Sub judice protection under FEMA barred fresh notice and complaint based on the same cause of action, leading to quashing.

A show-cause notice and complaint under FEMA were found unsustainable because they arose from the same cause of action already under challenge in a pending writ petition concerning Section 37A proceedings. The court treated the later notice and complaint as a fresh form of the same disputed action, and noted that a status quo order was already operating in the earlier matter. As the issue remained sub judice and protected by the subsisting interim order, continuation of the later proceedings was not permitted, and the notice and complaint were quashed.

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Issues: Whether the show-cause notice dated 11.09.2023 and the complaint initiated under Section 16(3) of the Foreign Exchange Management Act, 1999, could be sustained when they arose from the same cause of action already under challenge in a pending writ petition concerning proceedings under Section 37A of the Foreign Exchange Management Act, 1999 and were said to be affected by the subsisting status-quo order.

Analysis: The earlier writ petition had already questioned the legality of proceedings under Section 37A of the Foreign Exchange Management Act, 1999, and a status-quo order was stated to be operating. The impugned notice and complaint were found to be a continuation of the very same cause of action, only in a fresh form. Since the matter was already sub judice and protected by the existing interim order, continuation of the later proceedings was not permitted.

Conclusion: The impugned show-cause notice and complaint were quashed, and the proceedings could not be continued independently of the pending writ petition.

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