Karnataka HC quashes money-laundering case against Razorpay: ‘Intent essential to constitute offence under PMLA’

The counsel for the company argued that there was no material or allegation showing that Razorpay had been involved in concealing the crime, and that the burden of proof would only be on the firm if the prosecution could establish that an offence had been committed.

The court said, “There is no evidence to suggest that the petitioner… had knowledge that the funds transferred to the merchant IDs of accused…were derived from criminal activity related to a scheduled offence, nor did they knowingly assist accused No.5 in concealing or transferring illicit proceeds as clean money….most, it indicates that accused No.7 (Razorpay) was negligent in setting up the merchant IDs…. Intent is essential to constitute an offence under Section 3 of the PMLA.”

It was also pointed out that various other payment gateways and even banks had not been arraigned as accused in the matter unlike Razorpay.

The court further added that in the absence of any prima facie material to show that Razorpay knowingly facilitated the proceeds of crime, it could not be said that they were involved in money laundering as per section 24 of the PMLA.

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Noting that allowing the proceedings further would be an abuse of the process of law, the court quashed the proceedings against Razorpay.