Xiaomi has received HC relief and can now use ED-seized accounts.

On Thursday, the Karnataka high court granted Xiaomi Technology India a conditional stay in relation to an Enforcement Directorate (ED) order recovered Rs 5,551.2 crore under the Foreign Exchange Management Act (Fema), 1999 on April 29, 2022. Vacation judge Hemant Chandanagoudar stated in his judgement that the interim injunction will allow the petitioner company to conduct day-to-day business with its confiscated bank accounts. The next hearing will take place on May 12.

The petitioner contended that the payment of technology royalties to three firms outside of India would not violate Fema because the income-tax department had approved it as a deduction and a value-added activity. Xiaomi further stated that the seizure order under Section 37A of the Fema could not have been issued if there had been no allegation of foreign exchange kept by it in a foreign nation.

The court was told that technology royalty payments have been made through authorised dealers for the past six years. The ED seized the bank accounts of Xiaomi India, a wholly owned subsidiary of the Chinese company Xiaomi Group, last week. The ED is looking into the company's foreign funding, stock ownership, financial statements, and other actions.