Telangana High Court
Coda Payments India Private Limited Ltd vs The State Of Telangana on 28 September, 2021
Author: Shameem Akther
Bench: Shameem Akther
THE HON'BLE Dr. JUSTICE SHAMEEM AKTHER
CRIMINAL PETITION Nos.7254 AND 7255 OF 2021
COMMON ORDER:
These Criminal Petitions, under Section 482 of the Code of Criminal Procedure, 1973, are filed by 'Coda Payments India Private Limited' (hereinafter referred to as 'petitioner-Company'), seeking to quash the orders, dated 01.09.2021, passed in Crl.M.P.Nos.656 and 657 of 2021 (in Crime No.330 of 2021 of Cyber Crime Police Station, Cyberabad), by the learned IX Additional Metropolitan Magistrate, Cyberabad at Kukatpally, whereby the subject applications filed by the petitioner-Company seeking to defreeze its current bank accounts i.e., Account No.0715176009 with Citi Bank, Nariman Point Branch, Mumbai, and Account No.22105074914 with Standard Chartered Bank, Bandra Kurla Complex Branch, Mumbai, were dismissed.
2. Heard Sri S. Niranjan Reddy, learned Senior Counsel representing Sri Pasham Mohith, learned counsel for the petitioner- Company, the learned Assistant Public Prosecutor representing the respondent-State and perused the record.
3. Learned senior counsel for the petitioner-Company would submit that the petitioner-Company runs an e-commerce website. A variety of digital content, which is published by various third-party gaming companies, is offered for sale on the petitioner-Company's e- commerce website. The petitioner-Company does not develop or publish any games directly, but only resells digital content for such games, through its e-commerce platform. The petitioner is a subsidiary of Coda Payments Private Limited, a Singapore based Dr.SA,J 2 Crl.P.Nos.7254 & 7255 of 2021 Company. The petitioner-Company acts only as an intermediary under the nomenclature of 'Coda Payments India Private Limited' between the companies on its digital platform and the end users (customers). The nomenclature of the web page of the petitioner- Company is 'www.codashop.com'. An URL link is provided in the said web page. When a customer opens the said link, an array of products are available, which are developed by different companies. In the instant case, the product is 'free fire' game developed by Garena International Private Limited, a Singapore based Company. It is a digital game. The allegation made in the subject F.I.R. is that an amount of Rs.11,50,000/- was deducted over a period of time from the accounts of the de facto complainant and his daughter. It is alleged that the grandson of the de facto complainant purchased the game through the 'Codashop' website by using the smart phone of the de facto complainant. The grandson of the de facto complainant not only purchased the game, but also purchased top-up. The petitioner-Company is not the developer of the 'Free Fire' game. The petitioner-Company is a digital retail shop. When the end users (customers) purchase the products through the petitioner-Company's digital platform, the entire amount will go to the original Company/person who developed the game and the petitioner- Company will get surcharge or margin money on the said purchase. Payment is not made directly to the account of the petitioner- Company. Like most e-commerce platforms, the payments for any purchase to be made on the petitioner's e-commerce platform occurs through a payment gateway offered by the Banks/other entities, duly registered with RBI. The petitioner, at no juncture, has access to any Dr.SA,J 3 Crl.P.Nos.7254 & 7255 of 2021 of the purchaser's bank account/payment information. The customer makes the payment through payment gateway. To authorize payment through the gateway, an OTP would be generated by the bank with which the customer would be having account. Once the customers share the said OTP with the payment gateway, the same would be verified by the payment gateway from the concerned bank. The verification and authentication of OTP is managed and handled entirely by the payment gateway service provider and the petitioner- Company has no role to play in the same. Further, after registration of the subject crime, the petitioner/accused has suspended offering the products of 'Free Fire' game on its e-commerce website page i.e., Codashop. The amount involved in the subject crime is Rs.11,50,000/-, whereas the petitioner-Company has over Rupees forty crores in the subject Bank Accounts, which were frozen. The petitioner-Company has several employees and it has to make payments towards salaries, taxes, commercial and other business purposes. Further, the game 'Free Fire' is not an illegal game. It has not been banned by any operation of law. The only gaming act which is in force in the State of Telangana is the Telangana Gaming Act, 1974, which does not ban 'Free Fire' game. Though recently, the Government of India has banned certain games sponsored by Chinese companies, 'Free Fire' game has been sponsored by Garena International Private Limited, a Singapore based Company, and there is no ban to play the said game in India. The offences alleged in the subject crime have no application to the facts of the case on hand. The Court below erroneously dismissed the subject interlocutory applications and ultimately, prayed to defreeze the subject accounts Dr.SA,J 4 Crl.P.Nos.7254 & 7255 of 2021 of the petitioner-Company and allow the Criminal Petition as prayed for.
4. On the other hand, the learned Assistant Public Prosecutor would submit that menace of dangerous online games is alarming. The administrators of these dangerous games are manipulating the young minds and exploiting their vulnerable psychological condition. The subject 'Free Fire' game is being sponsored by Garena International Private Limited, a Singapore based company, which does not have any registered entity in India. Hence, it entered into an agreement with the petitioner-Company for payment services, which, in turn, made an agreement with a payment gateway service provider called Paytm. Huge money is illegally routed to the account of the petitioner-Company. Investigation in the subject crime is in progress. Altogether there are 30 victims in this case. Once the subject accounts of the petitioner-Company are defreezed, there is possibility of the petitioner-Company withdrawing the entire money lying in the accounts leaving minimum balance, which would cause huge loss to the victims and substantially affects the investigation. The Court below rightly dismissed both the subject interlocutory applications. The request of the petitioner-Company cannot be acceded to and ultimately, prayed to dismiss both the Criminal Petitions.
5. In view of the submissions made by both the sides, the point that arises for determination in this Criminal Petition is:
"Whether the current bank accounts of the petitioner- Company i.e., Account No.0715176009 with Citi Bank, Dr.SA,J 5 Crl.P.Nos.7254 & 7255 of 2021 Nariman Point Branch, Mumbai, and Account No.22105074914 with Standard Chartered Bank, Bandra Kurla Complex Branch, Mumbai, be defreezed, as prayed for."
POINT:
6. The facts of the case, in brief, are that the de facto complainant is a retired police officer. He regularly used to withdraw amount from ATMs using his ATM card and gets SMS alert to his registered mobile number from bank with regard to the said transaction. Recently, when he checked his bank account balance, he found that the available balance in his account is only Rs.1,28,007/-. Therefore, he collected the bank statement and noticed that several fraudulent transactions have taken place in his bank account without his knowledge since October, 2020 and he has lost an amount of Rs.11,00,000/- and did not get any SMS alert. He also came to know that similar fraud was played with his daughter, who lost Rs.50,000/-. Therefore, the de facto complainant lodged the subject complaint with Cyber Crime Station, Cyberabad, which was registered as Crime No.330 of 2021 for the offences punishable under Section 420 IPC and Section 66C of Information Technology Act, 2000. During investigation, it was found that there are multiple transactions in the account of the de facto complainant since October, 2020 and amount is deducted at Paytm. It was found that the amount got deducted at Coda Payments India Private Limited i.e., the petitioner- Company, which is linked with gaming applications like 'Garena Free Fire' etc. On examining the de facto complainant, it came to light that the grandson of the de facto complainant, aged about 14 years, Dr.SA,J 6 Crl.P.Nos.7254 & 7255 of 2021 used to play games using the smart phone of the de facto complainant. On examining the said boy, it is learnt that he plays Garena Free Fire game using gaming accessories (paid). Pursuant to the subject complaint, the bank accounts of the petitioner-Company viz., current bank accounts i.e., Account No.0715176009 with Citi Bank, Nariman Point Branch, Mumbai, and Account No.22105074914 with Standard Chartered Bank, Bandra Kurla Complex Branch, Mumbai, were freezed. To defreeze the said accounts, the petitioner- Company filed the subject applications before the Court below under Sections 451 & 457 of Cr.P.C., and the Court below, vide the impugned orders, dated 01.09.2021, dismissed the said applications. Hence, these Criminal Petitions.
7. As seen from the material placed on record, the allegations in the instant case are that the petitioner-Company cheated the de- facto complainant and fraudulently withdrawn Rs.11,50,000/- from his account and also from the account of his daughter. Though the learned Assistant Public Prosecutor had made submissions at length and also filed some material papers before this Court, he could not establish that 'Free Fire' game sponsored by Garena International Private Limited, which is the epicenter of the subject dispute, has been banned in India under any law. The material facts are that the de facto complainant allowed his grandson, who is 14 years old, to use his smart phone on several occasions, who played 'Free Fire' game in the smart phone. As per the material on record and the submissions made, the said boy purchased the 'Free Fire' game and top-ups, several times, and in that process, amount has been deducted from the accounts of the de facto complainant and his Dr.SA,J 7 Crl.P.Nos.7254 & 7255 of 2021 daughter, totaling to Rs.11,50,000/-, however, not more than Rs.1,600/- at a time.
8. It is apt to state that generally, e-commerce entities only play the role of a facilitator between the buyer and seller, and would not have ownership over the goods sold. They do not stock any product or service, but simply acts as a facilitator or a go-between entity. Using their digital platforms, they simply bring together a potential customer with a seller of the product/service, and the said potential customer, using the said digital platforms, may express interest in purchasing. E-Commerce entities additionally provide certain value- added services to the customers to use its digital platforms, such as provision of e-payment gateway facilities with service providers such as Wallet, UPI, net banking, Paytm, etc., and for providing such services, they generally charge minimal amounts for their services.
9. In the instant case, it is argued on behalf of the petitioner- Company that the petitioner-Company is only a facilitator and does not serve as payment platform on its own and that the payments are not made directly on the petitioner-Company's website but they are made directly on payment channel's platform and the petitioner- Company only delivers the purchased digital content, upon receiving payment confirmation from the said payment channel. Further, it is also brought to the notice of this Court that the petitioner-Company has several employees and it has to pay huge amounts towards expenses. As per the details furnished by the learned Assistant Public Prosecutor, as on today, an amount of Rs.50,66,55,269.36 ps. is lying in the Citi Bank Account and Rs.33,22,21,598.33 ps. is lying Dr.SA,J 8 Crl.P.Nos.7254 & 7255 of 2021 in the Standard Chartered Bank Account. The learned senior counsel appearing for the petitioner-Company would submit that altogether, a total amount of rupees forty crores is lying in the subject freezed accounts of the petitioner-Company.
10. It is the case of the de-facto complainant that he has given his smart phone to his grandson, who is 14 years of age, and it is he who operated the smart phone and appears to have made payments for purchasing the subject 'Free Fire' game by undergoing the aforementioned process. The offences alleged against the petitioner- Company are under Section 420 of IPC and Section 66C of the Information Technology Act, 2000. As seen from the modus operandi of the petitioner-Company, the petitioner-Company is only a facilitator and the products/services of different companies are put for sale in the web page of the petitioner-Company, by providing URL link, to the interested purchasers to purchase the said product. Whether there is any dishonest inducement to any person to purchase the subject game, needs to be investigated in this case. It is too early to come to a conclusion that there is such dishonest inducement. Further, the learned Assistant Public Prosecutor could not able to establish that the subject 'Free Fire' game is banned in India under any enactment. Further, Section 66C of the Information Technology Act, 2000, reads as follows:
Punishment for identity theft: Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine with may extend to rupees one lakh.
Dr.SA,J 9 Crl.P.Nos.7254 & 7255 of 2021 Whether the requisite ingredients of Section 66C of Information Technology Act, 2000, are made out against the petitioner-Company or not is also a matter of investigation and it is too early to conclude that the manner in which the amount has been transferred would attract offence under Section 66C of Information Technology Act, 2000, and the petitioner-Company had fraudulently or dishonestly made use of the electronic signature, password or any other unique identification feature of the de-facto complainant and his daughter and got transferred the amount of the de-facto complainant and his daughter. It can be determined once the investigation is completed. The petitioner-Company had put several products on sale on their webpage. The amount lying to the credit of the subject freezed accounts of the petitioner-Company is derived from sale of several products. In view of the circumstances of the case, it is too early to conclude that the entire money lying to the credit of the subject freezed accounts of the petitioner-Company is tainted. The de-facto complainant and his daughter lost Rs.11,50,000/-. There are said to be 30 victims in this case.
11. Further, learned Senior Counsel appearing for the petitioner- Company would submit that the petitioner-Company has already stopped providing any kind of service to 'Garena International Private Limited' and it will continue to do so till the completion of investigation in the subject crime. He would further submit that the petitioner-Company would maintain a minimum balance of rupees five crores in each account, until further orders. The said Dr.SA,J 10 Crl.P.Nos.7254 & 7255 of 2021 submissions of the learned senior counsel appearing for the petitioner-Company are taken on record.
12. In view of the circumstances of the case and undertakings placed on record, the Criminal Petitions are allowed and the impugned orders, dated 01.09.2021, passed in Crl.M.P.Nos.656 and 657 of 2021 (arising out of Crime No.330 of 2021 of Cyber Crime Police Station, Cyberabad), by the learned IX Additional Metropolitan Magistrate, Kukatpally, Ranga Reddy District, are hereby set aside. The bank accounts of the petitioner-Company, i.e., Account No.0715176009 with Citi Bank, Nariman Point Branch, Mumbai, and Account No.22105074914 with Standard Chartered Bank, Bandra Kurla Complex Branch, Mumbai, stand defreezed. The petitioner- Company is permitted to operate the said bank accounts, subject to condition of the petitioner-Company maintaining a minimum balance of Rs.5,00,00,000/- (Rupees five crores only) in each account.
Miscellaneous Petitions, if any, pending in these Criminal Petitions shall stand closed.
_______________________ Dr. SHAMEEM AKTHER, J 28th September, 2021 Note:
Furnish C.C. by 30.09.2021.
(B/O) MD/BVV