Delhi High Court Asks Vivo To Pursue Remedies Before PMLA Appellate Tribunal In Plea Against Freezing Of Debt Accounts By ED

Hearing the plea moved by Vivo India against the order of Enforcement Directorate to debit freeze its bank accounts, the Delhi High Court has directed Chinese smartphone manufacturer to pursue its appellate remedies before the Appellate Authority under Prevention of Money Laundering Act, 2002.

Justice Prathiba M Singh noted that Vivo India has preferred an appeal before the Appellate Tribunal last month against the order passed by Adjudicating Authority confirming the debit freeze order.

“Considering the fact that the writ petitions itself were directed against the initial debit freeze orders, which have now merged with the final order passed on 21st December, 2022 and the Petitioner has already availed of the appellate remedy, it is deemed appropriate to relegate both the Petitioners to pursue their appellate remedies before the Appellate Tribunal, under the PMLA, in accordance with law,” the court said.

The court directed Vivo India to prefer interim application before the Appellate Tribunal along with its appeal which may be taken up within four weeks and shall be adjudicated expeditiously.

“The interim arrangements, which have been directed by this Court vide order dated 13th July, 2022 and 1st September, 2022, shall continue till the time the Appellate Tribunal decides the interim applications or till the final decision in the Appeals, in terms of the orders that may be passed by the Tribunal,” the court added.

On July 13, 2022, a coordinate bench of the court had passed an interim order directing Vivo India to furnish a bank guarantee of Rs.950 crores. It was also directed to maintain a credit balance of Rs. 251 crores in the bank accounts.

Later, on September 01 last year, the court directed the Chinese smartphone manufacturer to maintain a credit balance of Rs.10,45,94,868.9. In the meantime, the Adjudicating Authority confirmed the debit freeze order on December 21, 2022.

Justice Singh directed that the interim applications and the final adjudication of Vivo India’s appeal may be conducted expeditiously before the Appellate Tribunal within four weeks, either from filing of the appeal or first listing along with interim applications.

Responding to Vivo’s plea, the ED in its affidavit filed in July last year alleged that the company's seized bank accounts were "clearly involved in money laundering".

The central investigating agency had also submitted that it was not a case of mere commission of an economic offence but an "attempt to destabilize the financial system of the country and also to threaten the integrity and sovereignty of the nation."

It is ED’s case that as per its investigations, Bin Lou, the Director of Grand Prospect International Communication Pvt Ltd, a company already under investigation for charges of money laundering, had incorporated multiple companies all over the country and used them to transfer huge amount of funds to Vivo India.

It has alleged that out of the total sale proceeds of Rs. 1,25,185 crores, Vivo India remitted Rs. 62,476 crores. i.e, almost 50% of the turnover out of India, mainly to China.

These remittances were made to claim huge losses by these companies to avoid payment of taxes in India, ED alleged.

Title: VIVO MOBILE INDIA PVT. LTD v. DIRECTORATE OF ENFORCEMENT

Citation: 2023 LiveLaw (Del) 278

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