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The Delhi High Court on Wednesday sought response of the Reserve Bank of India and the Enforcement Directorate (ED) on a plea alleging that an online payment platform PayPal was operating “illegally” without the central bank’s authorisation and should be stopped immediately.
A bench of Chief Justice D N Patel and Justice C Hari Shankar also issued notice to the RBI, ED and Paypal Payments Pvt Ltd, and sought their stand before the next date of hearing, September 18.
The court was hearing a PIL by a financial economist, Abhijit Mishra, who submitted that the operation of PayPal as a payment system in India is in contravention of Section 4(1) of the Payment and Settlement Systems Act, 2007 (2007 Act), which provides that no person other than the Reserve Bank, shall commence or operate a payment system except in accordance with an authorisation issued by the India’s central banking institution. The petition also alleged that PayPal does not figure in the list of authorised payment system operators published by RBI on May 27, 2019.
According to the plea, filed through advocate Payal Bahl, PayPal’s services are being used by various online travel, clothing and food websites or apps, including Yatra, Dominos Pizza and Myntra.
It alleged that PayPal was also “operating as a foreign exchange dealer in contravention of the Foreign Exchange Management Act (FEMA)”. It also sought probe against PayPal’s directors, management and officers of PayPal for alleged malpractice and violation of provisions of Article 21 of the Constitution of India, Payments and Settlements Act, FEMA and Prevention of Money Laundering Act (PMLA).
