Delhi High Court Issues Notice To RBI regarding PayPal Operation In India

Delhi High Court Issues Notice To RBI In A Plea Claiming PayPal Operating Illegally In India

Business Judiciary

The Delhi High Court on July 3, 2019, issued notice to the Reserve Bank of India (RBI) and PayPal in a plea seeking to stop the allegedly illegal and unauthorized operations of PayPal Payments in India.

A Division Bench of Chief Justice D.N. Patel and Justice C. Hari Shankar issued the notice while hearing a plea filed by one Abhijit Mishra through advocate Payal Bahl.

Mishra, in his plea, has alleged that operations of PayPal as a payment system in India is against Section 4(1) of the Payment and Settlement System Act, 2007.

Section 4(1) of The Payment and Settlement Systems Act, 2007, says “no person other than the Reserve Bank shall commence or operate a payment system except under and in accordance with an authorization issued by the Reserve Bank under the provisions of the Act.”

Mishra alleged that PayPal Payments Private Limited was not listed as an authorized operator in the RBI’s list of the ‘Payment System Operators’ published on May 27, 2019.

“That the Paypal Payments Private Limited is operating as a Foreign Exchange dealer for their clients to receive and send money for Export and Import transactions in blatant violation and contravention of the Foreign Exchange Management Act (FEMA) section 10 and sub section 6…,” the plea claims.

The plea sought direction to RBI to initiate action against Paypal for violation of the Payment and Settlement Systems Act, 2007, and to impose penalty under FEMA. It also urged a probe against PayPal by the Enforcement Directorate and transfer of their allegedly illegal profits to the Prime Minister’s Relief Fund.

The matter will be heard next on September 18, 2019.

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