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Bombay High Court Orders Release of Coda’s ₹100 Crore Accounts
The Enforcement Directorate froze several accounts belonging to Coda Payments.
The freeze was connected to complaints about unauthorized deductions from online game users.
The frozen accounts held about ₹100 crore.
Coda Payments argued that the authorities had not properly shown that this money came from illegal activity.
The Bombay High Court agreed with the company.
It said the required legal finding had not been made by the correct authority.
The court also said a later tribunal could not fix that mistake.
As a result, the court ordered the accounts to be released.
The Bombay High Court ordered the release of Coda Payments’ accounts containing around ₹100 crore.
The court found that authorities had not established under Section 8(2) that the assets were linked to money laundering.
The case followed an Enforcement Directorate investigation involving ten FIRs alleging cheating and criminal conspiracy.
The court said the alleged fraud involved about ₹25 lakh, while more than ₹100 crore had been frozen.
The court quashed orders continuing the freeze, ruling that the Appellate Tribunal could not repair the original legal defect.
- Who
- Coda Payments India Pvt. Ltd., the Enforcement Directorate, the Adjudicating Authority, and the Appellate Tribunal were involved; the case was decided by a Bombay High Court division bench.
- What
- The Bombay High Court quashed orders continuing the freeze on Coda Payments’ bank and payment gateway accounts.
- Where
- The case was heard by the Bombay High Court in Mumbai.
- When
- The article does not specify the date of the ruling.
- Why
- The court found that the authorities had not made the mandatory finding that the frozen assets were involved in money laundering.
Coda Payments’ Position
Authorities’ Position
Whether the assets were linked to money laundering
Coda Payments’ Position
Coda Payments argued that the Adjudicating Authority had not independently found under Section 8(2) that the properties were involved in money laundering.
Authorities’ Position
The freezing of the accounts was continued through orders upheld by the Appellate Tribunal, which relied on the available material, including alleged overseas remittances and gross revenue.
Scale of the account freeze
Coda Payments’ Position
Coda Payments questioned why around ₹100 crore was frozen when the alleged amount in the ten FIRs was about ₹25 lakh.
Authorities’ Position
The authorities continued the freeze over the company’s accounts and merchant IDs, while the Tribunal considered the company’s revenue and transactions in assessing alleged proceeds of crime.
Authority to correct the legal omission
Coda Payments’ Position
Coda Payments maintained that the required finding had to be made by the Adjudicating Authority.
Authorities’ Position
The Appellate Tribunal upheld continuation of the freeze, but the High Court ruled that it could not later supply a finding omitted by the Adjudicating Authority.
Key facts
- Frozen assets
- Around ₹100 crore in five bank accounts and merchant IDs.
- Alleged amount
- About ₹25 lakh was allegedly involved in the ten FIRs.
- Transactions cited
- The court questioned how transactions worth ₹2,854 crore could all be treated as fraudulent auto-debits.
- Investigation basis
- An ECIR was registered based on ten FIRs alleging cheating and criminal conspiracy.
- Relevant law
- The ruling addressed the mandatory finding required under Section 8(2) of the Prevention of Money Laundering Act.
- Court outcome
- The High Court allowed Coda Payments’ appeal and ordered the account freeze to end.
Quotes
Bombay High Court bench
Division bench of Justices Ajey Gadkari and Kamal Khata
“If an Adjudicating Authority omits the mandatory finding under Section 8(2), the Appellate Tribunal cannot thereafter supply that finding on the basis of the same material.”
freepressjournal.in
“Gross business turnover… cannot by itself establish that the entirety of the turnover represents ‘proceeds of crime’.”
freepressjournal.in
Sources
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