Petitioner, a company incorporated under the

provisions of the Companies Act, 2013 is before this Court

under Article 226 of the Constitution of India praying for a

writ of certiorari to quash the order dated 29.04.2022

passed by the second respondent bearing No.F.No.

T-3/BGZO/01/2022 under Section 37A[1] of Foreign

Exchange Management Act, 1999 [for short <FEMA=],

seizing the movable properties i.e., money in the bank

account of the petitioner maintained with the petitioner9s

bankers as mentioned in the schedule to the petition and

for a direction to the respondents to conduct all further

investigation and interrogations, if any, with respect to the

petitioner through its employees or otherwise under

video/audio recording and also permit the legal counsel of

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the petitioner be present during such investigations or

interrogations, in order to prevent any form or harassment

to the representatives of the petitioner.

2.

Petitioner claims that it operates as a re-seller

and distributor of mobile phones and related products in

India. Petitioner purchases locally manufactured smart

phones for resale from third party Indian manufacturers

and apart from the above, petitioner imports spare parts,

accessories, mobile phones, televisions and certain other

internet items and lifestyle products from its group

entities. Petitioner claims that it regularly files its income

tax returns and it has been assessed up to the assessment

year 2017-18. Petitioner states that Qualcomm Inc., and

Qualcomm technologies Inc., are the world9s leading

wireless technology innovators including code division

multiple access [CDMA] technology and manufactures

semiconductors

and

provides

software

for

wireless

communications, especially in mobile devices. Petitioner

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claims that it is beneficiary of Qualcomm9s proprietary and

licensed

intellectual

property,

particularly

standard

essential patents (SEPs) that are used in the mobile

phones sold by it and therefore pays royalty for the use of

SEPs to Qualcomm. It also states that SEPs are patents

which are essential for functioning of the mobile phone in

a telecommunication network by implementing the

technical specifications or standards and that the

technology cannot be used or implemented without

implant of that patent. Since the petitioner is using

Qualcomm9s proprietary licensed intellectual property,

petitioner is said to have paid certain percentage of royalty

to Qualcomm and Beijing Xiaomi Mobile Software Co.,

Ltd., which is as follows:

Year

Payment made to

Qualcomm

Payment made to Beijing

Xiaomi Mobile Software

Co., Ltd.,

2016

870,885,769.1

Nil

2017

5,144,014,635

Nil

2018

13,224,021,361

4,217,291,050

2019

9,602,448,201

Nil

2020

7,682,814,048

71,253,494

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2021

8,498,226,532

4,484,596,937

2022

1,717,163,796

NA

TOTAL

46,739,574,342

8,773,141,481

3.

Respondent No.2, Directorate of Enforcement

on the basis of information from the credible sources that

petitioner had made certain foreign remittances in the

name of royalty to foreign based entities in violation of the

provisions of FEMA, initiated investigation. Summons

under the provisions of FEMA were issued to the Ex-

country head and Managing Director of the petitioner and

their statements were recorded. Based on the collected

information, the Authorized Officer passed seizure order

under Section 37A[1] of FEMA, which is impugned in this

writ petition.

4.

Statement of objections filed by the respondent

Nos.1 and 2 state that petitioner is engaged in the trading

of mobile phones, electronic gadgets and other accessories

under the brand name of Xiaomi. Petitioner purchases the

completely manufactured, box packed ready to sell/use

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mobile from four manufacturers based in India and

directly sells it to distributors, without adding any

technology or any other value to the purchased phones.

Petitioner

has

not

received

any

kind

of

service,

software/IPR/technology directly or indirectly. When there

is no use of any intellectual property by the petitioner,