Bombay HC Orders Release Of Bank Accounts & Payment Aateway Accounts Worth ₹100 Crore Of Coda Payments

Mumbai: The Bombay High Court has directed the release of bank and payment gateway accounts belonging to Coda Payments India Pvt. Ltd., boasting a value of around Rs 100 crore. The Court determined that the authorities had not meticulously established the assets' connection to money laundering. The Court also declared that an Appellate Tribunal could not rectify this oversight by asserting that the Adjudicating Authority was obligated to record a finding under the Prevention of Money Laundering Act (PMLA).

A division bench comprising Justices Ajey Gadkari and Kamal Khata was deliberating on an appeal against an Appellate Tribunal order that had maintained the freeze on the company's accounts. The case emerged from a complaint registered under ECIR (Electronic Crime Investigation Report) based on ten FIRs (First Information Reports) accusing users of online games of unauthorized deductions post an initial transaction.

Following investigations, the Enforcement Directorate seized five bank accounts and merchant IDs linked to payment aggregators and gateways. "Coda Payments," a global leader in digital content monetization and distribution, contended that the Adjudicating Authority had not independently recorded a Section 8(2) finding indicating involvement in money laundering. The Court concurred, emphasizing that the statutory requirement under Section 8(2) was not merely a formality.

However, the Court noted that the Order did not explicitly identify the property established as involved in money laundering. It also disagreed with the Tribunal's reliance on the company's gross revenue and alleged overseas remittances to ascertain "proceeds of crime." The Court emphasized, "Gross business turnover... cannot by itself establish that the entirety of the turnover represents 'proceeds of crime'."

The Bombay High Court dismissed the appeal, quashing the orders retaining the freezing of Coda Payments' accounts.