Chinese mobile manufacturer Vivo on Friday, 8 July, moved a plea in the Delhi High Court challenging the freezing of its various bank accounts by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002.
In the writ petition, Vivo said that the orders against it were in stark contravention to the mandate of Section 17 of the PMLA, as the same did not entail any reasons for freezing, let alone cogent "reasons to believe" as to why the bank account should be frozen. It is a generic order passed mechanically without any application of mind, it said.
'Blanket Orders Causing Irreparable Hardship'
The petition said the total non-application of mind and arbitrariness was manifest from the fact that even the amount in question had not been quantified by the respondent and blanket orders for freezing all the bank accounts had been passed, causing substantial and irreparable hardship to the petitioner and gravely impacting its business and reputation.
It further said the frozen accounts were utilised for the payment of salaries and statutory dues, opening of letter of credits for the petitioner's operations, and for all kinds of expenses necessary for day-to-day functioning of the petitioner.
"Monthly payments of around Rs 2,826 crore have to be made towards statutory dues, salaries, rent, monies for daily business operations. Due to the freezing of the bank accounts, the petitioner will be unable to honour its aforesaid obligations not only towards various statutory authorities, but also towards its employees and customers," it said further.
Vivo has told the court that the circulation of the news about the ED searches has maligned its image among its suppliers and customers, "leading to reputational and financial loss, and irreparable damage to the years of goodwill developed" by it.
"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 across the globe," it added.
(Published in an arrangement with IANS.)
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