The Delhi High Court on Wednesday allowed Chinese smartphone maker Vivo to operate its various bank accounts frozen by the Enforcement Directorate in connection with a money laundering probe, provided it provides a bank guarantee of ₹950 crore with the agency within a week.Justice Yashwant Varma also ordered the company to provide the ED with details of its transfers and issued a notice to the investigating agency on Vivo’s plea to lift the freeze order on various bank accounts. The ED claimed that at present the proceeds of crime have been pegged at ₹1,200 crore.
The High Court also asked the company to maintain the balance of ₹251 crore which was there at the time of freezing the accounts in the bank accounts and the amount will not be used until further orders. The court gave the ED a week to file a reply to the application and posted the matter for further hearing on July 28.In addition to seeking to have the freezing order lifted, Vivo has requested permission to use the frozen bank accounts to make payments on certain liabilities. The investigating agency raided several locations across the country on July 5 as part of a money laundering probe against Vivo and related firms.
The searches were conducted under the Prevention of Money Laundering Act (PMLA) in several states, including Delhi, Uttar Pradesh, Meghalaya and Maharashtra. On July 8, the apex court directed the ED to look into Vivo’s statement seeking permission to dispose of frozen bank accounts for making payments on certain liabilities.On Wednesday, ED counsel informed the court that the representation was general in nature and then asked the company to provide additional documents, which were made available to the agency on Tuesday on a disk containing 5 GB of data. On behalf of the agency, the legal counsel said that a claim was made that payments of ₹2,826 crore had to be made under various heads, but not a single document was produced in support.
He said the agency needs at least one week to go through the data on the disk, adding that searches have now been completed and relevant material has been sent to the relevant authority. Vivo’s counsel argued that the ED can only seize what they have discovered in their search operations and not the company’s bank accounts, which have already been disclosed to all authorities. They said there was “no factual basis” behind the search operation and the freezing of the bank account was the “civic death” of the petitioner. The ED counsel had earlier informed the court that around 2014, a company – GPICPL – was incorporated on forged documents by “one person who is also a joint former director of the petitioner”.
“The FIR was registered last year. Bin Lou (petitioner’s former joint director) has set up 18 similar companies across India. A large amount of incriminating material has been found and is being analysed. All the orders of Vivo were through these 18 companies including GPICPL which itself it processed ₹1,200 crore,” he said. On 7 July, the investigating agency said that ₹62,476 crore was “illegally” transferred by Vivo to China to avoid paying taxes in India.This money is almost half of Vivo’s turnover of ₹1,25,185 crore, it said without specifying the time frame of the transaction.
In its petition, Vivo said, “As the petitioner will not have the funds available in the bank accounts, the petitioner will not be able to pay its statutory dues (such as customs, GST, TDS, etc.) to various authorities as well as other expenses (such as are salaries, rent etc.) due to which her business has now embarked on a path of commercial and civil death.” The ED filed the money laundering case after taking cognizance of a recent FIR by the Delhi Economic Offenses Department against an agency distributor based in Jammu and Kashmir, where it was alleged that several Chinese shareholders in the company forged their identity documents. The ED suspects that this alleged forgery was done to launder illegally generated funds using shell or paper companies and some of these “proceeds of crime” were diverted to stay under the radar of India’s revenue and law enforcement agencies.
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