Notice to stop Paypal operations in India

The Delhi High Court Division Bench of Chief Justice D.N. Patel and Justice C. Hari Shankar has issued notice to the Reserve Bank of India (RBI) and PayPal in a plea by Abhijit Mishra through Advocate Payal Bahl, seeking to immediately stop the allegedly illegal and unauthorized operation of PayPal Payments in India.

Listing various contraventions such as Section 4(1) of the Payment and Settlement Act, 2007 (2007 Act) and PayPal’s position as an unauthorized operator as per the ‘Payment System Operators’ published by the RBI on May 27, 2019, the petition argues PayPal is not an authorised institution under the 2007 Act.

The petition has further raised the issue of protection of privacy and maintains PayPal’s operation is in contravention of Section 10 of the Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act. Paypal, has unauthorized access to the personal information of citizens such as Aadhaar and PAN, dealing a blow to Article 21 of the Constitution of India.

However, the petition is silent about Paypal’s various understanding with the Union government as also its understanding with major nationalized banks as well as private and scheduled banks. While it has highlighted Paypal’s shortcomings, it has failed to offer alternatives to lawful and securitized transactions internationally within the Indian economy.

The matter is slated to be heard next on September 18.