Prepaid Payments Instrument (PPI) company TalkCharge Technologies has filed a suit before the Delhi High Court against an order of the Reserve Bank of India (RBI) to stop the operations of the company [TalkCharge Technologies Private Limited v. Reserve Bank of India and Ors].
The plea was heard by single-judge Justice Vikas Mahajan who on Wednesday directed TalkCharge to serve a copy of the suit on RBI.
Advocate Sriram Parakkat represented Talkcharge.
The RBI issued a Stop Operation Order (SOO) on April 2 against TalkCharge directing it to stop issuing and operating its wallets/ PPI and to refund any remaining balance to its users within 15 days.
In its suit filed on July 24, TalkCharge has contended that RBI's action against it is based on the claim that TalkCharge is involved in third party transactions, meaning it was not operating as a closed system PPI but as an operating PPI.
This would require a certificate of authorization under the Payment and Settlement Systems Act, 2007 which TalkCharge does not have.
TalkCharge has disputed this claim contending that it operates as a closed PPI (a system where funds can only be used within the platform) which does not require RBI authorization.
As per TalkCharge's suit, many of its users violated TalkCharge's terms and conditions by using the platform for commercial purposes, leading to increased refunds and chargebacks, which hurt the company financially.
On May 3, TalkCharge's payment gateway provider, Razorpay, sent a demand notice to it seeking a payment of ₹87,85 lakh due to chargebacks from users who used the service for commercial purposes, the plea has claimed.
Further, in January 2023, its platform faced technical glitches due to served overload which caused certain difficulties to its users prompting them to withdraw amounts at once.
This prompted TalkCharge to restrict its wallet usage. Upset by these restrictions, its users filed numerous complaints demanding cashbacks, even though they had illegally used TalkCharge for commercial purposes, the plea said.
After RBI's action, TalkCharge's operations came to a halt and the company’s bank accounts, Demat accounts and phone numbers were blocked by investigating agencies due to ongoing complaints and alleged illegal actions, the plea pointed out.
Due to these setbacks, TalkCharge has claimed that it now faces a massive financial burden, owing to around ₹136 crores to users.
Some of its users are taking advantage of the situation by filing false complaints to extort money from it, the company has alleged.
TalkCharge has sought an ad interim injunction in its favor to stop any further adverse actions against it by RBI.