K’taka HC rejects plea by Chinese firm Xiaomi challenging ED

Karnataka High Court has rejected Chinese firm Xiaomi’s plea towards the seizure of Rs 5,551.27 crore from its financial institution accounts by the Enforcement Directorate (ED).

A single-judge bench of Justice M. Nagaprasanna, on Friday, although dismissed the petition, upheld its maintainability.

The Chinese expertise firm is dealing with prices of violations of the provisions of the Foreign Exchange Management Act (FEMA).

The bench noticed that problem to the Constitutional validity of Section 37A of the Act by the petitioner is held to be maintainable, on the fulcrum of the allegation that it’s violative of Article 14 of the Constitution. As Article 14 is particular person centric whereas Fundamental Rights below Article 19 are citizen centric.

Appearing for the central authorities and the ED, Additional Solicitor General M.B. Nargund Amaintained that Xiaomi is a international entity and can’t keep writ petition.

Earlier, counsels for Xiaomi India had argued that the firm was being targetted as it’s a Chinese firm and different corporations are allowed to make funds of expertise royalty.

They have additionally delivered to the discover of the court docket that banks should not permitting Xiaomi to make remittances in international alternate for imports.

They argued that the corporate is required to make funds for international corporations in reference to manufacturing and advertising smartphones.

Contesting this Additional Solicitor General Nargund had defined that the authorities had no complaints if Xiaomi is agreeable to maintain the seized quantity within the financial institution and use remaining quantity.

He delivered to the discover of the court docket that on April 24 and 29, earlier than theEDhanded the order to grab Xiaomi’s financial institution accounts, there was a switch of round Rs 1,500 crore from the corporate’s financial institution accounts as per the accessible info.

However, Xiomiis sustaining that royalty funds made to 3 corporations overseas wouldn’t violate the FEMA Act. The firm additional maintained that the IT division itself had allowed it as a price added exercise.

(With inputs from IANS)