Karnataka High Court
Ntt Data Payment Services India Limited vs State Of Karnataka on 15 July, 2025
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NC: 2025:KHC:26229
WP No. 22741 of 2022
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MS. JUSTICE J.M.KHAZI
WRIT PETITION NO. 22741 OF 2022 (GM-RES)
BETWEEN:
NTT DATA PAYMENT SERVICES INDIA LIMITED
(ATOM TECHNOLOGIES LIMITED)
RULE 29 OF THE COMPANIES ACT, RULES 2014
PLOT NO.2-A, 4TH FLOOR
SURAKSHA ACE BUILDING, CST NO.34/3,
VILLAGE CHAKALA, ANDHERI KURLA ROAD
ANDHERI EAST, MUMBAI-400059
REPRESENTED BY ITS DIRECTOR
MR.TAKEO UENO
...PETITIONER
(BY SMT.POORNIMA HATTI, ADVOCATE)
AND:
Digitally
signed by
REKHA R 1. STATE OF KARNATAKA
Location: REPRESENTED BY THE POLICE INSPECTOR
High Court
of HULIYURDURGA POLICE STATION,
Karnataka KUNIGAL TALUK, TUMKUR-572123
2. NAVEEN KUMAR P A
GOLLARAHATTI VILLAGE
HULIYURDURGA HOBALI
KUNIGAL TALUK, TUMKUR-572123
...RESPONDENTS
(BY SRI.M.R.PATIL, HCGP FOR R1;
SRI.G.B.SHARATH GOWDA, ADVOCATE FOR R2)
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NC: 2025:KHC:26229
WP No. 22741 of 2022
HC-KAR
THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE ENTIRE
PROCEEDINGS ARISING FROM THE SAID F.I.R. NO 178 OF
2022 (COPY OF THE F.I.R ARE PRODUCED AT ANNEXURE A),
QUA THE PETITIONER.
THIS PETITION, COMING ON FOR DICTATING ORDERS,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MS. JUSTICE J.M.KHAZI
ORAL ORDER
Petitioner who is arraigned as accused No.1 has filed this petition under Article 226 and 227 of the Constitution of India r/w Section 482 of the Code of Criminal Procedure to quash the criminal proceedings initiated against it in Cr.No.178/2022 of Huliyurdurga PS, Kunigal, Tumkur District, for the offences punishable under Sections 420, 465, 468, 120B r/w 34 IPC.
2. In support of the petition, the petitioner has contended that it is a company incorporated under the Companies Act, 2013. It is an award-winning payment aggregator engaged in the business of providing secured and seamless digital payment solutions. The majority -3- NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR shareholder of the petitioner is the Japan based NTT Corporation in which the Ministry of Finance, Japan owns 33% stake. It has been granted an "in-principle"
authorisation on 02.09.2022 to operate as a Payment Aggregator under the Payment and Settlements Act, 2007.
2.1 Payment aggregators are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of the payment obligations without the need of merchants to create separate payment integration system of their own. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.
2.2 The platform developed by NTT is integrated with over 50 Banks and 265 payment options, offering transaction through Net-banking, Credit Cards, Debit Cards, BQR, UPI, Wallets, NEFT - RTGS challan, etc. The -4- NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR platform provides service to many customers, including regulated and Government entities, such as the Bombay Stock Exchange, Mutual Fund Houses, Government Brokers, Karnataka One, Municipal Corporations of Tumkur and Hubballi, Dharwad, Railtel, Karnataka State Electronic Development Corporation, IRCTC, etc. 2.3 The NTT platform is devised to also aid both start-ups and long-running businesses to grow revenue, alleviate risk and safeguard customer's data. Merchants are sourced by entities Sales Team and they are onboarded and monitored after adequate due diligence and documentation/KYC checks in lines with the Regulatory requirements. NTT services are spread across various sectors classified under education, government, broking, finance, utility, mutual fund, insurance, retail, amongst other services.
2.4 On 09.11.2022, the petitioner received an e- mail from petitioner's Nodal Bank ICICI Bank, stating that -5- NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR a police notice under Section 102 Cr.P.C was issued to them by respondent No.1 police to mark debit freeze on all the accounts held by petitioner with it. On the same day, petitioner has also received police notice under Section 91 Cr.P.C dated 08.11.2022 with reference to the said FIR. Consequent to the police notice, petitioner's bank accounts have been frozen effectively bringing its business operations to stand still.
3. Verification of the complaint reveal that complainant has filed a false and frivolous complaint with the sole intention of causing harm to the business and tarnishing the goodwill and reputation carefully built by the petitioner since its establishment. The complaint does not contain any details about the transaction initiated by the complainant whatsoever. It is vague and completely devoid of merits without a single shred of written evidence produced to substantiate any of the allegations. It contains vague details about the flow of the transaction through the petitioner's payment service platform which indicates that -6- NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR complainant is aware of the petitioners business as well as step-by-step transaction flow between the private aggregator, the Nodal Bank and the merchants account. With the sole object of harassing the petitioner, complaint is filed. No evidence is provided to support the said allegations. Without proper application of mind, the investigating officer has taken the drastic step of freezing the accounts of petitioner without holding proper enquiry or examination of the facts, underlying the complaint or appropriate documents.
4. Petitioner is also issued with the notice dated 11.11.2022 seeking personal presence of the petitoner's Director along with documents. Immediately petitioner provided all the documents. Being aggrieved by the arbitrary action taken by the respondent No.1, petitioner has come up with this petition on the following among other:-7-
NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR GROUNDS i. The Government entities such as Bombay Stock Exchange, Mutual Fund Houses, Government Brokers, Karnataka One, Municipal Corporations of Tumkur and Hubballi Dharwad, Railtel, Karnataka State Electricity Department Corporation, IRCTC etc, conduct their transactions through the petitioner's platform and are affected by the arbitrary actions of respondent No.1 in freezing the account of the petitioner. As a consequence of respondent's actions, the ecosystem wherein these Government entities have invested large sum of public money and the settlement systems in the financial markets are on the verge of collapsing. In respect of the damage that the respondent action have caused which will collapse the financial ecosystem that these Government entities rely on, respondent No.1 may be directed to defreeze the accounts by showing appropriate instructions to the petitioners bank.-8-
NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR ii. It is well settled that the intermediary shall not be liable for any third party activities or information, data, or communication link hosted by the intermediary. The complaint consists of bald allegations, without any substantiation and there is sufficient material to show that it is malafide and prima facie does not make out any offence against the petitioner.
5. The action of respondent No.1 investigating officer in issuing instructions to the Nodal Bank of the petitioner, directing them to freeze all accounts, including nodal accounts of the petitioner and stop all debits, are not in compliance with the provisions contained under Section 102 of Cr.P.C. Respondent No.1 has unilaterally issued the aforesaid instructions without reporting the aforesaid actions to the concerned Magistrate or Sessions Court and without informing the petitioner of such actions.
It is clear that it amounts to extortion and on this ground alone, the proceedings is liable to be quashed. The -9- NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR freezing of the account of petitioner would affect several of its customers business.
6. Even though complainant has alleged that he has suffered loss of ₹20,000/-, he has not furnished the details of the transaction such as mode of transaction or transaction ID. Despite the same respondent No.1 has taken arbitrary and unilateral action of freezing all the accounts, including the nodal accounts belonging to the petitioner and thereby effectively crippling the business of the petitioner and thousands of merchants relying on the petitioners platform. The petitioners account with ICICI bank contains in excess of Rs.3662 Crores and for the alleged loss of ₹20,000/-, respondent No.1 investigating officer has taken a drastic and this proportionate action by freezing its account. Without making any preliminary enquiry, respondent No.1 has taken a historic action in violation of directions given by the Hon'ble Supreme Court
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR in Arnesh Kumar Vs State of Bihar (Arnesh Kumar)1. Unnecessarily, the petitioner is being implicated. Continuation of the criminal proceeding would amount to abuse of the process of the Court and hence the petition.
7. In support of his arguments, learned counsel for petitioner has relied upon the following decisions:
(i) Sri.Rahul Chari & Ors. Vs. State of Karnataka (Rahul Chari)2
(ii) State of Haryana and Ors. Vs. Bhajan Lal and Ors.(Bhajan Lal)3
8. On the other hand, learned counsel representing respondent No.2 and learned High Court Government Pleader representing respondent No.1 State submit that on 07.11.2022 at 5.00 p.m, respondent No.2 lodged a written complaint stating that while he was browsing Facebook, he came across an online gaming website/app. He installed the same on his cell phone and 1 (2014) 8 SCC 273 2 W.P.No.2865/2022 Dt.17.10.2022 3 1992 Supp (1) SCC 335
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR opened it. Till 24.10.2022, he has credited more than ₹20,000/- in several instalments. However, on verification he found that the money has not gone to BETIN Exchange bank account, but it is credited to the account of NTT data payment services India Ltd (Atom Technologies Ltd). Therefore, he suspect that said NTT data payment services is making unlawful gain by using BETIN Exchange gaming app. The BETIN exchange company is running betting online Casino. The NTT Data Payment Services India Ltd based on fake documents utilising BETIN Exchange App is making money. They are collecting money through nodal accounts and company accounts and therefore action is required to be taken against NTT Data Payment Services India Ltd and BETIN Exchange or betin exchange.com companies.
9. Heard arguments and perused the record.
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR
10. Thus respondent No.2 has filed complaint alleging that when he downloaded the BETIN -Exchange gaming app and credited ₹20,000 through various payments through NTT data payment services India Ltd. However he found that the payments have not reached the BETIN exchange gaming app, but on the other hand, they remained with petitioner No.1. Based on the said complaint, respondent No.1 has registered the case and issued notice to ICICI Bank to freeze the account of petitioner and also issued notice to petitioner to furnish several details. As rightly pointed out by the petitioner, in the complaint, complainant has not furnished all the details of the transaction and has not produced any documents to evidence the same. Anyhow, the investigating officer is at liberty to collect all those details.
11. Since petitioner is an Intermediately facilitating the payments made through it, as per Section 79 of the Information Technology Act, the intermediary
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR is/are exempted from liability in certain cases. It reads as follows:
"79. Exemption from liability of intermediary in certain cases.-(1) 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 overwhich 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;
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR
(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 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."
12. Sub-section (2) provides that the exemption enumerated in sub-section (1) is available if the conditions specified in sub-section (2) are complied with. Similarly, sub-Section (3) mandates that the said exemption would not be available if the intermediary is guilty of clause (a) and (b) of sub-section (3).
13. Without conducting investigation and ascertaining the information available with petitioner and examining whether it has followed the conditions enumerated in sub-section (2) and whether it is guilty of
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR provisions of sub-section (3), the investigating officer ought not to have arraigned petitioner as accused and ought not have freezed the entire account bringing business to a standstill. Therefore, the continuation of the criminal proceedings against the petitioner would amount to abuse of the process of law.
14. However, the investigating officer is at liberty to seek all the details which are required and available with the petitioner, which is necessary for the purpose of investigation and treat the petitioner as a witness for collecting the said information. If the investigating officer finds that the petitioner is guilty of violation of sub-section (2) and (3) of Section 79, and not entitled for the exemption available under Section 79, it may proceed against the petitioner in accordance with law.
15. In the result, the petition succeeds and accordingly the following:
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NC: 2025:KHC:26229 WP No. 22741 of 2022 HC-KAR ORDER
(i) Petition filed by the petitioner/accuses No.1 under Article 226 and 227 of the Constitution of India r/w Section 482 Cr.P.C, is hereby allowed.
(ii) The criminal proceedings initiated against the petitioner in Cr.No.178/2022 of Huliyurudurga PS, Kunigal Taluk, Tumkur District is hereby quashed so far as petitioner is concerned.
(iii) The petitioner shall co-operate with the investigating officer to furnish all the information available with it.
(iv) However, liberty is reserved to the trial Court to proceed against the petitioner under Section 319 Cr.P.C, if such necessity arise.
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(v) The Registry is directed to send a copy of this order to the trial court through e-mail.
Sd/-
(J.M.KHAZI) JUDGE RR List No.: 1 Sl No.: 59