Management Act (FEMA) in the Genpact case, holding that the agency had sufficient material to invoke Section 37A and seize the company’s property in Gurgaon.
The judgment, delivered on September 16 by Justice Suraj Govindaraj, deals with transactions involving Genpact India and its overseas group entities and a subsequent movement of thousands of crores from India.
The court, however, clarified that it was not deciding at this stage whether Genpact had ultimately violated FEMA. That question has been left to the competent authority under Section 37A.
The ED was represented by Additional Solicitor General N. Venkataraman and counsel including Senior Advocate Madhu N. Rao.
At the heart of the ED investigation is a series of transactions in 2015 involving Empower India, Genpact India and overseas Genpact entities.
According to the judgment, in March 2015, Genpact Bermuda borrowed USD 737.5 million from Morgan Stanley. The money was routed through Genpact Luxembourg, which subscribed to 4,600 non-convertible debentures of Empower India, valued at around ₹4,600 crore.
The entire ₹4,600 crore was transferred by Empower India on the same day towards acquisition of the remaining 51% stake in Genpact India. The money then moved to Genpact Singapore and subsequently to Genpact Bermuda, which used it to repay the Morgan Stanley loan.
The ED argued that the transactions represented a connected arrangement and that the fund trail amounted to circular movement of money. The agency also relied on subsequent repayments made by Genpact India.
Between 2018 and 2023, around ₹7,800 crore was paid by Genpact India to Genpact Luxembourg towards repayment of the NCD principal and interest, the judgment records.
The High Court held that the ED was entitled to examine the transactions as a connected arrangement rather than looking at each transaction in isolation.
On the seizure of Genpact’s Gurgaon property, the court found that the ED’s order contained sufficient material for the authorised officer to form the required “reason to believe” under Section 37A. The court said the ultimate question of whether a FEMA contravention was established would have to be decided by the competent authority.
The court also rejected the argument that Section 37A was being applied retrospectively. While transactions completed in January and March 2015 could not themselves be subjected retrospectively to Section 37A, the court held that subsequent payments made between 2018 and 2023 could be considered if they formed part of the arrangement under investigation.
Genpact had also relied on proceedings before the RBI, SEBI and Income Tax authorities. The court held that those proceedings did not prevent an independent FEMA examination, as they had not determined whether the entire arrangement, viewed as a whole, violated Section 4 of FEMA.
The court dismissed Genpact’s challenge to the seizure. However, it set aside the ED’s rejection of Genpact’s application for an NOC for a proposed USD 100-million investment in its GIFT City entity, directing the competent authority to reconsider the application and pass a reasoned order.
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Ask News18The Karnataka High Court upheld the Enforcement Directorate’s action under FEMA, ruling that the agency had sufficient material to invoke Section 37A and seize Genpact’s Gurgaon property.
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Harish Upadhya, an Assistant Editor at CNN-News18, reports from Bengaluru. Political reporting is his forte. He also tracks India’s space journey, and is passionate about environmental reporting and R…Read More
September 18, 2026, 9:48 PM IST
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