![Karnataka High Court Directs Google India to Furnish 50% Bank Guarantee in FEMA Violation Case [READ ORDER]](https://www.jurishour.in/wp-content/uploads/2025/04/google-karnataka-hc-696x392.webp "google karnataka hc")
The Karnataka High Court has instructed Google India Pvt Ltd (GIPL) and three of its senior executives to submit bank guarantees covering 50% of the penalties imposed for alleged violations of the Foreign Exchange Management Act (FEMA).
The total penalties amount to ₹5.45 crore, with ₹5 crore levied on GIPL and ₹45 lakh collectively on the executives.
The bench comprising Justice V. Kameshwar Rao and Justice S. Rachaiah noted that the appellate tribunal’s earlier stay on the penalties was a prima facie observation. Consequently, the High Court directed GIPL and the involved executives to furnish bank guarantees for 50% of the imposed penalties within two weeks.
Background of the Case
The Enforcement Directorate (ED) alleges that GIPL engaged in unauthorized transactions totaling ₹364 crore. These transactions include distributor fees paid to Google Ireland and equipment purchases from Google US. The ED contends that these payments, made without prior approval from the Reserve Bank of India (RBI), effectively constitute unapproved commercial loans, thereby violating Section 6(3)(d) of FEMA.
Specifically, the ED highlighted that ₹363 crore owed to Google Ireland remained unpaid for over four years until May 2014, while ₹1 crore in assets from Google US stayed outstanding for over seven years until January 2014. The agency asserts that such prolonged outstanding payments necessitated RBI approval, which was not obtained.
Google’s Defense
Google India has refuted the ED’s allegations, arguing that the transactions in question do not qualify as foreign exchange borrowings under FEMA. The company maintains that there were no formal loan agreements, deferred payments, or interest components involved. Furthermore, Google India cited compliance with an RBI circular dated July 1, 2014, to support its position.
Case Details
Case Title: The Deputy Director Versus Google India
Case No.: MSA NO. 42 OF 2019
Date: 20/04/2025
Counsel For Petitioner: Jayakara Shetty H
Counsel For Respondent: Naresh Thacker
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