Karnataka High Court on Friday dismissed the challenge by Xiaomi against The Enforcement Directorate’s (ED) order which had seized Rs 5,551.27 crore from Xiaomi India for violation of the Foreign Exchange Management Act (FEMA).
In 2022, the ED had ordered the seizure of Rs 5,551.27 crore in the accounts of Xiaomi for reportedly violating FEMA rules and transferring money to three companies outside India in the guise of royalties.
Xiaomi had challenged the order by ED in the Karnataka HC. But Justice M Nagaprasanna, on Friday, dismissed the petition saying that the seizure was valid under Section 37 A of FEMA.
According to a PTI report, Xiaomi was given the liberty to approach Appellate Tribunal and challenge the Competent Authority’s order under Section 37A(5).
The Chinese phonemaker had challenged the Constitutional validity of Section 37A of FEMA, which authorises the “Authorised Officer” prescribed by the central government to order seizure of property held outside India for violating Section 4 of the Act.
The HC in its response said that Xiaomi’s challenge to the Section is maintainable, but since there was no arbitrariness in the Section 37A, it was “Constitutional”.
