Karnataka HC issues notice to Centre on Xiaomi's petition

The division bench of Karnataka High Court has issued a notice to the Centre on Xiaomi's petition against the single bench order in connection with seizure of Rs 5,551.27 crore for alleged violations of the Foreign Exchange Management Act (FEMA) by the Enforcement Directorate (ED).

The bench headed by Chief Justice Prasanna B. Varale and Justice M.G.S. Kamal issued the notice on Wednesday while looking into the appeal petition by Xiaomi Technology India Private Limited seeking remedy under Section 37A of the FEMA Act.

The Karnataka High Court had rejected the plea by the Chinese firm Xiaomi against the seizure of Rs 5,551.27 crore from its bank accounts by the Enforcement Directorate (ED) on April 21. The bench headed by Justice M. Nagaprasanna though dismissed the petition, upheld the maintainability of the petition.

The Chinese technology company is facing charges of violations of the provisions of the Foreign Exchange Management Act (FEMA).

The notice has also been issued to Enforcement Directorate (ED) and directed them to file objections to the appeal petition. The hearing has been adjourned to July 11.

Earlier, the counsel for Xiaomi India had argued before the single bench that the firm was being targeted as it is a Chinese company and other companies are allowed to make payments of technology royalty. They have also brought to the notice of the court that banks are not allowing Xiaomi to make remittances in foreign exchange for imports. They argued that the company is required to make payments for foreign companies in connection with manufacturing and marketing smartphones.

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