Prepaid Payments Instrument (PPI) company, TalkCharge Technologies, has filed a petition in the Delhi High Court challenging an order from the Reserve Bank of India (RBI) to cease its operations [TalkCharge Technologies Private Limited v. Reserve Bank of India and Ors].
The case was heard by Justice Vikas Mahajan, who on Wednesday directed TalkCharge to serve a copy of the petition to the RBI. Advocate Sriram Parakkat appeared on behalf of TalkCharge.
The RBI had issued a “Stop Operation Order” (SOO) on April 2, instructing TalkCharge to stop issuing and operating its wallets/PPI services and to refund any remaining balances to its users within 15 days.
In its petition, filed on July 24, TalkCharge contended that the RBI’s action was based on the claim that the company was conducting third-party transactions, thereby operating as an open-system PPI rather than a closed-system PPI. Operating as an open-system PPI would require a certificate of authorization under the Payment and Settlement Systems Act, 2007, which TalkCharge does not possess.
However, TalkCharge disputed this claim, asserting that it operates as a closed-system PPI, where funds can only be used within the platform, and therefore does not require RBI authorization.
According to TalkCharge’s plea, some users violated the platform’s terms by using it for commercial purposes, which resulted in increased refunds and chargebacks, causing significant financial strain on the company.
On May 3, TalkCharge’s payment gateway provider, Razorpay, issued a demand notice seeking ₹87.85 lakh due to chargebacks resulting from users who had used the service for commercial activities, according to the petition.
Additionally, TalkCharge experienced technical issues in January 2023 due to server overload, which affected users and led to mass withdrawals. As a result, TalkCharge restricted its wallet usage. Upset by these restrictions, users filed numerous complaints demanding refunds, even though they had allegedly used the platform for commercial purposes in violation of its terms, the company claimed.
Following the RBI’s action, TalkCharge’s operations were halted, and its bank accounts, Demat accounts, and phone numbers were blocked by investigating agencies due to ongoing complaints and alleged illegal actions, the petition noted.
TalkCharge now faces a massive financial liability, with approximately ₹136 crores owed to users. The company also alleged that some users are taking advantage of the situation by filing false complaints to extort money.
In its plea, TalkCharge has requested an ad-interim injunction to prevent further adverse actions by the RBI.
