`We have 9000 employees. There is a liability`: Vivo India challenges freezing of bank account by ED

Vivo India approached the Delhi High Court to challenge the freezing of the company`s bank account by the Enforcement Directorate (ED) in connection with a money laundering case.

New Delhi: Vivo India on Friday approached the Delhi High Court to challenge the freezing of the company`s bank account by the Enforcement Directorate (ED) in connection with a money laundering case. Senior Advocate Siddharth Luthra on Friday mentioned the matter before the bench headed by Delhi High Court Chief Justice Satish Chandra Sharma also comprising Justice Subramonium Prasad and submitted that ED has frozen all our bank accounts.

"We have 9000 employees. There is a liability," Luthra said. The bench consented to hear the matter on an urgent basis today.

Vivo India, in the plea, submitted that grave injustice will be caused to the company due to this act of the Respondent (ED) and will negatively impact its reputation and business operations. 

The freezing of the Bank Accounts will not only impede the existing/prospective business operations of the Petitioner conducted through the Bank Accounts but will bear an adverse effect on the Petitioner`s operations in India and across the globe, the plea said. 

"If amounts in the Petitioner`s Bank Accounts remain frozen, it would not be able to pay its statutory dues to the competent authorities under various enactments, leading to the Petitioner, being in further violation of law. The freezing also prevents the payment of salaries to the thousands of employees of the Petitioner."

According to the ED, Vivo India`s nearly 23 associated firms such as Grand Prospect International Communication Pvt Ltd (GPICPL) transferred huge amounts to the firm and out of the total sale proceeds of Rs 1,25,185 crores, it remitted Rs 62,476 crores almost 50 per cent of the turnover out of India, mainly to China.

The agency said these entities are Rui Chuang Technologies Private Limited (Ahmedabad), V Dream Technology and Communication Private Ltd (Hyderabad), Regenvo Mobile Private Limited (Lucknow), Fangs Technology Private Limited (Chennai), Weiwo Communication Private Limited (Bangalore), Bubugao Communication Private Limited (Jaipur), Haicheng Mobile (India) Private Limited (New Delhi), Joinmay Mumbai Electronics Pvt. Ltd (Mumbai), Yingjia Communication Private Limited (Kolkata), Jie Lian Mobile India Pvt. Ltd. (Indore), Vigour Mobile India Private Limited (Gurgaon), Hisoa Electronic Private Limited (Pune), Haijin Trade India Private Limited (Kochi), Rongsheng Mobile India Private Limited (Guwahati), Morefun Communication Private Limited (Patna), Aohua Mobile India Private Limited (Raipur), Pioneer Mobile Private Limited (Bhubhaneswar), Unimay Electronic Private Limited (Nagpur), Junwei Electronic Private Limited (Aurangabad), Huijin Electronic India Private Limited (Ranchi), MGM Sales Private Limited (Dehradun) and Joinmay Electronic Pvt Ltd (Mumbai). 

"These companies are found to have transferred huge amounts of funds to Vivo India. Further, out of the total sale proceeds of Rs 1,25,185 crores, Vivo India remitted Rs 62,476 crores almost 50 per cent of the turnover out of India, mainly to China," ED said in a statement.

These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India.

The ED in its statement revealed the information after it carried out a search at 48 locations spanning the country belonging to Vivo Mobiles India Private Limited and its 23 associated companies such as GPICPL.ED said Vivo Mobiles India Pvt Ltd was incorporated on August 1, 2014, as a subsidiary of Multi Accord Ltd, a Hong Kong-based company and was registered at the Registrar of Companies, Delhi. It further said GPICPL was registered on December 3, 2014, at Registrar of Companies, Shimla, with registered addresses of Solan in Himachal Pradesh and Gandhi Nagar, Jammu.

The company was incorporated by Zhengshen Ou, Bin Lou and Zhang Jie with the help of Nitin Garg, a Chartered Accountant. "Bin Lou left India on April 26, 2018. Zhengshen Ou and Zhang Jie left India in 2021."

PMLA Investigation by ED was initiated by recording an Enforcement Case Information Report (ECIR) on February 3 this year on the basis of a First Information Report (FIR) registered by Kalkaji police station under Delhi Police on December 5 last year against GPICPL and its Director, shareholders and certifying professionals on the basis of a complaint filed by Ministry of Corporate Affairs. As per the FIR, GPICPL and its shareholders had used forged identification documents and falsified addresses at the time of incorporation.

The allegations were found to be true as the investigation revealed that the addresses mentioned by the directors of GPICPL did not belong to them, but in fact, it was a government building and the house of a senior bureaucrat.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 2014-15 and further another Chinese national Zhixin Wei had incorporated a further four companies. 

During raids, the ED said, due procedures as per law were followed at each premise but "the employees of Vivo India, including some Chinese Nationals, did not cooperate with the search proceedings and had tried to abscond, remove and hide digital devices which were retrieved by the search teams". 

So far, the ED said, 119 bank accounts of various entities with a gross balance to the tune of Rs 465 crores including Fixed Deposits to the tune of 66 crores of Vivo India, 2 kg gold bars, and cash amount to the tune of approximately Rs 73 lakhs have been seized under the provisions of PMLA, 2002.