Himachal Pradesh High Court
Phonepe Private Limited vs State Of Himachal Pradesh & Others on 20 May, 2024
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. MMO No.972/2023 Reserved On: 20th May, 2024 .
Decided On: 24th May, 2024 PhonePe Private Limited .....Petitioner.
Versus State of Himachal Pradesh & Others .....Respondents. Coram The Hon'ble Mr. Justice Bipin Chander Negi, Judge.
Whether approved for reporting?1 For the Petitioner: M/s Uttam Dutt, Shradha Karol, Sonakshi Singh, Vaibhav Singh Chauhan and Astha Kohli, Advocates.
For the Respondents: Mr. R.P. Singh, Deputy Advocate General, for respondents No.1 and 2.
Mr. Lalit Sharma, Advocate for respondent No.3.
Mr. Sanjay Kumar Sharma, Advocate, for respondents No.4 & 5.
Bipin Chander Negi, Judge.
The instant petition has been filed by the petitioner under Section 482 of the Code of Criminal Procedure, 1973 against the order dated 13.06.2023 and the consequential release order dated 16.06.2023 passed by Ld. JMIC Court No.5, Shimla, H.P. in Cr.MA No.7571 of 2022 titled Ranjana Vaishnav Vs. S.P. Cyber Cell Shimla, H.P. and Ors.
2. The complaint in the case at hand was filed by respondent No.3 on 12.09.2022 in the Police Station Lakkar Bazar, Shimla. The same was registered as Complaint No.380/DCR and GD. No.13 in General Diary.
1Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 24/05/2024 20:34:41 :::CIS 23. In the complaint filed by respondent No.3 she has stated that she had advertised on OLX website with respect .
to renting out her house located at Udaipur, Rajasthan. It is further alleged in the complaint that on 07.09.2022, respondent No.3 received a phone call from a person named Bablu Kumar who claimed to be employed with CISF (Central Industrial Security Force). The said Bablu Kumar showed a keen interest to take respondent No.3's advertised property on rent. Over the phone the rent agreed to by both the parties was Rs.13,500/- per month.
4. In the aforesaid context the said Bablu Kumar defrauded the respondent No.3 of Rs.13,500/- and Rs.68,542/0 on 08.09.2022. The aforesaid two transactions were initiated through PhonePay App. The said two transactions were credited to a Merchant named 'Natraj Pencil' on 08.09.2022 itself. From the aforesaid, it is evident that with respect to the fraud committed on 08.09.2022, the complainant respondent No.3 had registered a complaint on 12.09.2022.
5. The complaint so filed on 12.09.2022 was forwarded to respondent No.1 through e-mail and was got registered with Cyber National Online Portal. During investigation respondent No.1 got the Nodal Bank Account of the present ::: Downloaded on - 24/05/2024 20:34:41 :::CIS 3 petitioner frozen on 07.10.2022 by marking a lien of Rs.81,842/- in respect of the two transactions dated .
08.09.2022. In this respect, a communication was sent to respondent No.4.
6. Subsequent to the aforesaid respondent No.3 filed an application under Section 457 of Cr.P.C. before the Learned JMFIC, Shimla (learned Trial Court) seeking release of the amount of Rs.81,842/- from the Nodal Bank Account of the petitioner. In response to the said application respondent No.2 filed a No Objection letter stating that they had no objection in case of de-freezing and releasing of amount of Rs.81,842/- from the Nodal Bank Account of the petitioner in favor of respondent No.3.
7. Respondent No.4 had also filed a response to the application filed by respondent No.3 for release of amount of Rs.81,842/-. In the reply so filed, respondent No.4 had categorically stated that the amount mentioned in the said application is a Nodal Bank Account belonging to the petitioner. It was further submitted in the reply that the Nodal Bank Account of the petitioner had been opened in accordance with the guidelines issued by the Reserve Bank of India. Besides it was categorically mentioned in the ::: Downloaded on - 24/05/2024 20:34:41 :::CIS 4 reply that the petitioner is an "intermediary" as per the RBI guidelines.
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8. Details, qua the role of "intermediary" were categorically specified in the reply. In the aforesaid backdrop it was submitted that the petitioner is necessary party and hence petitioner be heard before passing any order on the application filed by respondent No.3 for release of amount.
9. Admittedly, the petitioner was never made a party before the trial Court while adjudicating the application filed by respondent No.3 under Section 457 of the Cr.P.C.
seeking release of amount of Rs.81,842/- from the Nodal Bank Account of the petitioner. Vide the impugned order dated 13.06.2023 a order of release was made in favour of respondent No.3 on furnishing an indemnity bond as well as surety bond in the equivalent sum with an undertaking to deposit the said amount in Court, if a better claimant is found later on. Since, the requisite indemnity and surety bond were furnished by respondent No.3. Therefore, a release order dated 16.06.2023 was issued directing debit of an amount of Rs.81,842/- from the petitioners Nodal Bank Account. The same was received on 22.06.2023 by ::: Downloaded on - 24/05/2024 20:34:41 :::CIS 5 the petitioner through its Nodal Officer. Hence the instant petition.
.
10. I have heard the learned counsel for the parties and perused the material on record.
11. One glaring factor is that the petitioner is not the accused; though for freezing of account one need not be an accused. It is only money trail that leads to suspicion as also freezing of account. Therefore, nobody need be heard as Section 102 of the Cr.P.C. empowers Investigating Agency to direct freezing of account within its sweep. The case at hand is not of that kind.
12. From a perusal of the application filed by respondent No.3 under Section 457 Cr.P.C. for release specifically para-
13, thereof, it is evident as to whose account the money of which the respondent No.3 was defrauded has gone into.
13. Hence, it is not a case where the suspect is not known. The investigation ought to have been made for unearthing the fraud qua the alleged fraudsters.
14. The application under Sections 451 and 457 of the Cr.P.C. is dealt with by the learned Magistrate in a casual and cavalier manner. The amount in question is the property of an individual in whose account, it is held. Such amount which is a right to property of the account holder ::: Downloaded on - 24/05/2024 20:34:41 :::CIS 6 cannot be taken away without even bringing to his knowledge. There has been a debit from the account of .
the petitioner for the purpose of satisfying the complainant.
While the right of a complainant is to be looked into, since the complainant is a victim of a fraud, but the investigation cannot be cut short without unearthing the fraud and closing the issue, by transfer of amount from a third party, in the case at hand, from the account of the petitioner. All these factors have to be borne in mind by the Magistrates while dealing with an application under Sections 451 and 457 Cr.P.C.
15. Freezing of account in terms of Section 102 of the Cr.P.C. is a power that is available, but if the amount is sought to be transferred to any other account, the account holder whose account is frozen or de-frozen for the purpose of transfer of the amount needs to be heard.
Therefore, the impugned order, on the face of it, is arbitrary and cannot stand the scrutiny of law.
16. The petitioner maintains a bank account with respondent No.4/Yes Bank Limited ('Nodal Account Bank' for short), a Banking Company established under the Companies Act, 1956. The Nodal Account Bank is expected to carry out business for the nodal account holder i.e., ::: Downloaded on - 24/05/2024 20:34:41 :::CIS 7 PhonePe which is for a special purpose created for receiving monies from the participating Banks and remitting .
to specific merchants, in terms of the Reserve Bank of India mandate. The petitioner is thus an intermediary receiving online payments and those payments getting into nodal account and payments to the seller moving out from the nodal account instantaneously.
17. The petitioner is a Unified Payment Interface platform. All such UPI platforms are not owned by the petitioner. They are owned by the National Payments Corporation of India ('NPCI' for short). The petitioner is considered as a third-party application provider by the NPCI or a system provider. PhonePe has the status of "intermediaries" as obtaining under the Information Technology Act, 2000 ('IT Act' for short). Section 2(w) of the Information Technology Act, 2000 reads as follows: -
"intermediary", with respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes;::: Downloaded on - 24/05/2024 20:34:41 :::CIS 8
18. Section 79 of the IT Act protects the intermediaries to the extent as provided therein. Section 79 of the ITC Act .
reads as follows: -
"79. Exemption from liability of intermediary in certain cases.-(I) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him.
(2) The provisions of sub-section (1) shall apply if-
(a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; or
(b) the intermediary does not-
(i) initiate the transmission,
(ii) select the receiver of the transmission, and
(iii) select or modify the information contained in the transmission;
(c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf.
3. The provisions of sub-section (1) shall not apply if-
(a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or otherwise in the commission of the unlawful act;
(b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that ::: Downloaded on - 24/05/2024 20:34:41 :::CIS 9 material on that resource without vitiating the evidence in any manner.
Explanation-For the purposes of this section, the .
expression "third party information" means any information dealt with by an intermediary in his capacity as an intermediary".
Section 79 (supra) directs that notwithstanding anything contained in any law, an intermediary shall not be liable for any third-party information, data or communication link made available or hosted by him and application of the provision is in terms of what is observed in the provision itself. The intermediary would not become liable if the intermediary has not initiated the transmission, selected the receiver of the transmission or selected or modified any information contained in the transmission.
The expression third party information under Section 79 of the ITC Act is explained to be information dealt with by the intermediary in the capacity as an intermediary.
19. Hence even on this account, the impugned order, cannot stand the scrutiny of law.
20. For the aforesaid reasons, the following order is passed: -
The petition is allowed order dated 13.06.2023 and the consequential release order dated 16.06.2023 passed by Ld. JMIC Court No.5, Shimla, H.P. in Cr.MA No.7571 of 2022 titled Ranjana Vaishnav Vs. S.P. Cyber Cell Shimla are quashed.::: Downloaded on - 24/05/2024 20:34:41 :::CIS 10
The amount of Rs.81,842/-, if debited from the account of the petitioner shall be refunded to the .
petitioners account forthwith. Other than the aforesaid respondent No.1 is directed to pursue investigation in furtherance of complaint of respondent No.3 registered as Complaint No.380/DCR and GD. No.13 in General Diary which was got registered with Cyber Cell online portal.
(Bipin Chander Negi) Judge 24th May, 2024 (Manish) ::: Downloaded on - 24/05/2024 20:34:41 :::CIS