Karnataka HC asks Xiaomi to approach competent authority

Directing Xiaomi Technology India to approach a competent authority to challenge the provisional attachment order passed by the Directorate of Enforcement (ED), which also seized its Rs 5,551.27 crore on April 29, the Karnataka High Court on Friday disposed of a petition filed by the telecom company.

Justice SG Pandit made it clear that the interim order will continue till the matter is decided by the competent authority under sub-Section (3) of Section 37-A of the Foreign Exchange Management Act.

The court stated in its interim order on May 5 that Xiaomi should operate the seized bank accounts only to meet its day-to-day expenses and not to make any payments to companies located outside India. On May12, it clarified that Xiaomi is at liberty to take overdraft and use it to pay foreign entities, excluding royalty.

The court directed the competent authority to pass an order either confirming or setting aside Xiamoi’s seizure order within 60 days.Xiaomi said that From 2016 to 2022, it has paid Rs 4,673.95 crore and Rs 877.31 crore to Qualcomm and Beijing Xiaomi Mobile Software Company, respectively, as royalty for use of patents, technology and other intellectual property.

ED contended that the petitioner purchases ready-to-sell mobiles from manufacturers based in India and sells them directly to distributors without adding any technology. It has not received any service/software/intellectual property rights/technology to pay royalty, the ED argued. The court said the competent authority should decide whether the payments made by the petitioner to Qualcomm and its parent company could be considered as royalty or could attract Section 4 of FEMA.

Premature release of convicts: HC issues notice to govt
The Karnataka High Court on Friday issued a notice to the state government on a public interest litigation (PIL) questioning guidelines denying premature release of life term convicts who have completed 14 years. The petitioner contended that, currently, there exist numerous life convicts across prisons in Karnataka who have served substantial and lengthy periods of time beyond 14 years in jail and are continuing to be in custody as they are rendered ineligible to be considered for premature release by the impugned guidelines. Hearing the petition filed by Justice Initiative Foundation, a division bench of Acting Chief Justice Alok Aradhe and Justice J M Khazi issued a notice to the state government. New Indian Express