Latest news with #foreignexchangemanagementact
Hindustan Times
4 days ago
- Business
- Hindustan Times
Madras HC upholds ED action on Xiaomi under FEMA
The Madras high court has upheld the Enforcement Directorate's action against Chinese mobile phone manufacturer Xiaomi under the foreign exchange management act (FEMA), in which the agency had ordered seizure of deposits worth ₹5,521 crore, stating that it cannot 'interfere' at this stage with the opinion formed under the FEMA rules. Madras HC upholds ED action on Xiaomi under FEMA The financial crimes probe agency had alleged that Xiaomi Technology India Pvt Ltd had remitted abroad foreign exchange worth ₹5,521 crore between 2015 and 2022 in the form of royalty payments to parent companies in violation of the law, and attached equivalent funds of the company in April 2022. The seizure was confirmed by an adjudicating authority or AA (a special director rank officer in ED) in September that year, which also issued a notice to the company stating it has 'formed an opinion' that an inquiry should be held in this case. Xiaomi India and its chief financial officer, Sameer B S Rao, through a batch of petitions, challenged the attachment, AA's formation of opinion under FEMA rules and the complaint filed by ED in June 2023. Declining to quash the proceedings, justice N Anand Venkatesh said in his order on June 25, 'It is not necessary for this Court to go deep into the reasons arrived at by the first respondent while forming an opinion. This Court only wanted to satisfy itself as to whether the first respondent had applied his mind and formed an opinion. Prima facie, there is application of mind on the part of the first respondent and at that stage, since it is the commencement of the proceedings towards actual adjudication, even a strong suspicion is enough to form an opinion.' Underlining why courts should not interfere in such cases, justice Venkatesh said - 'To understand it from the standpoint of view of criminal jurisprudence, it is more in the nature of taking cognizance of a complaint or a police report where strong suspicion is enough to proceed further with the trial. In cases of this nature, the courts must be wary while interfering with the further proceedings since the adjudication proceedings is at the nascent stage and only after formation of the opinion, the notices are provided with an opportunity of personal hearing to defend themselves'. '....this court is not inclined to interfere with the opinion formed by the first respondent (AA) under Rule 4(3) of the FEMA Rules,' the order adds. The high court, however, directed the ED to allow Xiaomi to inspect all the investigation records stating that 'Only if those documents are furnished to the petitioners (Xiaomi), they will be able to effectively defend themselves during the adjudication proceedings'. 'Hence, the missing documents from the entire record of investigation shall also be traced and furnished to the petitioners,' the order added. While seizing Xiaomi Technology India Private Limited's funds worth ₹5,551.27 crore in April 2022, ED had alleged that the company unauthorisedly remitted this amount in guise of royalty abroad which constitute violation of Section 4 of the FEMA. 'Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities. The amount remitted to other two US based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,' the ED had said then. Asserting that remittances began from 2015, a year after the company launched its operations in India, ED said 'Xiaomi India is a trader and distributor of mobile phones in India under the brand name of MI. It procures completely manufactured mobile sets and other products from the manufacturers in India. It has not availed any service from the three foreign based entities to whom such amounts have been transferred.' 'Under the cover of various unrelated documentary façade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitutes violation of Section 4 of the Foreign Exchange Management Act (FEMA). The company also provided misleading information to the banks while remitting the money abroad,' ED, which started a probe against Xiaomi in February 2022, said at that time. HT has reached out to Xiaomi for a comment.
Hindustan Times
29-04-2025
- Business
- Hindustan Times
In Delhi court, Gensol Engineering's Puneet Jaggi shifts blame to brother Anmol
NEW DELHI: Gensol Engineering Ltd co-promoter Puneet Jaggi told a Delhi court on Tuesday that he was not involved in the day-to-day affairs of the company, which is being investigated by multiple agencies, and claimed his elder brother Anmol, currently in Dubai, made all the management decisions, officials familiar with the development said. He made the claim while seeking anticipatory bail fearing arrest by the Delhi Police's economic offences wing (EOW), which is currently examining two complaints by Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency Limited (Ireda) and is set to soon file separate cases in the matter. Delhi Police had opposed the plea calling it premature. Police argued that in the absence of an FIR, the plea for anticipatory relief was not maintainable. The additional sessions judge, Kiran Gupta, at Patiala House courts granted interim protection to Puneet Jaggi, directing Delhi Police to serve a seven-day prior notice in case it decides to arrest him. A 15 April interim order by market regulator Securities and Exchange Board of India barred Gensol's promoters from the securities market and from holding any key managerial post in any listed company. Sebi said its investigation had found that the Jaggis used loans from PFC and Ireda for personal expenditure and that the company forged documents to show that it was regular in servicing its debt. The Enforcement Directorate (ED) is also currently conducting a foreign exchange management act (Fema) violation probe against the company and the promoter brothers and raided them on April 24. But it is waiting for Delhi police to file cases, so that it can launch a prevention of money laundering act (PMLA) probe as well, the officials said. The financial crimes probe agency had on April 24 questioned Puneet Jaggi during the raids, but since it cannot make arrests under Fema, he was allowed to go, they added. ED, according to officials familiar with the probe, has frozen the bank accounts of the promoters as well as of Gensol . Meanwhile, on ED's request, the bureau of immigration (BOI) last week issued a lookout circular for both brothers. In his plea for anticipatory bail, filed through advocate Ayush Jindal, Puneet Jaggi said he 'was not involved in day-to-day affairs of the company, Gensol Engineering Ltd, and the entire affairs of the company were looked after by his brother (Anmol Singh Jaggi)'. He added that he was 'merely a namesake director and all the decisions were taken by his brother, Anmol Singh Jaggi'. Puneet Jaggi has further claimed that he was focusing on the operations of another company , Prescinto Technologies Pvt Ltd, which was sold to IBM in the year 2024 and after that he only oversaw 'the administrative tasks of BluSmart Technology and was receiving a salary in consideration of his services', his application stated. Gensol's sister concern BluSmart , a ride hailing company that uses an all-electric cab fleet, has frozen operations in major cities since the Sebi order came out. Asserting that he is not a flight risk and has not made any attempts to evade the probe agencies, Puneet Jaggi said he 'is willing to cooperate during any investigation'. 'My client had no role in financial decisions or management of Gensol. He is fully cooperating with the inquiry and protection sought is not against investigation, but against sudden coercive action,' Jindal said. To be sure, India companies law states that a director is liable for the acts of their co-directors, if they were aware of such actions and did not act to prevent them.
