Delhi High Court issues notice in a plea to stop operations of PayPal in India

The Delhi High Court has issued notice in a plea seeking to stop the allegedly illegal and unauthorized operation of PayPal Payments in India immediately..Notice was issued to the Reserve Bank of India (RBI) and PayPal by a Division Bench of Chief Justice DN Patel and Justice C Hari Shankar in a petition by Abhijit Mishra..Filed through advocate Payal Bahl, the petition argues that the operation of PayPal as a payment system in India is in contravention of Section 4(1) of the Payment and Settlement Systems Act, 2007 (2007 Act)..The Section provides that no person other than the Reserve Bank, shall commence or operate a payment system except in accordance with an authorization issued by the RBI..The petitioner has alleged that Paypal Payments Private Limited is not listed as an authorized operator as per the list of the ‘Payment System Operators’ published by the RBI on May 27, 2019. The list denotes the operators authorised by the RBI to set up and operate in India under the 2007 Act. The petition states,.“Paypal Payments Private Limited as per the published User Agreement on the official website itself makes an admission under Section 11.2 “Services Limitation-PayPal is not an Authorised institution (licensed bank, restricted licence bank, or deposit-taking company) for the purpose of Banking Regulation Act, 1949 or a payment system provider under the Payment and Settlement Systems Act, 2007…“.Raising issues of protection of privacy, the petitioner submits that Paypal, has unmonitored and unauthorized access to the personal information of the citizens such as Aadhaar and PAN, threatening Article 21 of the Constitution of India..It is also alleged that Paypal is operating as a foreign exchange dealer in contravention of Section 10 of the Foreign Exchange Management Act (FEMA) and the Prevention of Money Laundering Act..The petitioner further states that Paypal, being an unregistered entity to the 2007 Act, is not in complying with the RBI’s Master Circular on Storage of Payment System Data in India..The petitioner thus seeks a direction to the RBI to initiate appropriate action against the Paypal for the violation of the 2007 Act and to impose a penalty under the FEMA and Rules..It also prays for an investigation against PayPal by the Enforcement Directorate and the subsequent transfer of their allegedly illegal profits to the Prime Minister’s Relief Fund..The matter will be heard next on September 18..Image taken from here..Bar & Bench is available on WhatsApp. For real-time updates on stories, Click here to subscribe to our WhatsApp.

Delhi High Court issues notice in a plea to stop operations of PayPal in India

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