India’s financial crime-fighting agency on Thursday asked a court to reinstate Xiaomi’s $725 million (about 56.24 billion rupees) freeze in Indian bank accounts as it investigates the Chinese smartphone giant’s money transfers.
The Enforcement Bureau confiscated the money, saying Xiaomi illegally transferred the funds to three entities abroad, including one of the Xiaomi Group, which it said were payments “under the guise of royalties.”
But the high court in the southern state of Karnataka put the decision on hold after Xiaomi challenged it, saying all royalties were legal.
A judge at the same court said on Thursday that the stay would continue, adding that the agency would make a formal request to reinstate the freeze later in the day.
“This matter requires further hearings,” added Judge Siddappa Sunil Dutt Yadav, who set the next hearing for May 23.
A Xiaomi spokesman did not immediately respond to a request for comment.
Xiaomi’s lawyers told the court that the bank would not allow the company to make the necessary payments, although the court allowed it to use the funds for purposes other than paying royalties.
On Thursday, a judge allowed Xiaomi to use a bank overdraft facility to make such payments.
The agency’s action comes after Xiaomi said in a court filing that its executives faced threats of “physical violence” and coercion during interrogations by law enforcement officials, claims the agency did not believe to be true.
© Thomson Reuters 2022