PhonePe Moves Karnataka High Court Against Police Demand for User Data
PhonePe appealed before the Karnataka High Court on Wednesday against a single-judge order that had upheld a police notice asking the company to share user information in a cheating case linked to online betting.
A Division Bench comprising Chief Justice Vibhu Bakhru and Justice CM Poonacha issued notice on the appeal and scheduled the next hearing for February 12.
Appearing for PhonePe, Advocate Nitin Ramesh argued that the earlier order did not properly examine the statutory protections granted to UPI service providers under the Payment and Settlement Systems Act, 2007 (PSS Act) and the Bankers’ Books Evidence Act, 1891. He submitted that such entities cannot be compelled to disclose customer data merely through a Section 91 CrPC notice.
He said the key issue before the Bench was whether broad data sets could legally be demanded from a regulated UPI intermediary.
“The issue pertains to the interpretation of Section 91 of the CrPC, Section 22 of the Payment and Settlement Systems Act and the Bankers’ Book Evidence Act,” he told the Court. He also questioned whether an entire data dump could be sought through a police notice issued under Section 91.
PhonePe maintained that since it is a licensed and supervised entity under the PSS Act, it cannot be treated in the same manner as ordinary intermediaries for the purpose of data disclosure.
Background of the dispute
The case arose from a 2022 cheating complaint. A man claimed he had used PhonePe to deposit around ₹6,000 on a sports-betting website during India–South Africa cricket matches. He later found that the website was inaccessible, and he could not withdraw his money. He then filed a police complaint alleging cheating.
Following this, the police issued a Section 91 CrPC notice to PhonePe in December 2022. The notice sought details relating to the user who made the payments, whether PhonePe had conducted due diligence while onboarding customers, whether it had detected any suspicious activity, and whether it had observed any gambling-related transactions on its platform. The police also asked for a list of customers allegedly involved in online gambling.
PhonePe challenged this notice, stating that it is required by law to maintain the confidentiality of user information under the PSS Act and the Bankers’ Books Evidence Act, and that disclosure is permissible only when directed by a court.
The single-judge, however, ruled that the statutory provisions cited by PhonePe do allow sharing of information with authorities, including investigating agencies. The judge also noted that the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2011 require intermediaries to provide information to investigating officers within 72 hours of a lawful request.
PhonePe has now taken this ruling to the Division Bench.
