The Enforcement Directorate has issued a show-cause notice of about Rs 10,600 crore to e-commerce major Flipkart and its promoters for alleged violation of the foreign exchange law, the source familiar with the matter said.

The source said the Walmart-owned company and its executives will now undergo adjudication that will be conducted by a Special Director-rank officer of the agency based in Chennai. Proceedings under FEMA are civil in nature and the final penalty, post-adjudication, can be at least three times the amount contravened under the law. The notice under various sections of the Foreign Exchange Management Act (FEMA) was issued to 10 people last month that includes Flipkart, its founders Sachin Bansal and Binny Bansal, among others. Sources added the notice was issued after completion of the investigation and the charges include violation of the foreign direct investment (FDI) rules and those that regulate multi-brand retail.

The case of alleged FDI rules violation against Flipkart has been under the ED scanner since 2012 and the agency has found alleged violations of the FEMA under various counts, including an instance of transfer and issue of security to a person or entity outside India.

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