Allowed

M/s. Fone Paisa Payment Solutions Pvt. Ltd. v. The State of Telangana

Telangana HC8 Feb 2023CRLRC/857/2022

Case brief

AI extract

What is this about?

The High Court allowed a criminal revision petition filed by a payment gateway service provider seeking defreezing of its bank account. The court set aside the trial court's order dismissing a motion to unfreeze, noting the Magistrate was not informed of the freeze and the account-holder was not an accused. It directed the defreezing subject to a bond.

What did the court decide?

Set aside the impugned order dating 05.11.2022 and directed to defreeze the bank account of FonePaisa Pvt Ltd subject to the revision petitioner furnishing a bond equal to the amount in the credit of

M/s. Fone Paisa Payment Solutions Pvt. Ltd… — Civil Procedure and Limitation | Telangana HC (2023)

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[³²⁵⁴ ]

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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WEDNESDAY THE EIGHTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SMT JUSTICE G.ANUPAMA CHAKRAVARTHY

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CRIMINAL REVISION CASE NO: 8s7 OF 2022

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Revision filed under Section 397 & 401 of Cr.P.C. against the Judgment dated 05.1 1 .2022, made in Crl. M. P. No. 231 8 ot 2022 in Ctime No. 1 00 of 2022 on the file of the Honble Court of the IAJCJ-CUM- lX-Additional Metropolitan Magistrate, Rangareddy District at Kukatpally.

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Between:

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M/s. FonePaisa Payment Solutions Pvt ltd, Rep by its Authorized person lt4r. Ashish Vishwakarma. O/o. ll 90, 3rd Cross, 26th tr,4ain, JP Nagar, Phase 1, Bengaluru-500078, Karnataka, lndia

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...III PARTY PETITIONER

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AND

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The State of Telangana, Represented by its Public Prosecutor, High Court at Hyderabad Through PS Cyber Crime (CYB) Police Station.

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...RESPONDENT

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Counsel for the Petitioner: Sri M. P. K. ADITYA

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Counsel for the Respondent: ADDITIONAL PUBLIC PROSECUTOR

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The Court made the following:

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HON'BLE^{SM]" JUSTICEG. ANUPAMA CHAKRAVARTHY} Crl.R.C.No.857 OF 2022

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RI) ER:

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This Criminal Revision Case is filed against the order dared 05.11.2022^{in Crl.M.P.No.23 l8 of 2022 in Cr.No.100} of 2022,^{on the file of i AdditionalJuniorCivil Judge-Cum-lX} Additional^{Metropolitan Magistrate, RangaReddy Districtat} KukatpallY.

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For the sake of convenience, the parlies herein are relerred^{to as they are arrayed belolethe trial Court}

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l. 'lhe petitioner filed Crl.M.P.No.23 18 of 2022beforethe trial Court^{under Sections45 I & 457 Cr.P.C prayingthe} Court ro defreeze^{the account bearingNo.002281300003993} of'YES' bank^{for the purpose of operationof account.}

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The contents of the petition in nutshell is that basing on the report filed by one Smt.Vijaya Lakshmi, Police, Cyber Crimes^registered a^case in Crime No. 100 of 2022 under Section^{420 of IPC and Section 66-D Information} Technology

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GlC, J Crl- R.C.h'o.8 57 of 2022

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Act. During the course of investigation, the Police have fi'eezed the account bearing No.00228^1300003993 of^'YES' bank of the petitioner, who is no way concemed with the crime ol the accused. It is the contention of the^petitioner that he has been doing business as "online payment^gateway" which approves the transaction process between^merchant and customer, and^as such, the petitioner had no^nexus with the accused and fuithermore, the petitioner had^{not rcceived} any amount neither from the accused nor from the^{defacto corrplainant.} Theretbre. operation of account of the^{petitionerwhich was} 1i'eezed by the Police is illegal and^prayed to allow the^petition.

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Though the prosecution received notice belore the trial Court, it did not file any^{counter. The trial} Court after^hearing the rival contentions of the^{leamed counsel} for the^petitioner and the learned Assistant Public Prosecutor disn-rissed the petition with a specific finding that the^petitioner has not filed any document to substantiate that it has been doing business as a gateway for payment to the customers at the instancc of

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GAC, J Crl.R.C.No.E57 of 2022

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merchant and as the investigation is in, progress, it was not inclined to pass any orders, in favour of the petitioner.

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Being aggrieved by the orders of the trial Court, the present revision is preferred. It is the contention of the revision petitioner that though the documents were filed before the trial Couft, the said Court has not seen or verified the said documents and erroneously dismissed the petition mechanically

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Heard the learned counsel for the revision petitioner and the learned Assistant Public Prosecutor for respondent. Perused tl're record.

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In order to support his contention, learned counsel for the petitioner has relied on documents which were filed along with petition. On perusal of the documents, it is evident that the petitioner's organization is dealing with the process ol payment through "Online Gateway" which approves the transaction between the merchant and the customer and the petitioner company plays its role only in the "online transaction plocess".

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G,4C, J Crl.R.C.No.857 of 2022

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Admittedly, no complaint was made against t[-re petitioner. The contents of the cornplaint disclose that one Vijaya Lakshmi Meriga is the cornplainant and the accused is the management of www.kines567 website. The recitals of FII{ disclose that complainant stated that "her younger son by narne Rohit Kumar moved to India from USA in September, 20 l9 and later started working for a software company in Ilyderabad. In February, 2021 he received an anonymous call asking him, il he was interested in playing casino games, for lvhich l-re responded positively. A t RL of portal:www.kings56T.com rvas shared to him and he created an account. ln the beginning, he never^r'vot.t money and by the end of June, 202l,he was at a loss of Rs.8 lakhs. Thereafter, he started playing with highcr stakes and b1, the end of August, 2021, he was at a loss of Rs.45 lakhs. On September, 202l,he won Rs.8 lakhs and withdrew the cash^to his bank account and started depositing and withdrawing the money frequently. By the end of November, 2021, dil'letent account numbers were used for withdrawal and deposit of money and a total amount of Rs.14 lakhs was withdrawn.^'l'he

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GAC, J Crl.R.C.No.E57 of 2022

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names of the accounts to which he credited funds as reflected on the webpages i.e., Unique Traders, King Trading, King 567 Casino, Fonepaisa.com,^{MR.Enterprise and when} checked his bank statements,^{it was down} to^loss by^Rs.70lakhs. They put his account on hold for a week and then release it. But this time, when he tried to withdraw, they only approved Rs.2 lakhs tbr withdrawal and for remaining balance, he was asked to play rnore." Therefore, he prelerred the present complaint.

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On perusal of the record, it is noticed that at Column No.4 ol the bank accounts and intermediaries, the complainant has shown the petitioner's name in the complaint lor which the Police have freezed the account of the petitioner. On 13 .09 .2022, the petitioner has addressed a letter to Rohit Kumar Meriga wl.ro is the son of the complainant wherein, it is mentioned that the entire amount has been released and paid to the son of the complainant towards full and final settlement

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I l. It is needless to say that the petitioner company is a payment gateway service provider by the banks directly or a

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GAC, J Ctl.R.C. No-857 of 2022

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payment service provider authorized by a bank and the petitioner organization is not hosting any kind ol online card games nor inviting any customer for playing online card games and they only deal with the transaction process and authorizes transactions between merchants and customers. Moreover, it has no nexus with the offences as alleged by the complainant as the petitioner organization is a rnediation bctween the customer and the merchant such as net banking, credit card, debit card, UPI or many online wallets that are available these days

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Learned counsel for the petitioner relied on the^judgnient of this Court in Crl.R.C.No.230l of 2018, wherein this Court has directed to defreeze two bank accounts for the persons holding accounts in Kotak Mahindra Ilank, llaniara Hills, Hyderabad.

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It is the specific contention of the learned counsel for the petitioner that though the accounts of thc petitioncr are fieezcd. the said fact was not informed to the Magistrate.

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r'/

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GAC, J C rl. R. C. I 5 7 oI 2 0 2 2 ^'o.

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In support of his contentions, learned counsel for the petitioner relied on the judgment of this Court reported in Meridian Educational Society, Hyderabad v. State of Telangana antl otherst wherein it is held as under:-

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"It is clear from the facts that the concemed Magistrate was not informed at all. As held in AP Products (supra) the Magistrate has to be informed within reasonable time without any undue delay. The irnpugned notice was addressed on 1 1.08.2021, however, till date the Magistrate has not been informed about the freezing of the bank Account in question. I'herefore, the freezing of bank Accounts in the instant case is liable to set aside on this ground alone."

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Learned counsel for the petitioner relied on^judgment of

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the Karnataka High Court reported in SmtLathifa Abubakkar

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v. The State of Karnataka and Orl wherein their lordship has held as follows:-

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"In the present case, the tburth respondent has not produced any materials till this day to show that the bank account has any nexus with the

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'^{2021 (6) ALD 474(TS)}

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'^{zor2 cRr.Lof34B7}

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GAC, .' Crl.R.C.No.857 of 2022

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commission of the alleged offence. It is evident that respondents have not issu'ed a notice of seizure to the petitioner to enable her to executing bond undertaking to produce the amount in the Court as and when required. Admittedly, the third respondent has not reported the seizure of the bank account to the Magistrate having jurisdiction. Thus, it is clear that respondents have not complied with the mandate contained in Section 102 of Cr.P.C. therefore, the direction of the fourth respondent in freezing the bank account of the petitioner is illegal."

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He also relied on the^judgment of Madras High Court reporled ln Guruprasath, S/o V,S.Ralhinam rls. Slole, represented by Inspeclor of Police3 wherein their lordships held as follows:-

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"The Supreme Court, in the following judgments have indicated that while freezing account, pursuant to any pending investigation, such freezing shall be of very short duration and the period should also be specific and pending investigation, Bank accounts cannot be freezed

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3 2017 Lawsuit (Mad) 2079

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CAC, J Crl.R.C.No.857 of 2022

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indetinitely. In this case, the petitioner is not even arrayed as an accused, but his business accounts are being freezed without any intimation and in violation of statute and contrary to the dictum laid in the^judgments of the Supreme Court. Under Section 18 ol the Prevention of Comrption Act, conditions are imposed to the investigating agent regarding the manner in which the inspection should be conducted regarding bank accounts. Without the authorization of the Superintendent of Police, accounts of a person shall not be inspected by any Police Officer below the rank of Superintendent of Police. The freezing of accounts in this case has been done in violation of Section I 8 of the Prevention of Coruption Act."

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Il . In the present case, the learned Magistrate was not informed about the freezing of the accounts. Further, the petitioner was not artayed as accused and no FIR was registered against the petitioner so as to freeze his accounts and there is no nexus between the petitioner and the accused-

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18.^'l'herefore, the above said citations squarely apply to the lacts and circumstances of the case. The record also reveals that

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G,4C, J C .R.C. No.857 of 2022

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there is no intimation to the Magistrate about freezing ol the account. As the investigating is still pending, the trial Court has dismissed the application without considering the documents relied on by the petitioner herein.

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It is pertinent to note that the trial Court has no authorization on record to prove that the bank accounts ol the petitioner has no nexus with the comrnission of alleged offences. Even as per the propositions laid down by thc Apcx Court and other courts, there is no notice issued to thc petitioncr before freezing the bank accounts and no specific tirne limit was also fixed. The record also reveals that the son ol the complainant has already received amount fron-r the petitioncr company. Thus, this Court is of the opinion that it is a fit case to interfere with orders of the trial Court and defreeze the bar.rk accounts of the petitioner.

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Having regard to the facts and circumstances of the case, this Criminal Revision Case is allowed and the order dated 05.11.2022 in Crl.M.P.No.23 l8 of 2022 in Crime No. 100 of

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GAC, J C .R.C.NI.857 of2022

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2022, on the trle of I Additional Juniol Civil Judge-Cum-lX Additionat Metropolitan Magistrate, Ranga Reddy District at Kukatpally is hereby set aside and directed to defreeze the bank account of the petitioner i.e., "Fonepaisa Pvt Limited. A/c.No.002281300003993, Yes Bank, Kasturba Road, Bangalore" subject to the revision petitioner fumishing bond equal to the arnount in the credit of his accounts as on the date ol lr'cezing.

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Pending miscellaneous applications, if any, shall stand

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closed.

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SO/.M.MANJULA DEPUTY REGISTRAR

To,

v SECTION OFFICER