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BENGALURU: The Karnataka HC directed the competent authority under Fema to hear and dispose of Xiaomi India’s appeal challenging a seizure order passed by the ED. The company had challenged the April 29 order passed by ED, seizing Rs 5,551 crore kept in its bank accounts for alleged violation of FEMA regulations.
“The competent authority appointed by the Centre under Section 37A of Foreign Exchange Management Act (Fema) 1999, is directed to issue a notice of hearing to the petitioner, hear the parties concerned and pass appropriate order either confirming or setting aside the seizure order within a period of 60 days from the date of making available a copy of this order,” Justice SG Pandit said on Tuesday while disposing of the petition filed by Xiaomi India. Until the competent authority takes a decision, the interim orders passed by the high court will stay in effect, the court said.
In a ruling on May 5, the high court stayed the April 29 order subject to the condition that the petitioner should operate bank accounts only to meet expenses for its day-to-day activities and observed that the order will not confer any right on the petitioner to make payment in the form of royalty or in any other form to the companies located outside India.
Further, on May 12, the HC clarified that the petitioner is at liberty to take overdraft and make payments from such overdrafts to foreign entities, excluding payment of royalty. The petitioner had claimed that it operates as a re-seller and distributor of mobile phones and related products in India. The petitioner had contended that since it is using Qualcomm’s proprietary licensed intellectual property, the petitioner had paid money as technology royalty, particularly for standard essential patents that are used in the mobile phones sold by Xiaomi.
“The competent authority appointed by the Centre under Section 37A of Foreign Exchange Management Act (Fema) 1999, is directed to issue a notice of hearing to the petitioner, hear the parties concerned and pass appropriate order either confirming or setting aside the seizure order within a period of 60 days from the date of making available a copy of this order,” Justice SG Pandit said on Tuesday while disposing of the petition filed by Xiaomi India. Until the competent authority takes a decision, the interim orders passed by the high court will stay in effect, the court said.
In a ruling on May 5, the high court stayed the April 29 order subject to the condition that the petitioner should operate bank accounts only to meet expenses for its day-to-day activities and observed that the order will not confer any right on the petitioner to make payment in the form of royalty or in any other form to the companies located outside India.
Further, on May 12, the HC clarified that the petitioner is at liberty to take overdraft and make payments from such overdrafts to foreign entities, excluding payment of royalty. The petitioner had claimed that it operates as a re-seller and distributor of mobile phones and related products in India. The petitioner had contended that since it is using Qualcomm’s proprietary licensed intellectual property, the petitioner had paid money as technology royalty, particularly for standard essential patents that are used in the mobile phones sold by Xiaomi.
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