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Xiaomi India moves HC against seizure of over ?5,500-cr assets.


Date: 06-10-2022
Subject: Xiaomi India moves HC against seizure of over ?5,500-cr assets
Xiaomi India has filed a petition at the Karnataka High Court against the competent authority's confirmation of the Enforcement Directorate's (ED) order to seize the company's bank assets worth over ₹5,500 crore for allegedly violating Foreign Exchange Management Act (FEMA) provisions.

The case is listed for Thursday and will be heard by the vacation bench of Justice Sanjay Gowda, people familiar with the matter said. Xiaomi India will be taking a two-pronged approach to appeal against the order, according to them. The writ petition is the constitutional route wherein the company's lawyers will be arguing to put a stay on the ED's order.

Xiaomi India will also approach the appellate tribunal empowered under FEMA, challenging the competent authority's confirmation of the ED order. India's smartphone market leader didn't respond to ET's emailed queries.

In a major setback for Xiaomi, the competent authority last week held that the ED is right in holding foreign exchange equivalent to ₹5,551.27 crore. The ED had passed a seizure order in April against Xiaomi India for illegally remitting foreign exchange outside India under the guise of royalty payments.

The competent authority said Xiaomi India transferred the said amount in an unauthorised manner and is held on behalf of the group entity in contravention to Section 4 of FEMA. It also observed that royalty payments are nothing but a tool to transfer forex out of India and are in violation of FEMA provisions.

The ED said this is the highest amount of seizure order confirmed by the authority till date. Xiaomi has said it will take all steps to protect its reputation and interest and called the competent authority's decision a disappointment.

Xiaomi, in a public response, has previously said it will take all steps to protect its reputation and interest, and called the competent authority's decision a disappointment.

The smartphone market leader said none of the legal and factual contentions raised by the company has been addressed.

The company also clarified that it does not hold any assets outside India, claiming that Section 4 of FEMA does not even apply in this situation.

Xiaomi reiterated that 84% of the Rs 5,551.27 crore was paid to the Qualcomm group for accessing in-licensed and standard essential patents, without which its smartphones would not even work in India.

 Source Name:-Economic Times
 
   

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