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On ED’s plea, HC nixes order to release some funds of finance firm to pay employees

Within a short span of time, the company made foreign outward remittances worth Rs 429.29 crore in the name of payments for non-existent software services received from related foreign companies. 

Published: 27th February 2022 04:21 AM  |   Last Updated: 27th February 2022 04:21 AM   |  A+A-

Enforcement Directorate (File Photo | PTI)

Enforcement Directorate (File Photo | PTI)

By Express News Service

HYDERABAD: Responding to an appeal by the Enforcement Directorate (ED), a bench of the Telangana High Court has set aside an order by a single judge allowing PC Financial Services Pvt Ltd (PCFSPL) to release over Rs 15 crore to enable it to pay its staff their salaries. 

PCFSPL is the force behind the mobile loan app companies. During the course of the investigation, ED had frozen the bank accounts of PCFSPL, forcing the company to move court seeking the release of funds to pay its staff their salaries and meet the day-to-day expenditure and pay statutory dues.

After hearing the petitioner, the single judge directed the ED to release Rs 15,35,45,317 within a week and further directed the petitioner to furnish the details of utilisation of this amount within two weeks from the date of its release, in the form of an affidavit to ED.

Aggrieved by the single judge order, the ED filed an appeal before a bench, informing that during the course of the investigation, it was seen that the foreign parent companies of the PCFSPL brought in Foreign Direct Investments worth Rs 172 crore.

Within a short span of time, the company made foreign outward remittances worth Rs 429.29 crore in the name of payments for non-existent software services received from related foreign companies. 

The company has also shown a high domestic expenditure of around Rs 900 crore. The ED also found that exorbitant payments were allowed by the Indian directors of the company without any due diligence and on the instructions of the country head Zhang Hong, who reported directly to Zhou Yahuri, a resident of China.  

The ED said that the respondent remitted forex worth Rs 429,29,65,295 to 13 foreign companies located in Hong Kong, China, Taiwan, and Singapore in the guise of payments for licence fees for the Cash Bean Mobile app. 

The ED also argued that the total expenditure incurred by the company from November 2021 to January 2022 came to about Rs 15.35 crore and allowing the release of such funds would defeat the very purpose of the FEMA Act.  After hearing the ED in detail, the high court bench set aside the single judge orders on Friday. 



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