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The petitioner is before this Court calling in question order dated 02-09-2022 passed by the 5th respondent/Assistant Director, Directorate of Enforcement directing freezing of the account of the petitioner invoking Section 17(1-A) of the Prevention of Money Laundering Act, 2002 ('the Act' for short).

2. Brief facts that lead the petitioner to this Court in the subject petition, as borne out from the pleadings, are as follows:-

The petitioner is M/s Inditrade Fincorp Limited which claims to be a Type-II non-deposit taking Non-Banking Financial Company (NBFC) incorporated in 2007 under the provisions of the Companies Act, 1956 and further claims to have secured and unsecured micro lending business and its primary revenue is the interest income on the loans given and other incidental fees. The petitioner claims that it is a Company wholly governed and regulated by the Reserve Bank of India under the Reserve Bank of India Act, 1934 and the relevant Rules therein. Respondents 2 to 5 who are the officers of the Enforcement Directorate, 5th respondent in particular, directs that the account of the petitioner be placed under debit freeze pursuant to a search conducted on M/s Cashfree Payments India Private Limited and M/s Razorpay Solutions India Private Limited which are Payment Gateways utilized by the petitioner for disbursal and collection of digital micro-loans to borrowers/customers. After directing debit freeze, proceedings are initiated in Original Application No.732 of 2022 by the Adjudicating Authority under the Act and issues show cause notice to the petitioner on 14-10-2022 in terms of Section 8 of the Act. Contending that the very search and seizure is contrary to law and the second show cause notice being based on the foundation of such search and seizure would also be contrary to law, the petitioner has knocked the doors of this court in the subject petition.

10. It is not in dispute that the petitioner was in the business of disbursing small loans by loan agreements that would be signed between the parties. One of such agreement is also appended to the petition as an illustration. Therefore, it is a fact that the petitioner was disbursing small loans to small borrowers, through Cashfree Payments or Razorpay or any other Payment Gateway and did have an agreement with Waterelephant. Waterelephant Company is said to have had several transactions and its Directors are said to be Chinese. The link travels in this manner. It now become germane to notice the panchanama that was drawn while the office of Razorpay was searched and it reads as follows:

Thereafter, the said officer along with his staff enquired about the in-charge of the said office premises of M/s Razorpay Software Pvt. Ltd. from the receiptionist and it is found that Mr. Abhishek Abhinav Anand, Senior Manager of Razorpay was here to extend full cooperation on behalf Razorpay. Thereafter, the said officer showed the said search Warrant to Mr. Abhishek Abhinav Anand and took his signature on the said Search Warrant for having seen the same and thereafter entered the said premises of M/s Razorpay Software Pvt. Ltd. at SJR Cyber Laskar, Hosur Road, Adugodi, Bengaluru-560 030 at 10.10 hrs. While starting the search proceedings, the said officials of the Enforcement Directorate offered their personal search to Mr. Abhishek Abhinav Anand, while was politely declined by Mr. Abhishek Abhinav Anand.

The search of the said premise commenced at 10.30 hours on 2-09-2022. The search proceedings conducted in our presence by the said Assistant Director and other accompanied staff and during the search proceedings, no documents were seized by the members of search team and NIL Panchama was drawn by them after the search. However, freezing order u/s 17(1A) of PMLA has been issued in respect of the Merchant IDs and a/c nos. found in r/o the 111 entities during the search.

During the course of the search, Mr. Pushkar Deshapande, Associate Director (Risk Management) in M/s Razorpay Software Pvt. Ltd. and Mr. Satyanarayana Kunapuli, Senior Vice-President (Finance) of M/s Razorpay Software Pvt. Ltd. gave their sworn statement n our presence. No threat, coercion or inducement was used by the officers for getting the said statement of Mr. Pushkar Deshpande and Mr. Satyanarayana Kunapuli. Thesearch concluded at 19.45 hours on 2-09-2022. During the entire course of search at the premises, no harm was caused to the inmates or the premises as above. During the entire search proceedings, no force/coercion was used against the inmates and also no harm was caused to inmates or to the property. During the entire proceedings, no religious sentiments were hurt. The search ended in a peaceful manner and all protocols related to Covid- 19 were followed."