The Karnataka High Court on Thursday declined the Enforcement Directorate’s request to restore the freeze on Rs 5,551.27 crore seized from mobile manufacturer Xiaomi India, Live Law reported. It allowed Xiaomi to use a bank overdraft facility to make payments for operations.

“It is clarified that the petitioner [Xiaomi] is at liberty to take an overdraft and make payments from such an overdraft, excluding royalty,” the court said. “It is a matter between him [Xiaomi] and the bank.”

The Enforcement Directorate has alleged that the company transferred Rs 5,551.27 crore in the guise of royalties to three foreign-based entities in February. It had violated the foreign exchange law by doing so, the central agency added.

On April 30, the Enforcement Directorate had passed an order to seize the amount remitted from the bank accounts of Xiaomi. However, on May 5, the Enforcement Directorate’s order was stayed by a single bench of the Karnataka High Court. The bench allowed Xiaomi India to use the bank account for its day-to-day activities.

On Thursday, a single-judge bench of Justice Siddappa Sunil Dutt Yadav extended the High Court’s interim order staying the seizure of the amount.

“The interim order earlier granted is extended till the next date,” the bench said, Live Law reported. “Matter is adjourned to May 23.”

Senior Advocate S Ganesh asked for a clarification from the court, stating that banks were not allowing the company access to the money “even though it can use it for purposes other than royalty payments”, Reuters reported.

The Enforcement Directorate’s request to reinstate a freeze on Xiaomi’s bank account came after the company alleged that its officials were coerced to record their statements.

Xiaomi alleged that its top executives, India’s former managing director Manu Kumar Jain, current Chief Financial Officer Sameer BS Rao, and their families, were threatened with “dire consequences” if the officials did not submit statements as desired by the Enforcement Directorate.

The Enforcement Directorate, however, refuted the claims. It said that it is a professional agency with strong work ethics and that the allegations were “untrue and baseless”.