Consider Vivo plea for account access: Delhi HC to ED
Justice Yashwant Varma also sought the stand of the investigating agency on the company’s plea seeking to set aside the ED order of July 5 through which all its bank accounts were frozen.
The Delhi high court on Friday asked the Enforcement Directorate (ED) to consider the representation of Vivo India seeking permission to operate its bank accounts for certain payments, while posting the mobile company’s challenge against freezing of its accounts for Wednesday.
Justice Yashwant Varma also sought the stand of the investigating agency on the company’s plea seeking to set aside the central probe agency’s order of July 5 through which all its bank accounts were frozen in connection with a money laundering case.
“In the meanwhile, and bearing the financial conditions which are expressed in the petition and are also set out in a representation of July 7, 2022, this court directs the respondent to attend to that representation in light of the power of according prior permission to deal with the seized property as is envisaged under section 17(1) A of the Prevention of Money Laundering Act (PMLA),” justice Yashwant Varma said.
The matter was mentioned urgently by senior advocate Sidharth Luthra before a bench of chief justice Satish Chandra Sharma and justice Subramonium Prasad, who agreed for its listing on Friday itself.
“We have to pay tax. We have to pay TDS. We have to pay excise duties. There are 9,000 employees. There is urgency. There is a liability that is growing every day,” Luthra said.
Later during the hearing before justice Varma, senior counsel Luthra and Siddharth Aggarwal, for Vivo India, submitted that the freezing of the bank accounts has brought the functioning of the company to a standstill and there are crores of rupees that have to be paid as statutory dues apart from the payment of salaries to employees.
They contended that there was “no factual foundational basis” behind the search operation and the freezing of the bank account was the petitioner’s “civil death”.
Opposing the petition, advocate Zoheb Hossain, for the ED, submitted that the petition was “premature” as the search operation would conclude during the course of the day and the agency would then send the relevant material to the adjudicating authority under the law.
He informed the court that around 2014, a company -- Grand Prospect International Communication Private Limited (GPICPL) -- was set up based on forged documents by “one person who is also the common ex-director of the petitioner”.
He said that ₹1,400 crore came into the account of GPICPL, of which at least ₹1,200 crore has gone into various bank accounts of the mobile phone company.
“GPICPL was registered with the Ministry of Corporate Affairs (MCA) on the basis of forged and fake documents, common ex-director being Bin Lou, who had set up 18 companies across India. Orders of Vivo were being placed through these companies and GPICPL, which alone has handled ₹1,200 crore and sent it into different accounts,” the counsel contended.
He alleged that during the search operation, the employees were trying to abscond, hide the digital devices, and were non-operative.
After noting the submissions, the court asked the ED counsel to take instructions on Vivo India’s petition and posted the matter for hearing on July 14.
The ED filed the money laundering case after taking cognisance of a recent FIR of Delhi Police’s Economic Offences Wing against a distributor of an agency based in Jammu and Kashmir where it was alleged that a few Chinese shareholders in that company forged their identity documents.
On July 5, the federal probe agency raided several places across the country in the money laundering investigation against Vivo and related firms. The searches were carried out under the PMLA in several states, including Delhi, Uttar Pradesh, Meghalaya and Maharashtra.
The ED suspects this alleged forgery was done to launder illegally generated funds using shell or paper companies and some of these “proceeds of crime” were diverted to stay under the radar of Indian tax and enforcement agencies.
On Thursday, the ED said nearly half the company’s profits -- amounting to ₹62,476 crore -- had been remitted out of the country and primarily to China.
“These remittances were made to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India,” the ED said. The agency named 23 associated companies.
The ED has said that GPICPL was incorporated by Zhengshen Ou, Bin Lou and Zhang Jie with the help of one Nitin Garg, a chartered accountant. Bin Lou left India on April 26, 2018. Zhengshen Ou and Zhang Jie left India in 2021.
“ED’s investigation revealed that the same director of GPICPL, namely Bin Lou, was also an ex-director of Vivo. He had incorporated multiple companies across the country spread across various states, a total of 18 companies around the same time, just after the incorporation of Vivo in the year 2014-15 and further another Chinese national Zhixin Wei had incorporated further 4 companies,” an ED statement said on Thursday.