BENGALURU: The Karnataka High Court quashed the proceedings against Razorpay Software Pvt Ltd (RSPL), the payment gateway, under the provisions of Prevention of Money Laundering Act (PMLA) by the Enforcement Directorate (ED).
Allowing the petition filed by Razorpay, Justice Hemant Chandangoudar questioned the validity of the complaint registered by ED. “When there is no prima facie material to substantiate that RSPL knowingly facilitated the transfer of proceeds of the crime, no presumption can be drawn that RSPL was involved in money laundering as stated under Section 24 of the PMLA,” the court said.
ED alleged that RSPL was negligent in allowing transactions in the name of Jamnadas Morarji Finance Pvt Ltd (JMFPL), accused No.5, without due diligence which was substantiated by an employee of RSPL.
The court noted that there is no evidence to suggest that RSPL knew that the funds transferred to the merchant IDs of JMFPL were derived from criminal activity. Nor did they knowingly assist JMFPL in concealing or transferring illicit proceeds as clean money and there is no evidence to establish that RSPL had the intention to commit the crime under Section 3 of the PMLA.
FIRs were registered by the jurisdictional police under Sections 419, 385, 384, 509, 420 of IPC and Sections 66, 66(c), 66(d) and 67 of the Information Technology Act, stating that the accused in those cases were involved in money lending through mobile phone applications on exorbitant rates of interest.
Further, it was alleged that when the borrowers failed to repay the loan amount in time, and in some cases, even after the repayment of the loan, the accused have been harassing the borrowers to extort money from them, and had also stolen data from the mobile phones of the victims, and misused them.
The accused had also created WhatsApp groups to harass victims, abuse them etc. As the offences under Sections 384, 385, 419, and 420 IPC are scheduled offences under the PMLA Act, the case was referred to ED, which submitted the complaint before the jurisdictional court in the city arraigning RSPL as accused No 7 after the investigation.