The Supreme Court has overturned the confiscation of properties belonging to Accord Distilleries & Breweries Pvt Ltd and its directors, including DMK MP S Jagathrakshakan and his family, citing procedural lapses and a lack of legal basis.
A bench of justices Vikram Nath and Sandeep Mehta found that the confiscation order was unsustainable due to a flawed premise and ignored prior findings that went to the root of the case.
The court noted that the competent authority under the Foreign Exchange Management Act (FEMA) had refused to confirm the seizure of the company's assets, rendering the subsequent show cause notice and adjudication proceedings arbitrary and contrary to law.
The bench held that once the competent authority declined to confirm the seizure, the foundational facts necessary to sustain the proceedings stood eroded, making the confiscation order legally untenable.
The court also flagged another infirmity - the reliance placed by the adjudicating authority on observations made by the Madras High Court, which had incorrectly assumed that the seizure stood confirmed.
In view of these cumulative infirmities, the bench declared the confiscation order and the underlying adjudication proceedings to be unsustainable, setting aside the 2024 orders of the Madras High Court and restoring the matter to the stage of the show cause notice.
The court directed that the appellate authority must first decide the pending appeal against the competent authority's order within two months, after which the adjudication proceedings can resume without being influenced by earlier observations.
