The Karnataka High Court has allowed the Enforcement Directorate to keep the seizure order on Genpact's Gurugram headquarters but directed the agency to reconsider the firm's rejected $100 million GIFT City investment. The ruling mandates that the regulator must provide written reasons for its denial, while the company remains under investigation regarding 2015 debt transactions.
The Karnataka High Court has delivered a mixed verdict in the ongoing legal dispute between the Enforcement Directorate (ED) and Genpact India. The court has upheld the regulator's decision to seize the company’s Gurugram headquarters. This action was taken by the agency under the provisions of the Foreign Exchange Management Act (FEMA), stemming from an investigation into financial transactions dating back to 2015.
While the seizure remains in effect, the court clarified that Genpact can continue its daily business operations from the facility. However, the property is currently under encumbrance, which means the company is legally restricted from selling, mortgaging, or transferring the asset until the investigation is fully resolved.
The investigation focuses on $737.5 million in foreign debentures issued in 2015. The Enforcement Directorate alleges that these financial maneuvers involved funneling capital into India only to repatriate it shortly after, which the agency claims left the local entity with the resulting debt obligations. Genpact has maintained its position throughout the process, noting that the debt was repaid between 2018 and 2023.
In a partial victory for the company, the High Court addressed the ED’s previous summary denial of Genpact’s proposal to invest $100 million into a treasury center at GIFT City. The court ruled that an ongoing investigation does not serve as an automatic ground for rejecting new investment projects. The judiciary has ordered the regulator to stop issuing blanket refusals and instead provide specific, written justification for its decisions.
The case now moves to a procedural review phase. The court has granted Genpact a 10-day window to submit supplemental documentation for the GIFT City project. Following this submission, the Enforcement Directorate is required to issue a reasoned decision within another 10 days. The court also noted that the regulator should consider extending the investment deadline for the project given the legal delays.
For investors and stakeholders, the key monitorable will be the outcome of this 10-day review process. While operations in Gurugram remain unaffected, the restriction on the asset and the progress of the GIFT City investment plan will depend on the final decision rendered by the regulator after the mandated review.