HC upholds seizure of Rs 5,551 crore from Xiaomi for FEMA violation

BENGALURU: The High Court of Karnataka on Friday upheld the seizure of Rs 5,551.27 crore from Xiaomi India for violation of the Foreign Exchange Management Act (FEMA).

The Enforcement Directorate (ED) had seized the amount from the company’s account and this was upheld by the Competent Authority. Xiaomi had challenged the Competent Authority’s order in the HC.

On Friday, Justice M Nagaprasanna dismissed the petition holding that it was valid under Section 37 A of FEMA. However, liberty was granted to Xiaomi to approach the Appellate Tribunal and challenge the Competent Authority’s order under Section 37A(5).

The ED had in 2022 ordered the seizure of Rs 5,551.27 crore in the accounts of Xiaomi for allegedly violating FEMA rules and transferring money in the guise of royalty to three companies outside India; two in the USA and one in China. The company had approached the HC against this order. The HC had however ordered it to approach the Competent Authority under FEMA. The Competent Authority had upheld the seizure.

Xiaomi had approached the HC again challenging the Competent Authority’s order. After hearing the arguments, Justice M Nagaprasanna had reserved the judgement on November 17, 2022.