Razorpay Software Private Limited Vs Union of India (Karnataka High Court)
In the case of Razorpay Software Private Limited vs Union of India, the Karnataka High Court examined whether the accused, a payment gateway, could be held liable under the Prevention of Money Laundering Act, 2002 (PMLA), for allegedly facilitating illegal money lending activities without knowingly participating in criminal activity or having the intent to launder money. Here’s a summary of the judgment:
Background: The accused, Razorpay Software Private Limited, was alleged to have facilitated illegal money lending activities by allowing transactions in the name of another accused entity without proper due diligence.
Allegations: The complaint filed by the respondent alleged that the accused payment gateway facilitated transactions for an entity involved in illegal money lending, leading to harassment of borrowers and misuse of data.
Legal Arguments:
- The defense argued that the accused payment gateway had no knowledge of the funds’ criminal origin or intent to launder money.
- They contended that mere negligence in setting up merchant IDs without intent to commit an offense under the PMLA cannot constitute an offense.
- The defense also argued that the burden of proving innocence shifts to the accused only after the prosecution establishes the primary burden of guilt.
Court’s Analysis:
