High Court backs Xiaomi’s Seizure of Rs.5,551 Crore

The Karnataka High Court upheld the seizure of Rs 5,551 crore from Xiaomi India for violating the Foreign Exchange Management Act (Fema) on Friday.

The cash was seized from the company’s account by the Enforcement Directorate (ED), and this was upheld by the relevant authority. The order of the competent authority has been challenged in the HC by Xiaomi.

Justice M Nagaprasanna dismissed the plea, stating that it was not valid under Fema section 37A. Xiaomi, on the other hand, was granted the right to appeal the competent authority’s order under section 37A(5). “We are investigating the situation and await the written order. We’d like to reiterate that our operations in India comply with all local laws and regulations,” stated a Xiaomi India representative in a statement. The ED had ordered the seizure of Rs 5,551 crore from Xiaomi’s accounts in 2022 for allegedly breaking Fema laws and sending money to three businesses outside India — two in the United States and one in China — under the premise of royalties.

The company had filed an appeal with the HC in response to this order. However, the HC directed it to seek the appropriate FEMA authority. The seizure had been upheld by the authorities. Xiaomi had petitioned the HC once more, this time to overturn the competent authority’s order.