Delhi High Court To ED: Decide On Vivo’s Plea On Frozen Accounts

After Vivo India approached Delhi HC, filing a plea against the Enforcement Directorate’s (ED) move to freeze its bank accounts, the court left the decision to ED on the same.

While Justice Yashwant Varma refused to grant any interim relief to Vivo, he asked the ED to “attend to Vivo’s representation of July 7 in light of its power of according prior permission to deal with the seized property as is envisaged under section 17(1) A of PMLA.”

The court noted that the directions were issued while ‘bearing in mind the financial implications’ that the ED order will have on Vivo.

The Delhi High Court has asked ED to decide on the plea by Wednesday.

Senior counsel Siddharth Luthra and counsel Divyam Agarwal, appearing for the company, argued that ED’s action will prevent Vivo from carrying out its liabilities like custom duties and GST among others. The counsels, therefore, sought the defreezing of Vivo’s bank accounts.

Vivo also argued that ED’s move will hamper the company’s day-to-day operations as it needs around INR 2.826 Cr towards its monthly payments, including salaries, rents and refunds against cancelled orders.

ED’s order to freeze Vivo’s accounts came after the federal agency conducted searches across 48 locations of the company and its associated entities on Tuesday (July 5).

Vivo’s July 8 petition at the Delhi HC stated that the company’s business ‘has not been set on a path towards a commercial and civil death’, citing the unavailability of the amount in bank accounts. 

The petition added that the orders were passed without even identifying or quantifying the amount that allegedly is ‘proceeds of crime’ or is otherwise allegedly involved in money laundering. Notably, that is a prerequisite for exercising powers under Section 17(1A).

The ED told the HC that it has recovered a large amount of incriminating evidence during the raids at Vivo’s locations. During the raids, the ED also seized INR 73 Lakh in cash and 2 kg gold bars.

ED’s counsel argued that out of the INR 1,400 Cr that came into the account of Grand Prospect International Communication (GPICPL), around INR 1,200 Cr went to Vivo.

The ED had also said on Thursday that out of the total turnover of INR 1,25,185 Cr, Vivo India ‘remitted’ INR 62,476 Cr, almost half of it to foreign entities, mainly to China to avoid paying taxes in India.

“There is some serious concern and there are prima facie proceeds of crime,” the ED said.

The whole investigation started after the ED took cognisance of a recent FIR filed with the Delhi Police’s Economic Offences Wing against a distributor in Jammu and Kashmir. In the FIR, it was alleged that a few Chinese shareholders in that company forged their identity documents to open several shell companies for the purpose of laundering money for Vivo. 

At the same time, Vivo India’s primary Chinese stakeholders, Bin Lou, Zhengshen Ou and Zhang Jie have left India a while ago, making the case considerably weaker for the Chinese smartphone maker.

China, however, has not taken the investigation into Vivo kindly. Warning of ‘chilling impact on business confidence’, the spokesperson of the Chinese Embassy in India Wang Xiaojian said that the repeated investigation into Chinese companies damages the said companies’ goodwill.