2024 (4) TMI 1194 - HC - Law of Competition

Google's platform hosting services don't constitute unauthorized Payment Aggregator operations under PSS Act 2007

The Calcutta HC dismissed a writ petition challenging Google's alleged operation as an unauthorized Payment Aggregator under the PSS Act, 2007. The court ... Google Group of Companies acting as Payment Aggregators (PAs) or not - violation of the Payment and Settlement Systems Act, 2007 (PSS Act) and RBI Guidelines - expedition of adjudication process regarding the complaint filed by the petitioners - grant of interim relief to prevent delisting from the Google Play Store pending adjudication - HELD THAT:- The Google Play services have made out a reasonably satisfactory prima facie case of charging only 'service charges for hosting the Applications like Hoichoi (petitioner no.1)?? when the said Apps earn money by using the platform provided by Google. It only provides user of the online platform across devices for the purpose of hosting developers and App operators. There is nothing palpable or ex facie evident to clinch beyond reasonable doubt that Google acts as PA by handling end-to-end payment mechanisms from merchants to customers. Displaying various payments Apps on its platform including respondent no.6, which is an accredited body incorporated in India as a PA, does not make Google itself or its group of companies other than respondent no.6 a PA per se. The discussion is only for the purpose of ascertaining whether the petitioners have made out such palpable and ex-facie case which is evident at the first glance that the Google group of companies are operating as PAs without being accredited/registered to do so on Indian soil - However, the above discussion shows that the issues raised are at best arguable and are to be decided by the RBI, which is the designated regulatory and adjudicatory authority under the PSS Act which has its own ecosystem for dealing with contraventions of the said Act. Even the Competition Act provides fora which have already been approached and the petitioners have submitted to the jurisdiction of the CCI. Hence, it would be absolutely premature for the writ court to enter into the merits of the self-same issues and pass interim orders as per prayers (f) and (g) of the writ petition. There is no cause of action disclosed to support the apprehension that RBI will sit indefinitely over the matter. The 12 weeks? time sought by the RBI is sufficiently reasonable in the opinion of this Court, considering the intricate issues involved and the enquiries to be made as well as the hearing to be afforded to the concerned parties, even leaving alone the required detailed examination of the agreements between the parties and the modalities of operation of the concerned group of companies. Thus, there is no scope of interference in any manner, at least at the present juncture. Application dismissed. Issues Involved:1. Whether the Google Group of Companies is acting as Payment Aggregators (PAs) in violation of the Payment and Settlement Systems Act, 2007 (PSS Act) and RBI Guidelines.2. Whether the RBI should be directed to expedite the adjudication process regarding the complaint filed by the petitioners.3. Whether the petitioners should be granted interim relief to prevent delisting from the Google Play Store pending adjudication.Issue-wise Detailed Analysis:1. Google Group of Companies as Payment Aggregators:The petitioners argued that the Google Group of Companies, through their Google Play Billing System (GPBS), acts as Payment Aggregators (PAs) without proper authorization under the PSS Act. They contended that the services provided by these entities align with the definition of PAs as per the RBI Guidelines on Regulation of Payment Aggregators and Payment Gateways. The petitioners highlighted that the respondents receive payments from customers, pool, and transfer them to merchants, which constitutes acting as PAs. However, the respondents countered this by stating that the charges levied are merely service fees for hosting applications on the Google Play Store, and not for acting as PAs. The court noted that the Google Play platform offers various payment methods, including GPay, operated by Google India, which is registered as a PA. The court found no clear evidence to conclude that the Google Group of Companies, other than Google India, acts as PAs.2. RBI's Role and Adjudication Process:The petitioners sought a mandamus directing the RBI to initiate adjudicative proceedings against the Google Group of Companies. However, the court observed that the RBI had already initiated the process by serving notice and holding meetings with the respondents. The RBI argued that it required at least 12 weeks to conclude the adjudication process due to the complexity of the issues involved. The court agreed with the RBI's timeline, stating that the petitioners' request was premature, as the complaint was filed only a day before the writ petition. The court emphasized that the RBI, as the regulatory authority under the PSS Act, should be allowed to conduct its inquiry without interference.3. Interim Relief for Petitioners:The petitioners sought protection from being forced to accept the GPBS payment system and to prevent delisting from the Google Play Store. The court noted that similar reliefs were sought by the petitioners before the Competition Commission of India (CCI), which had refused such reliefs. The court found that granting interim relief would be premature, as the issues were already under consideration by the RBI and the CCI. The court concluded that the petitioners did not make a compelling case for immediate intervention, as the matters were already being addressed by the appropriate regulatory bodies.In conclusion, the court dismissed the writ petition, emphasizing that the RBI should be allowed to complete its adjudication process within 12 weeks. The court refrained from making any determinations on the merits of the case, leaving it to the jurisdictional fora, including the RBI and the CCI, to decide the issues based on their merits.