The Delhi High Court on Friday asked the Enforcement Directorate (ED) to decide on Vivo India’s representation seeking permission to operate its bank accounts, which were frozen by ED. The central investigating agency froze 119 bank accounts of 23 entities associated with Vivo India with a gross balance of Rs 465 cr including fixed deposits of Rs 66 cr of Vivo India, 2 kg gold bars and about Rs 73 lakh in cash under the provisions of PMLA 2002.
Earlier in the day, the smart phone company moved a petition in the High Court challenging the ED action freezing its bank accounts. While admitting the petition, the bench of Justice Yashwant Varma on Friday asked ED to take a decision on the representation that Vivo India had submitted to the agency on Thursday for allowing it to operate the bank account. The High Court bench has fixed 23 July 2022 for the next hearing.
Arguing the Vivo India’s case before the bench, Senior Advocate Siddharth Luthra submitted that ED freezing the bank accounts has brought the functioning the company to a “standstill”. “We have 9000 employees. There is a liability, freezing its accounts would lead to the company’s civil death,” Luthra told the bench. If the money in Vivo India’s bank accounts remains frozen, the company would not be able to pay statutory dues to the government authorities, leading to further violation of the law. The company will also not be able to pay salaries to thousands of employees working for it.
ED on Tuesday and Wednesday raided more than 40 places across 22 states in the money laundering case against the Chinese smart phone maker and its associated firms. ED on Thursday
had said that the company’s Indian arm “remitted” Rs 62,476 cr, almost 50% of its turnover, to China to avoid taxes.
ED officials alleged that during the raid the company and its employees, including some Chinese nationals, did not cooperate in search operations and tried to remove and hide digital devices, which were retrieved during the search, in an attempt to destroy evidence.
Reacting to the ED action against Vivo India, the Chinese Embassy on Wednesday said that the frequent investigations into Chinese companies “chill the confidence and willingness of market entities from other countries, including those from China to invest in India”. Wang Xiaojian, spokesperson of the Chinese Embassy, said in a statement, “The Chinese government has always asked Chinese companies to comply with local laws and regulations in their overseas operations and will firmly support Chinese companies to maintain their legitimate rights and interests.” Xiaojian also tweeted saying, “We hope the Indian side will abide by laws as they carry out investigation&enforcement activities&provide a truly fair, just&non-discriminatory business environment for Chinese companies investing&operating in India.” ED began its investigation after the Ministry of Corporate Affairs had lodged a complaint with police against Grand Prospect International Communication (GPICPL), its directors, shareholders and certifying professionals, alleging that Vivo India’s sister company and its shareholders had used forged documents and false addresses to register the company. According to ED officials, Nitin Garg, a chartered accountant, had helped Zhengshen Ou, Bin Lou and Zhang Jie to incorporate the company.
However, all company directors have fled the country. According to ED officials, Lou left India in April 2018, while Ou and Jie left followed him in 2021.