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2023 (12) TMI 1388
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....n 417/419/420 IPC & under Section 66-C/ 66-D of Information & Technology Act. Three accused persons were arrested from a Call Center office of M/s Jiya Liang Infotech Pvt. Ltd., Pune. The said Company was registered on 15.07.2020 and has made agreements for providing tele-caller services for the recovery of the loan payment dues with three Companies namely M/s Bienance Infrastructure Technology, West Mumbai, Maharashtra; M/s Ajaya Solutions Private Limited, Thane, Maharashtra; & M/s Taelde Technology Private Limited, Mysore, Karnataka. The abovementioned companies were doing online instant loan lending business through various applications and sanctioning the personal unsecured loans through digital apps to the borrowers. After one week of sanctioning the loan, customer data was being provided to M/s Jiya Liang Infotech Pvt. Ltd. for calling the borrowers on their phone numbers asking for repayment of loan along with higher rate of interest without following the Rules/ Regulations of RBI. M/s. Jiya Liang Infotech Pvt. Ltd. procured Laptops, Desktops and Network Routers from China and established Call Centers. Around 650 employees working in the Company were provided with dedicat....
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....censes from RBI/Concerned Govt. Authorities. Subsequent to non-payment of outstanding amount, the Complainants have been receiving multiple messages/ calls/ E-mails from various numbers demanding for repayment of further amounts. While sanctioning the loans, all contact details, photos and personal data of the complainants were being taken through the said loan apps. All such data is being given to various tele-caller companies, and further, the tele-caller companies have been making calls to the complainants' family members and friends addressing them with abusive language. Tele-callers have also been suggesting victims to make the repayment of existing loans by taking loans from their other loan applications. As such, customers fell into their debt-trap by taking loans in other loan apps as suggested by tele- callers and end-up paying huge amounts. In the said 43 FIRs around 365 loan mobile applications were involved. All the complainants have been receiving further calls/ messages/ e-mails from various mobile numbers to repay further amounts, accordingly, ECIR/HYZO/04/2021 was registered. During enquiry/ investigation by ED, it has been revealed that the Companies with NBFC (....
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....separate Merchant IDs (MID) with payment gateways for each APP and then credited back the same to so called performance guarantee in the MID of NBFC (actually of the APP). Fintech Company is then free to do its lending business using this money. Thus, in reality these Fintech Company are lending from their own money. By doing a MOU with an Indian NBFC Company, they get a de-facto NBFC license. On the other hand, these APPs are playing a risky high return game. They gave instant micro-loans to thousands of customers with minimum KYC requirements and just based on online verification. At the time of loan sanctioning itself, they deduct 25% amount as „processing fee‟ and on the loan amount they charge heavy rate of interest with high penalty rate etc. At the time of loan sanction, they also illegally capture d the mobile data of the customers and their phone contact data. They also employee call centers who are notorious in chasing people online and through threat calls to the customers and their relatives recover the micro loans with high interest. The NBFCs and Fintech Companies have gained amount of Rs. 8,19,61,25,594 on loan of Rs. 44,30,53,96,389, which is proceeds of....
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....borrow only up to 5 times its NOF and was not supposed to take deposits, they illegally took 'security deposit' and then passed on the same to the same mobile APP company to lend by piggybacking on its license. Thus, NBFCs with minuscule NOF, ended up lending thousands of crore business in a single financial year. The APPs minted money and had very impressive rate of return and could also turn around the loan amounts after every few weeks and enjoyed very high profits. The Indian NBFC owners also earned substantial commission. There is a suspicion that many of the fintech APPs are sponsored by foreign funds especially from China & Hong Kong and they illegally parked large amounts of profits in off-shore accounts in the guise of bogus outward remittances. 3. Now coming to the role of present appellants M/s Sarvottam Fincap Limited, and M/s VPoint Solution Ltd. (as per page no. 45 of the impugned order), the same is tabulated as under; SARVOTTAM FINCAP LIMITED NBFC The defendant had entered into service agreement with various service providers without following due diligence of such companies and allowed them to have the entire business of lending through mobile applic....
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.... the customers. On the other hand, respondent ED before Ld. Adjudicating Authority stated that a mobile application namely „Paisa Finch‟ associated with defendant no. 52 has been complained in FIR no. 1136/2020 & 2452/2020. The main allegation in the FIR was cheating by way of misusing the data of the borrower. Further, the said offence comes under the ambit of schedule offence under PMLA, 2002. Thus, proceeds generated out of such criminal activities is the proceeds of crime. The police filed chargesheet only in two FIRs and the chargesheet in the remaining 41 of the FIRs are yet to be filed. The borrowers were given lucrative offers so that maximum number of borrowers would avail loans. However, without their knowledge, during the time of loan application, their vulnerable data were taken and the same was misused in order to compel them to repay their loan along with excessive interest rates, processing fees and other fees, which led them falling into debt trap. Engagement of any service providers were not prohibited by the RBI. However, in the instant case, in the name of recovery, the service providers were resorting to cheating by way of misusing the data of the....
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....e Value of the property 211 ICICI 754105000013 Yes No 59,416 Accordingly, the said amount attached vide PAO was confirmed by Ld. Adjudicating Authority vide order dated 27.01.2023. 4. Aggrieved by the said impugned order dated 27.01.2023 appellants Sarvottam Fincap Limited and M/s VPoint IT Solution Pvt. Ltd. filed the present separate appeals. It is pertinent to mention here that after conclusion of oral arguments appellants filed their written submissions on 27.10.2023 and respondent ED filed its written submissions on 30.10.2023. 5. During the oral arguments, the learned counsel for the appellant/ defendant no. 52 submitted that there is nothing to demonstrate any nexus between the alleged schedule offences and the attached property. No 'reasons to believe' is disclosed. He further stressed that even for the issuance of a provisional attachment order under Section 5(1) of PMLA, respondent ED needs to arrive at a conclusion that the proceeds of crime viz the property sought to be attached is involved in money laundering. As a necessary corollary, the respondent ED needs to demonstrate that an offence of money laundering has been committed, before the pr....
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....ts of the appellant company was wrongly and illegally attached by the respondent ED. In support of his contention, he pointed out that Cyber Crime Police Bengaluru found the case of the appellant to be genuine and thus made a request to the appellant's bank to de-freeze the appellant's accounts. The said de-freezed account is also attached by respondent ED vide impugned PAO, which is confirmed by Ld. Adjudicating Authority vide impugned order. He further stressed that in absence of any allegation in the FIR regarding generation and quantum of proceeds of crime or the filing of chargesheet, it is wholly impermissible for the ED to itself become the arbiter whether a scheduled offence stands committed or not. Therefore, in the absence of any evidence or conclusion regarding commission of an offence, the foundation of proceedings initiated under the PMLA should fail. In support of his contention, he has relied upon the judgment of Hon'ble Delhi High Court, in case of Prakash Industries Ltd. vs. Union of India & Anr., 2023 SCC OnLine DEL 336 (para 84 to 88, 91 & 92). He pointed out that account no. 50200058917636 at Sr. No. 3 of the table was never used in the process of digital lendin....
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....in their joint written submission. 6. On the other hand, Ld. counsel for the respondent ED in its written submission explained the Modus Operandi of loans APPs for committing fraud. It is further, stated that vide order dated 04.02.2021 in PIL No. 13/2021 filed by Mr. Kalyandeep Dileep Sunkara, Advocate, the High Court of Telangana directed the DGP, Telangana to file a status report on the rampant instant sanctions of loan by instant loan APPs @ 150% to 450% interest and constant harassment of people to repay the loans. Direction was given to take immediate and necessary steps to nab the guilty parties and ensure that such lending APPs are deleted/ blocked. M/s Sarvottam Fincap Ltd. has APP "Paisa Finch" stated to be developed by itself. However, even if it has used its own APP, but it has used the same Modus Operandi as was being used by other NBFC and Fintech Companies. M/s Sarvottam Fincap has used third party services for recovery of their loan amount. M/s Sarvottam Fincap through their app "Paisa Finch" has disbursed a loan amount of Rs. 90,49,91,734 out of which a whopping amount of Rs. 17,27,97,774 was deducted upfront in the name of processing fees. M/s Sarvottam has rec....
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....busing, threatening, by using the sensitive data of the borrowers, as explained above. It was only after the investigation by the respondent ED, the appellant was found to be involved in the activity connected to money laundering and acquired the Proceeds of Crime and the same was attached. The learned Adjudicating Authority has recorded detailed reasons and the same was supplied to the appellant along with the Show Cause Notice. The instant case is not based merely on the involvement of foreign entity/person. Rather, the case is based on the 43 FIRs, wherein the borrowers had taken loans from various mobile application. At the time of downloading of their loan applications, their sensitive date such as contact number, images etc. were taken and the same was used towards pressurizing the borrowing to compel them to pay the loan amount along with higher interest, penalty and processing fees. It is further stated that the NBFC through its third parties, adopted to such method which would compel the borrowers to repay the loan amount. The contact details of the borrowers were accessed and not only the borrowers, but even their family members, relatives and friends were called and h....
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....ncap Ltd. was actually in defunct stage and there were not much lending activities in the said company. However, after the funds received from M/s VPoint IT Solutions which in turn was received from overseas company, was transferred to M/s Sarvottam Fincap Ltd. and thereafter its lending activity skyrocketed. Since, the funds which was ultimately utilized towards lending to the borrowers was of overseas company, it won‟t be wrong to state that the actual control over the entire business was of overseas companies, who were having control on the entire business through M/s VPoint IT Solutions. Thus, the main beneficiary is the overseas company, who infused funds with the involvement of M/s VPoint IT Solutions Pvt. Ltd. and M/s Sarvottam Fincap Ltd. Mr. Sandip Chhajed during his statement recorded under Section 50 of PMLA, 2002 has merely stated that the APP "Paisa Finch" was developed by M/s Sarvottam Fincap Ltd., however, he did not produce any documents evidencing the same. It appears that the APP may have been developed by the overseas company and the same was supplied to M/s Sarvottam Fincap Ltd. as in the other similar cases. M/s VPoint IT Solutions was non-cooperative in ....
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....and during this process, they took the access of the mobile data of the loanee customers. The mobile data and contact list of the loanee was used to exercise threat, blackmailing and extortion for re-payment on high rate of interest. The extortion by threat & blackmailing committed by agents of appellant M/s Sarvottam Fincap Ltd. as complained in FIR No. 1136 & 2452 of 2020 was not different from the other NBFC/ Fintech Companies. Simply, because no chargesheet is filed against the appellants in the said two FIRs is no ground to allow the present appeals, as conversely no closure report is admittedly filed by the investigation agency, till date. The fact that no sanction or adverse order is passed by the RBI against the appellant companies till date is also no ground to allow the present appeals, being a separate prerogative of the RBI as a Regulatory Authority. The fact that appellant M/s Sarvottam Fincap Ltd. after taking ICD of Rs. 4.52 crores from appellant M/s VPoint IT Solutions Pvt. Ltd. disbursed the small loans on high rate of interest and processing fee shows that huge amount was rotated again and again to earn high profits in a very short span by exercising coercive re- ....