Vivo ED case: Vivo asks ED to unfreeze bank accounts, says action ‘endangers existence’, disrupts operations

Chinese mobile phone maker Vivo India has urged the Directorate of Law Enforcement (ED) to unfreeze its bank accounts so it can continue operations, saying the freezing of debits from its ten bank accounts has “jeopardized its very existence” in the country.

Vivo India sent a representation to ED on July 7, two days after the phone maker and 23 associated companies were raided by the central agency.

Prior to launching nationwide raids on 48 premises belonging to Vivo India and its related entities, ED contacted nine banks to order a freeze on debits from the 10 bank accounts belonging to Vivo India.

Yes Bank, HSBC, , Citibank, , Standard Chartered Bank and DBS Bank manage Vivo India accounts at branches in Gurgaon, Mumbai, New Delhi, Noida and Badshahpur.

“Our legitimate funds”

The orders issued by ED were served on Vivo India on July 6, according to the company’s representation.

Vivo India wrote to ED that it was unable to use Rs 251.91 crore lying in its accounts after the debit freeze orders. He said: “Directing the freezing of debits from all Vivo bank accounts will lead to a commercial and civil death situation, and while we are committed to cooperating with the investigation, such action is irreversible, even if it is temporary, jeopardizes the very existence of Vivo.

The company said: “The situation is further aggravated as there are immediate payments to be made for statutory dues, wages, rent, funds for day to day business operations, including refunding funds to consumers who have canceled online orders and the service of the financial facilities of various banks.”

The flow freeze has caused “hardship” to all of its operations and is “disrupting” its business operations, the company said.

“This action has the result of depriving us of using our legitimate funds to meet our operational expenses and legal dues,” he said. “If this stance continues, Vivo and its operations will come to a complete halt, which will not only result in substantial business losses to Vivo, but will also deprive the Treasury of Rs 451 crore payable for various statutory dues.”

He also said that Vivo “further exposes Vivo to penalties and litigation for failing to meet its obligations.”

Court Directions

Last week, acting on a petition filed by Vivo India, the Delhi High Court ordered ED to decide on the company’s representation.

Appearing on behalf of the company, Senior Solicitor Sidharth Luthra assisted by Solicitor Divyam Agarwal argued that monthly payments of around Rs 2,826 crore were to be made for statutory dues, salaries, rent and funds for day-to-day business operations.

Vivo India said in its July 7 representation that “we are surprised to see the orders being served on all our bankers directing them to freeze bank accounts and allow no debts until further orders from your office. Issuance of the orders, delivered to Vivo after midnight on July 5, is surprising as searches are carried out without any prior notification to Vivo.

“It is pertinent to note that at this time, Vivo is unaware of either the allegations against it, or the ‘reasons to believe’ on the basis of which the orders were placed,” the company wrote to the Ed. “Since incorporation, Vivo has undertaken substantial capital expenditure and most recently was awarded approximately 170 acres of industrial land by Uttar Pradesh to build up its manufacturing capabilities, establish a new manufacturing facility with a proposed investment of Rs 6,090 crore (approximately), and further materializing the “Make in India” initiative.

The Chinese company said it is “constantly at the forefront of job creation in India.” In addition, the said new facility will create jobs for an additional 40,000 people upon completion of all phases “, did he declare.

He wrote: ‘In the interest of continuing our business operations and (for) the nearly 9,000 employees (we currently have), ask that you allow us to operate bank accounts as normal.’

The company has assured its cooperation with the investigation.

In a press release last Thursday, ED said Vivo India poured Rs 62,476 crore – nearly half of its Rs 1.25,185 crore revenue – out of India, mostly to India. China. “These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India,” the agency said.

ED seized 119 bank accounts of various entities with a gross balance of Rs 465 crore, including fixed deposits of Rs 66 crore from Vivo India, 2 kg gold bars and around Rs 73 lakh in cash.