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Delhi HC Allows Vivo To Operate Bank Accounts, Issues Notice To ED

New Delhi [India]: The Delhi High court on Wednesday allowed Vivo Mobile to operate its bank accounts subject to furnishing a bank guarantee of Rs. 950 crores.

The company has challenged the freezing of its bank accounts by the Enforcement Directorate (ED). The court has also sought a response from the ED to the petition. Justice Yashwant Varma on Wednesday issued notice to the ED on the plea of Vivo Mobile India Private Limited and directed them to file a reply within a week. The matter has been listed on July 28 for further hearing.

The bench allowed Vivo to operate its bank accounts by furnishing a bank guarantee of Rs. 950 crores and to maintain the balance of Rs. 251 crores already lying therein. Besides, the company will provide details of their remittances to the ED.

The bench also said that the bank guarantee should be deposited within 7 working days. In the meantime, the ED will file its reply.

Advocate Zohaib Hossain submitted that the petitioner supplied the required documents of 5GB contained in a pen drive along with the letter sent to them. Time is required for seven days to analyze these documents.

Senior advocate Siddharth Agrawal submitted that the bank accounts of the company has been frozen with Rs. 251 crores. All the transactions and flow of funds have been frozen and the petitioner is not able to operate the business and no company can operate without a bank account.

Senior Advocate Agrawal submitted that 9 bank accounts have been frozen and payment of dues and customs duties are paid from these accounts.

These accounts have to be made operational to run the business, he further submitted.
On the other hand, the ED’s counsel submitted that the proceeds of crime are disclosed but the nature is still hidden. The true nature is to be discovered. “I want to file a reply. We need at least one week’s time to analyze the 5 GB data. All our actions are illegal.”

“I will not touch the 251 crores, let me allow it to operate. We will maintain the balance. I have to make payments to suppliers and other expenses are also there,” Siddharth Agarwal submitted.

” How much money is lying there in the account?” The bench asked.

“Rs. 251 crores”, Agrawal replied. He added that these accounts are debit freezed.
Senior Advocate Siddharth Luthra, who appeared through VC, argued that the ED has frozen 251 crores. “Can bona fide be curtailed? Can’t be put to civil death. It would add additional mail to my coffin,” he said.

Advocate Zohaib Hossain for ED argued that the suspected amount is Rs. 1200 crores and only 251 crores has been debit frozen. He also said Rs.1200 crores were paid to the petitioner by GPICPL and its former director is fleeing.

“He is our distributor for Himachal Pradesh. We have 18 distributors in the country,” Agrawal submitted.

The mobile company has offered to give weekly or daily details of transactions.
The court said, “We can consider allowing you for statutory dues, and salaries but no foreign remittance.”

Senior Advocate Siddharth Luthra submitted that the components of the mobile are imported and payments have to be made for them.

Siddharth Agrawal submitted, “We will give a bank guarantee of 950 crores, please allow”. The court said, “Okay, give bank guarantee.”

Zohaib Hossain opposed the submission saying that Rs. 60000 has already gone to China, let it not be repatriated abroad, and to China.

The Delhi High Court on Friday had asked the ED to decide on Vivo India (petitioner) representation seeking permission to operate its bank accounts which were recently frozen in connection with a money laundering case.

Senior Advocate Siddharth Luthra submitted “We have 9000 employees. There is a liability,” Feezing its accounts would lead to company’s ‘civil death’, submitted Luthra.

Vivo India’s counsel had submitted that grave injustice will be caused to the company and will negatively impact its reputation and business operations.

The freezing of the bank accounts will not only impede the existing/prospective business operations of the Petitioner conducted through the bank accounts but will bear an adverse effect on the Petitioner’s operations in India and across the globe, said the petition.

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 law. The freezing also prevents the payment of salaries to the thousands of employees of the Petitioner.

Vivo India on Friday approached the Delhi High Court challenging the freezing of the company’s bank account by the Enforcement Directorate (ED) in connection with a money laundering case.

The ED in its statement had said that all due procedures as per law were followed during the said operations at each premise. 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.

According to the ED, Vivo India’s nearly 23 associated firms such as Grand Prospect International Communication Pvt Ltd (GPICPL) transferred huge amounts to the firm and out of the total sale proceeds of Rs 1,25,185 crores, it remitted Rs 62,476 crores almost 50 per cent of the turnover out of India, mainly to China.

“These companies are found to have transferred huge amounts of funds to Vivo India. Further, out of the total sale proceeds of Rs 1,25,185 crores, Vivo India remitted Rs 62,476 crores almost 50 per cent of the turnover out of India, mainly to China,” the ED said in a statement.

The ED in its statement revealed the information after it carried out searches at 48 locations spanning the country belonging to Vivo Mobiles India Private Limited and its 23 associated companies such as GPICPL.

It further said GPICPL was registered on December 3, 2014, at the Registrar of Companies, Shimla, with registered addresses of Solan in Himachal Pradesh and Gandhi Nagar, Jammu.
The company was incorporated by Zhengshen Ou, Bin Lou and Zhang Jie with the help of Nitin Garg, a Chartered Accountant.

“Bin Lou left India on April 26, 2018. Zhengshen Ou and Zhang Jie left India in 2021.”
PMLA Investigation by ED was initiated by recording an Enforcement Case Information Report (ECIR) on February 3 this year on the basis of a First Information Report (FIR) registered by Kalkaji police station under Delhi Police on December 5 last year against GPICPL and its Director, shareholders and certifying professionals on the basis of a complaint filed by Ministry of Corporate Affairs.

As per the FIR, GPICPL and its shareholders had used forged identification documents and falsified addresses at the time of incorporation.

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