Xiaomi India permitted to take overdrafts, make payments: Karnataka HC

Bengaluru: Karnataka High Court vacation Judge Justice S. Sunil Dutt Yadav on Thursday provided relief to Xiaomi India, a major tech giant, to take overdrafts from banks and make payments. Payment of technology royalty, however, has been excluded by the court.

The interim order was extended till May 23, with the judge stating that the matter was now between the banks and petitioner company.

on Thursday also extended the interim order till May 23 and stated that the matter is now between the banks and the petitioner company.

The court had given conditional stay on the order given by the Enforcement Directorate (ED) on April 29 to seize a whopping Rs 5,513.3 crore amount. The ED has taken the step after invoking the Foreign Exchange Management Act, 1999.

Senior advocate S. Ganeshan argued that Xiaomi India was being targeted as it is a Chinese company and other companies are allowed to make payments of technology royalty. Seeking clarification on the earlier interim order on May 5, he argued that banks are not allowing Xiaomi to make remittances in foreign exchange for imports following the court order.

He explained that the company is required to make payments for foreign companies in connection with manufacturing and marketing smartphones.

Contesting this Additional Solicitor General M.B. Nargund said that the authorities have no complaints if Xiaomi is agreeable to keep the seized amount in the bank and use the remaining amount.

He brought to the notice of the court that on April 24 and 29, before the ED passed the order to seize Xiaomi's bank accounts, there was a transfer of around Rs 1,500 crore from the company's bank accounts as per the available information.

However, Xiaomi is maintaining that royalty payments made to three companies abroad would not violate the FEMA Act. The company further maintained that the I-T department itself had allowed it as a value added activity.