The Karnataka High Court has instructed Google India and three of its senior officials to submit bank guarantees covering 50% of the penalties levied by the Enforcement Directorate (ED) over alleged breaches of the Foreign Exchange Management Act (FEMA). Previously, the ED had imposed a ₹5 crore fine on Google India, along with ₹45 lakh in total penalties on the three executives. The case involves alleged violations under Section 6(3)(d) of FEMA, linked to transactions worth ₹364 crore.

According to the ED, the violations stem from payments made by Google India to Google Ireland for distribution services and to Google US for equipment purchases. The agency claims ₹363 crore due to Google Ireland remained unpaid for over four years until May 2014, and ₹1 crore owed to Google US for equipment was pending for more than seven years, until January 2014.

The ED has treated these delays as “commercial loans,” which, under Indian regulations, require prior approval from the Reserve Bank of India (RBI). However, Google India has firmly denied the charges, arguing that the transactions weren’t foreign exchange borrowings and did not involve loans, deferred payments, or interest. The company claims compliance with an RBI circular issued on July 1, 2014.

In January 2019, the Appellate Tribunal for FEMA in Delhi had stayed the penalties, noting that Google India’s appeal had substance. The ED later filed second appeals against this stay. A division bench of the Karnataka High Court, comprising Justices V Kameshwar Rao and S Rachaiah, observed that the tribunal’s ruling was based on a preliminary review. The court has now directed Google India and the three executives to provide bank guarantees for 50% of the total penalty within two weeks.