Lookout notice against Huawei executive set aside

Published on Aug 31, 2022 09:07 AM IST

Permitting Li Xiongwei to travel abroad observed that “it is highly unlikely that applicant will indulge in act of terrorism or offence against Indian state

The IT department raided the Gurugram office of the Indian subsidiary of the Chinese firm on February 15 and initiated proceedings under sections 275-B and 278-B of the Income Tax Act (pertaining to failure in facilitating an authorized officer to inspect the books of accounts). (Reuters)
The IT department raided the Gurugram office of the Indian subsidiary of the Chinese firm on February 15 and initiated proceedings under sections 275-B and 278-B of the Income Tax Act (pertaining to failure in facilitating an authorized officer to inspect the books of accounts). (Reuters)
ByNeeraj Chauhan

Huawei Telecommunications (India) chief executive officer Li Xiongwei’s departure from India cannot be “detrimental to sovereignty, security and integrity of India” nor it is “detrimental to bilateral relations or strategic and/or economic relations of India”, a Delhi court said on Monday while setting aside a lookout circular (LOC) issued against him by the Income Tax department.

Permitting Li to travel abroad, Anurag Thakur, additional chief metropolitan magistrate (ACMM) further observed that “it is highly unlikely that applicant will indulge in act of terrorism or offence against Indian state. Thus, an apprehension that Li may leave India and may never come back cannot be grounds to keep him India till the culmination of all legal proceedings.”

The IT department raided the Gurugram office of the Indian subsidiary of the Chinese firm on February 15 and initiated proceedings under sections 275-B and 278-B of the Income Tax Act (pertaining to failure in facilitating an authorized officer to inspect the books of accounts). The department has claimed that Huawei reduced its taxable income in India by repatriating around 750 crore to its parent, even as its income from local operations declined.

The tax trouble also comes against the backdrop of security concerns over Huawei’s equipment, including that for 5G. India did not allow Huawei in its 5G trials; the US and some countries in Europe have also barred the use of Huawei equipment in communication networks out of fears that these may provide a backdoor to Chinese agencies.

A Chinese citizen, Li was stopped at Delhi airport from boarding a Thai Airways flight to Bangkok based on the LOC on May 1. His lawyers, Vijay Aggarwal and Nagesh Kumar Behl, opposed the LOC saying it was opened in an offence which was non-cognizable and bailable, adding that stopping Li’s travel to Bangkok dealt “a huge blow to his reputation as well as Huawei”. On the previous hearing in mid-August, Aggarwal said: “I (Li) am a Chinese and not a terrorist”, an apparent reference to a dialogue from a Bollywood movie ‘My Name is Khan’.

The IT department, however, said that if allowed to leave, Li may never come back and that India doesn’t have an extradition treaty with China. Rejecting the arguments of the IT department, the court said six months have passed since the LOC was issued but the investigation is nowhere near completion.

Asserting that Li is entitled to equality, the court said: “The applicant cannot be treated differently solely on the ground of his nationality and cannot be restricted from international travel by issuance of LOC, when Indian nationals facing legal proceedings in more serious offence are allowed to travel outside India”. HT has seen a copy of court order.

The court ordered imposing financial conditions on Li Xiongwei to compel him to follow the directions of the authorities. Noting that Huawei is not a fly-by-night operator and generates considerable revenue from India, the court said: “It is prudent that a condition be imposed upon payment of salaries, bonus, ESOPs and other benefits to the applicant (Li) by the accused company (Huawei), so as to exercise some degree of control over him. There is no ground to keep the LOC open against the applicant and the LOC is liable to be set aside”.

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