- The funds were seized by the Enforcement Directorate earlier this month
- Xiaomi also blamed the ED for recording statements ‘under coercion’
- The judge allowed Xiaomi to use a bank overdraft facility
The Karnataka High Court has refused to reinstate a freeze on Rs 5,551.27 crore belonging to Chinese smartphone giant Xiaomi. The funds were seized by the Enforcement Directorate earlier this month in relation to ‘illegal outward remittances but the seizure stayed after Xiaomi appealed.
Furthermore, Xiaomi also blamed the ED for recording statements ‘under coercion’ and lodging charges- foreign exchange violation, as an afterthought. On Thursday, the high court affirmed its decision to stay the order and allow Xiaomi access to the funds for non-royalty uses. The next hearing is scheduled for May 23.
The court further noted that the banks were not allowing Xiaomi to access money even though it can for purposes other than paying royalties. Hence, the judge allowed Xiaomi to use a bank overdraft facility. Reportedly, a courtroom battle between Xiaomi and the Enforcement Directorate comes after the Central investigation agency accused the company of baseless allegations stating that its officers had threatened employees and their families with violence.
On Saturday, the Enforcement Directorate said, “Allegations statement of the officials of Xiaomi India was taken under coercion by ED is untrue and baseless…. officials of Xiaomi India deposed their statements before ED under FEMA voluntarily in most conducive environments on various occasions.”
As per Xiaomi’s May 4 filing, ED officials warned ex Xiaomi India head Manu Kumar Jain and current chief financial officer Sameer BS Rao, and their families of dire consequences if they did not submit a statement as desired by the investigation agency. The Chinese company is under investigation for almost four months, over allegations of sending money to three foreign entities in the guise of royalties.