In the case of M/S Inditrade Fincorp Ltd v. Union of India in the Karnataka high court bench held by Justice M Nagaprasanna said that to ensure the safety and security of Indian citizens the investigation is necessary and cannot ignore the fact that the neighbouring nation tried to destabilize us. The court also refused to interfere in the investigation of the Enforcement Directorate (ED).
The court observed that for small loans Indian smartphone users used these apps for the loan and these loans were provided without any documents they asked users to give access to the content on their phones. Problems arrive when they threaten to leak the private information of the user due to the repayment issue of EMI which is 16 to 20 times of normal EMI.
Inditrade Fincorp company filed a plea in court for challenging the act done by ED in which they freeze the account of the company and for the transactions two apps mainly used by the petitioner Cash Free Payments and Razorpay Solutions. Petitioner claimed to be a non-banking financial company (NBFC) that provides small loans under the RBI directions.
The court observed that there are 15 FIR registered by the cyber crime police station under the harassment and extortion of money by the small loan-providing company in Bangalore through this the ED searched and found a total 115 entities and the petitioner was one of them.
The petitioner in the court claimed that the show cause notice and search by the ED are contrary to the law and there is no Chinese citizen in our company employed.
The ED said that the company is planning something big with a Chinese company which can only be proven after the completion of the investigation.
Section 17 of the Prevention of Money Laundering Act, grants the ED powers of search and seizure.
The court concluded by dismissing both show cause notice as well as freezing the account.