HC asks ED to decide on Vivo's plea to operate its bank accounts

The plea was mentioned before a bench of Delhi High Court Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad who agreed to list it for Friday

The Delhi High Court on Friday directed the Enforcement Directorate to decide by July 13 on a representation by Vivo Mobile India for permission to operate its nine bank accounts, frozen after raids of its 49 premises during the probe into a money laundering case.

The Chinese mobile phone's Indian subsidiary manufacturer approached the HC against the investigative agency's July 5 order.

In its plea, the company sought a direction to quash the ED's order, contending the freeze order was in "stark contravention to the mandate of Section 17 of the Prevention of Money Laundering Act. The order was passed mechanically without any application of mind, it claimed.

Also Read | Vivo remitted Rs 62,476 crore to China to avoid getting taxed in India, says ED

Justice Yashwant Varma refused to grant any interim relief to the company.

The court, however, asked the ED to “attend to the 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 directions were issued while “bearing in mind the financial implications” that the ED’s order will have on Vivo.

The bench fixed the matter for further hearing on Wednesday, July 13.

Senior advocate Sidharth Luthra, appearing for Vivo, submitted that the ED's action will prevent the company from carrying out its statutory and regulatory liabilities like custom duties and GST among others. Besides, it will hamper its day-to-day operations as it needs around Rs 2,826 crore towards its monthly payments, including salaries, rent for the premises, and statutory refund against cancelled orders of customers.

Advocate Zoheb Hossain, appearing for the ED, submitted that the search and seizure process was ongoing and would conclude by the end of Friday. A large number of incriminating materials recovered during raids were being analysed, he said.

The ED had on Thursday said the Indian arm of Vivo “remitted” almost 50% of its turnover, which is Rs 62,476 crore, mainly to China in order to avoid paying taxes in India. It had also seized 73 lakh cash and 2 kg gold bars after its pan-India raids that were conducted on July 5 across the country, including Delhi, Uttar Pradesh, Meghalaya and Maharashtra, under PMLA against Vivo and 23 related firms.

The ED filed the money laundering case after taking cognisance of a recent FIR of Delhi Police's Economic Offences Wing against a distributor of an agency based in Jammu and Kashmir. 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. It claimed an ex-director of Vivo, Bin Lou, left India in 2018 after incorporating a number of companies that are now under its scanner.