Delhi HC upholds trial court order quashing lookout circular against Huawei CEO Li Xiongwei
Sep 21, 2022
New Delhi [India], September 21 : The Delhi High Court has refused to set aside the Trial Court order that quashed a lookout circular (LOC) against Huawei Telecommunications (India) chief executive Li Xiongwei issued by the Income Tax Department.
However, Delhi HC modified the Trial Court order and increased the amount of fixed deposit to be submitted in the court from Rs 5 lakh to Rs 5 crore.
The bench of Anu Malhotra in a judgement passed on September 20 said "in the circumstances, though it is not considered appropriate by the Court to set aside the impugned the August 29 order of the Trial Court which has set aside the LOC against the respondent/ Huawei CEO Li Xiongwei in addition to the conditions imposed by the Trial Court."
The Court said the respondent be permitted to travel out of India only subject to the respondent submitting an FDR to the tune of Rs 5 crores drawn on a nationalized Indian bank in the Trial Court which on deposit is to be renewed in an automatic renewal mode which on the failure of the respondent to join the investigation twice shall stand forfeited and which also on failure to appear before the Trial Court as and when directed by the Trial Court shall be forfeited.
Court further observed that Undoubtedly taking into account the factum that there is no extradition treaty of our country with China, the respondent thus falls within the category of a flight risk, but, the factum that he is alleged to have committed only a non-cognizable and an alleged bailable offence can also not be overlooked.
The verdicts that the petitioner has relied upon all relate to the alleged commission of non-bailable offences in which the issuance of the LOCs have been upheld in as much as they relate to offences inter alia punishable under the Prevention of Money Laundering Act, 2002, Prevention of Corruption Act, 1988, the Central Goods and Services Tax Act, 2017 and the non-bailable offences under the Indian Penal Code, 1860, the court said.
Earlier, Income Tax Department submitted that the non-provision of the books of accounts, non-provision of relevant e-mail dump of the CFO (main person handling financial transactions), sending of substantial funds (around Rs 750 crores) outside India as dividends just prior to the search, coupled with the evidence indicating substantial tax evasion in the case were sufficient reasons for concluding that the economic security of the State could be adversely affected if the relevant Look Out Circular was not issued.
The Income Tax Department further submitted that since the CFO was not present in India, the CEO, being the officer of the company responsible for providing the books of accounts and other details, would be required to be present in India for facilitating determination of taxable income of the company, and thus a Look Out Circular was issued against the respondent herein because of his conduct during the course of the Search Action demonstrated that he was a flight risk and that he did not wish to cooperate with the investigation proceedings at hand.
Advocate Vijay Kumar Aggarwal appeared for Li Xiongwei and submitted that there can be no discrimination between a foreign national and an Indian national with it having been submitted by the respondent that the right to protection of life and personal liberty (right guaranteed against State Action) is available even to a foreign citizen in terms of Article 21 of the Constitution of India.
Li Xiongwei, who is a Chinese national, was recently stopped at New Delhi airport and not allowed to board a flight to Bangkok to attend a meeting on behalf of Huawei Telecommunications (India). His boarding pass was cancelled and was not returned to him due to the LOC.
