(Photo Courtesy: The Economic Times)
Pigeon Education Technology, a Bengaluru-based online education company funds worth Rs. 8.26 crore, have been confiscated by the Enforcement Directorate (ED) on May 19 as part of an investigation into the alleged violation of the foreign currency law. The company is charged under the relevant provisions of the Foreign Exchange Management Act (FEMA), 1999, as per the statement given by ED.
According to the ED’s statement, the investigation revealed that Chinese nationals owned the company, and those based in China were in charge of all business and financial decisions. Under the brand name “Oda class” the company provides online education. The company’s assets have been frozen under FEMA’s Section 37A.
In April, ED conducted searches against the company and “found that the company is 100 per cent owned by Chinese nationals and all the affairs of the company, including financial decisions, are being taken by the persons sitting in China”.
It stated, “an amount of Rs 82.72 crore has been siphoned to China and Hong Kong from the company under the pretext of advertising expenses and marketing expenses on the instructions of Chinese director Liu Can”.
In its statement, ED said, “The company could not produce any proof of receipt of service on its part and proof of any advertisement published against the said expenses. Further, the director and accounts manager of the company has also admitted during the investigation that the payment was made only on the instructions of Chinese director Liu Kan”.
The ED further added, “The Indian director of the company, Vedanta Hamirwasia stated that the Chinese director told them that the said advertisements were published through Google and Facebook, however, no confirmation or invoice raised by these platforms has been submitted”
Last year, ED seized Rs 5,551.27 crore from the Chinese manufacturer’s Xiaomi Indian arm under FEMA in connection to illegal remittances made by the company. In 2022, the ED said in a press release, “Xiaomi India is a wholly owned subsidiary of China based Xiaomi group. This amount of Rs. 5551.27 Crore lying in the bank accounts of the company has been seized by the ED. ED had initiated investigation in connection with the illegal remittances made by the company in the month of February this year.”
After that, Xiaomi approached the Karnataka High Court challenging the constitutional validity of section 37 of the Foreign Exchange Management Act. The Court upheld the impugned provision’s constitutional validity stating that it does not suffer from arbitrariness. The Court upheld ED’s seizure of assets under the FEMA provision.
Last year apart from Xiaomi, Chinese companies such as Vivo, ZTE and 500 others came under the scanner of authorities and their financial details were scrutinized, such as accounts books.
(With inputs from ANI)
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