Karnataka High Court
Ntt Data Payment Services India Limited vs State Of Karnataka on 15 July, 2025
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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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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,
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
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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
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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
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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
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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:
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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.
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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
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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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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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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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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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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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(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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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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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
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