The Madras High Court has dismissed petitions filed by Xiaomi Technology India Pvt Ltd and its CFO, Sameer B.S. Rao, seeking to quash Enforcement Directorate (ED) proceedings under the Foreign Exchange Management Act (FEMA) over alleged unauthorized royalty payments worth ₹5,551 crore to foreign entities.
Justice N. Anand Venkatesh, in a recent ruling, stated that the adjudication process was still in its early stage&mdash;where authorities form an initial opinion&mdash;and thus court interference would be inappropriate at this juncture.
The case stems from ED's findings that Xiaomi made royalty payments to Qualcomm Technologies Inc. (USA) and Beijing Xiaomi Mobile Software Co. Ltd (China) between 2016 and 2022 without prior approval from the Reserve Bank of India (RBI). Such transactions, especially those involving third-party remittances, are subject to RBI regulations under FEMA.
Xiaomi had argued that the payments were legitimate current account transactions that didn&rsquo;t require the RBI&rsquo;s clearance. However, the ED submitted that Xiaomi acted as a "third party" remitting funds on behalf of foreign group entities, which violated FEMA norms.
The court backed ED&rsquo;s argument, ruling that the formation of opinion under Rule 4(4) is a preliminary stage in the adjudication process, where only prima facie material is required. The court emphasised that Xiaomi would still have the opportunity to defend itself and access all relevant documents.
The ruling clears the way for ED to continue its probe and adjudication process.
[Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed.]
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Madras HC Rejects Xiaomi's Plea Against FEMA Case by ED

Court rules proceedings can continue, says it's premature to interfere at ‘opinion formation’ stage in ₹5,551 crore FEMA violation case

Madras HC Rejects Xiaomi's Plea Against FEMA Case by ED

Court rules proceedings can continue, says it's premature to interfere at ‘opinion formation’ stage in ₹5,551 crore FEMA violation case

July 4, 2025 | 01:13 IST