Delhi High Court Upholds Chinese National’s ED Remand Of Three Days In Vivo Money Laundering Case

The Delhi High Court has upheld a trial court order remanding a Chinese national to three days of Enforcement Directorate’s custody in a money laundering case registered against smartphone manufacturer Vivo.

Justice Swarana Kanta Sharma said that the trial court order takes into account the mandate of compliance of provisions of Section 19 and 45 of the PMLA.

The court said that the grounds of arrest and the remand application clearly mentioned the involvement of Chinese national Guangwen Kuang alias Andrew from the very initial stage i.e. “incorporation of the companies in question throughout the country which had ultimately resulted in acquiring proceeds of crime and siphoning off the same.”

Justice Sharma said that the impugned order took note of the allegations leveled against the accused persons as well as the investigation conducted so far by ED. The court said that the trial court also perused the written grounds of arrest placed on record and also took note of the fact that the grounds of arrest in writing were supplied to the accused persons in compliance of the Supreme Court judgment in Pankaj Bansal case.

“After perusing the records of the case, the learned Sessions Court has categorically recorded that prima facie there was no violation of Section 19 of PMLA since the investigating officer, from the material and investigation conducted so far, had formed an opinion that the accused persons were guilty of offence of money laundering and had affected their arrest accordingly,” the court said.

The FIR was registered was registered in 2021 against M/s. Grand Prospect International Communication Pvt. Ltd. on the basis of a complaint lodged by the Union Ministry of Corporate Affairs. It was alleged that some Chinese shareholders of the entity used forged identification documents and falsified addresses, while projecting itself to be a subsidiary company of Vivo.

The ED alleged that the company was engaged in the business of distribution and providing aftersales services of Vivo mobile phones and accessories in Himachal Pradesh, Jammu and Kashmir and Leh and Ladakh.

It was alleged that since the incorporation of the company in 2014 till December of 2021, it had received total credits of approximately Rs.1487 crores in its bank account through its business activities and approximately Rs.1200 crores were transferred to the accounts of Vivo Mobiles India Pvt. Ltd.

The allegations against the Chinese national were that he played a pivotal role in incorporation of entire setup of Vivo group companies in India and that he regularly coordinated with other companies in this regard.

“….this Court does not find any infirmity in the order of remand dated 10.10.2023 challenged before this Court as the same takes into account the mandate of compliance of provisions of Section 19 of PMLA as well as Section 45 of PMLA,” the court said while dismissing the plea.

Yesterday, the trial court extended the ED custody by three more days of the Chinese national and three other accused persons in the case.

Counsel for Petitioner: Mr. Abhishek Manu Singhvi and Mr. Siddharth Agarwal, Senior Advocates with Mr. Mudit Jain, Mr. Aashul Agarwal, Mr. Kunal Dewan, Mr. Aarohi Mikkilinani, Ms. Shradhanjali Parida, Mr. A. Singhvi, Mr. Vivek Kumar Singh, Mr. Vishwajeet, Ms. Rudrali, Ms. Mahima Malhotra and Mr. Ayush Goswami, Advocates.

Counsel for Respondents: Mr. Manish Jain, Special counsel for R-1/E.D.

Title: MR. GUANGWEN KUANG @ ANDREW v. DIRECTORATE OF ENFORCEMENT & ANR.

Citation: 2023 LiveLaw (Del) 963

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