SUMMARY
On Thursday, the ED seized 119 bank accounts belonging to Vivo India and associate companies, with a balance of around INR 465 Cr
Vivo India said grave injustice will be caused to the company due to the freezing of its accounts and it will negatively affect its business operations and reputation
Out of the total sale proceeds of INR 1,25,185 Cr, Vivo India remitted INR 62,476 Cr, almost half of its turnover, mainly to China: ED
Vivo India approached the Delhi High Court on Friday to challenge the Enforcement Directorate’s (ED) move to seize the bank accounts of the company in connection with an ongoing money-laundering investigation.
On Thursday, the ED seized 119 bank accounts belonging to Vivo India and associate companies, which had a balance of around INR 465 Cr. The amount also included up to INR 66 Cr in fixed deposits, gold bars weighing 2 kgs and cash worth INR 73 Lakh.
On behalf of Vivo India, senior advocate Siddharth Luthra brought up the matter before the bench headed by Delhi High Court Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad. Luthra submitted that the ED had frozen all bank accounts of Vivo. “We have 9000 employees. There is a liability,” he added.
In a plea submitted to the court, Vivo India stated that grave injustice will be caused to the company due to the ED freezing its accounts and will negatively affect its business operations and reputation. The plea also added that the move will also impact Vivo’s operations in India and around the world.
“If amounts in the Petitioner’s Bank Accounts remain frozen, it would not be able to pay its statutory dues to the competent authorities under various enactments, leading to the Petitioner, being in further violation of the law. The freezing also prevents the payment of salaries to the thousands of employees of the Petitioner,” the plea read.
Vivo’s move comes after ED uncovered that around 23 of Vivo India’s associated firms transferred a significant amount of money to the parent firm. Besides, out of the total sale proceeds of INR 1,25,185 Cr, Vivo India remitted INR 62,476 Cr, almost half of its turnover, mainly to China.
The associated entities were spread across Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi NCR, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Uttarakhand, Uttar Pradesh and West Bengal, according to the ED.
The ED said that these remittances were made to disclose losses in the Indian incorporated companies to avoid paying taxes in India. It added that it carried out searches at 48 locations across the country of Vivo India and 23 of its associate companies on Tuesday.
The ED also added that during the raids, the due procedures as per the law were followed but “the employees of Vivo India, including some Chinese nationals, did not cooperate with the search proceedings and had tried to abscond, remove and hide digital devices which were retrieved by the search teams”.
The ED noted that Vivo Mobiles India Pvt Ltd was incorporated in August 2014 as a subsidiary of Multi Accord Ltd. The company was incorporated by Zhengshen Ou, Bin Lou and Zhang Jie, with the help of a chartered accountant, Nitin Garg.
“Bin Lou left India on April 26, 2018. Zhengshen Ou and Zhang Jie left India in 2021,” the agency said.
Vivo is not the first Chinese company to be under the scrutiny of investigating agencies in India. The relations between both the countries were hit by the violent clashes between the Indian and Chinese soldiers in 2020 in eastern Ladakh in which 20 Indian soldiers were killed. The Indian government then went on to ban many Chinese apps in the country on the grounds of national security.
Besides Vivo, Xiaomi and Huawei are also facing investigation.
