Delhi HC directs ED to decide Vivo’s request to defreeze accounts

Mumbai – The Delhi High Court on Friday directed the Enforcement Directorate (ED) to take a decision on Vivo Mobile India Pvt Ltd’s representation seeking permission to operate its frozen bank accounts by 13 July.

Additionally the court has also asked ED to seek instructions on Vivo’s plea challenging freezing of its nine bank accounts.

Vivo India is an arm of the popular China-based multinational technology company—Vivo Communication Technology Co Ltd that designs and develops smartphone accessories, software and online services.

The company moved the Delhi High Court on Friday against the probe agency for freezing of its bank accounts.

On Thursday, the Enforcement Directorate blocked nearly 119 bank accounts linked to Vivo’s India business and its associates that were holding Rs 465 crores , as a part of the alleged money laundering by the smartphone maker.

Moreover, the probe agency also said it had raided 48 locations of Vivo and 23 related entities this week, alleging that the sale proceeds of Vivo India were transferred out of India to show losses and avoid paying taxes. The agency also found fixed deposits of Rs 66 crore of Vivo India , 2 kg gold bars and Rs 73 lakhs in cash.

In a writ petition filed before the high court, the smartphone maker sought quashing of the ED’s 5 July order, issued against the company wherein ED had debit freezed the bank accounts of the company under section 17(1A) of the Prevention of Money Laundering Act, 2002.

Based on the petition, Vivo submitted that ‘grave injustice’ will be caused to the company due to ED’s decision while also negatively impacting the reputation and business operations of the company.

Adding that the freezing of the bank accounts will have a negative impact on the petitioner’s operations in India and around the world in addition to impeding any current or future business operations that the petitioner conducts through the bank accounts.

Mainly, Vivo argued that if funds in its bank accounts continue to be frozen, the company would be further in breach of the law if unable to pay its statutory obligations to the competant authorities under various enactments.

“The freezing also prevents the payment of salaries to the thousands of employees of the company”, Vivo said in its 97-page petition.

Vivo in its representation made to the probe agency highlighted that monthly payments of around Rs 2,826 crores have to be made towards statutory dues, salaries, rent, monies for daily business operations, etc., including refund of monies to consumers who have cancelled online orders and servicing of finance facilities from various banks.

Accordingly, given the urgency of the situation Vivo requested the ED to allow it to operate the Bank Accounts as normal within a day. ED, however, did not issue any order allowing the company to operate the bank accounts, neither did the probe agency respond to the representation made by the company.

Due to the amounts in the bank accounts being unavailable to the company, it will be unable to pay its statutory dues (such as custom duties, GST, TDS, etc.) to various authorities, as well as other expenses (such as salaries, rent, etc.), because of which, its business has now been set on a path towards a commercial and ‘civil death’, Vivo said.