Sachin Bansal, co-founder of e-commerce giant Flipkart, has filed a lawsuit against the financial crime agency, which has accused him and others of violating foreign investment laws, court files show.
The agency, the Enforcement Directorate, sent a so-called show cause notice to Flipkart, the founders, and some investors in July asking them to explain why they shouldn’t be fined $1.35 billion for allegedly violating foreign investment laws. between 2009 and 2015, Reuters reported last month.
Court files and media reports on Saturday revealed that Sachin Bansal urged a state court in the southern state of Tamil Nadu to quash the agency’s message, arguing that it was issued after an excessive delay.
The judge in the case, R Mahadevan, heard the case 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 “compliant with Indian laws and regulations” and would cooperate with authorities.
The Enforcement Directorate has been investigating e-commerce giants Flipkart and Amazon.com Inc for years for allegedly circumventing foreign investment laws that strictly regulate multi-brand retailing and restrict such businesses from operating a marketplace for sellers.
Walmart took a majority stake in Flipkart in 2018 for $16 billion, its largest deal ever. Sachin Bansal sold his stake to Walmart at the time, while the other co-founder, Binny Bansal, kept a small stake.
The case concerned an investigation into allegations that Flipkart attracted foreign investment and a related party, WS Retail, and then sold goods to consumers on its retail website, which was prohibited by law, Reuters reports.
In February, a Reuters investigation based on Amazon documents showed that for years it had given preferential treatment to a small group of sellers, publicly misrepresented its ties to them and used them to circumvent Indian law. Amazon says it does not give preferential treatment to a seller.