The central legal point established in the judgment is the need for clarification on whether facilitators of monetary transactions should be categorized as 'payment system operators' and 'reporting entities' under the Prevention of Money Laundering Act, 2002.

JUDGMENT

Prathiba M. Singh, J. (Oral). - This hearing has been done by video conferencing.

CM APPLs. 422/2021 & CM APPLs. 423/2021(for exemption)

2. Allowed, subject to all just exceptions. Applications are disposed of. W.P.(C) 138/2021 & CM APPL. 421/2021 (for interim relief)

3. The Petitioner in the present petition challenges the impugned order dated 17th December, 2020, passed by the Director, Financial Intelligence Unit-India, Ministry of Finance, Government of India. By the impugned order, the Petitioner has been held to be a "reporting entity" and a "payment system operator", under Section 2(l) (wa) and Section 2(l)(rc) of the Prevention of Money Laundering Act, 2002 (hereinafter, 'PML Act'). Further, the impugned order finds the Petitioner guilty of violations under the provisions of the PML Act, and has imposed a penalty amounting to Rs.96 Lakhs. The impugned order, thereafter, directs the Petitioner to register itself as a "reporting entity" with the Financial Intelligence Unit-India {hereinafter, 'FIU-IND") as well as to appoint a Principal Officer and communicate the name, designation and address thereof, within a period of 15 days of the receipt of the said order. The operative portion of the said impugned order reads as under:

"52. In view of the above, I, in exercise of the powers conferred upon me under Section 13(2)(d) of the Prevention of Money Laundering Act, 2002 impose a total fine of Rs. 96,00,000/- (Rupees Ninety Six lakhs only) on PayPal Payments Private Limited which will be commensurate with the violations committed by it. PayPal Payments Private Limited shall pay the said amount of fine within 45 days of receipt of this Order by way of Demand Draft in favour of 'Pay & Account Officer, Department of Revenue" failing which the provisions of Section 69 of the Act shall apply.

53. Further, by virtue of powers conferred upon me under Section 13(2)(b) of the Prevention of Money Laundering Act, 2002, I, find it expedient to direct PayPal Payments Private Limsited to:

(a) register itself as a reporting entity with FIU-IND within 15 days of the receipt of this Order;

(b) appoint the Principal Officer and communicate the name, designation and address Thereof within 15 days of the receipt of this order; and

(c) appoint the Designated Director and communicate the name, designation and address thereof within 15 days of the receipt of this order. "

4. On behalf of the Petitioner, Mr. Rohatgi, Id. Senior Counsel and Mr. Poovayya, Id. Senior Counsel appear and submit that the Petitioner is only a facilitator platform which conducts two types of transactions. The first type of transactions are transactions in foreign exchange, which are merely facilitated between registered reporting entities. The second type of transactions are domestic transactions in Rupees. It is submitted by Mr. Rohatgi, Id. Senior counsel that each and every foreign exchange transaction is reported by the concerned reporting entity and the Petitioner is merely providing a facilitator platform and charging a nominal fee for each of the transactions. No foreign exchange is actually collected or paid by the Petitioner platform. He categorically submits and assures the Court that in the transactions facilitated by the Petitioner, no actual money is received or disbursed by the Petitioner- except for the payment of the nominal facilitator fee. He therefore submits, that the Petitioner cannot be deemed to be a "reporting entity" under the PML Act. Reliance is placed by the Id. senior counsel, upon the RBFs affidavit filed in another writ petition, where the RBI took a stand that the Petitioner is not operating or participating in a payment system, and the Payment and Settlement Systems Act, 2007 (hereinafter, 'PSS Act') does not apply to the Petitioner.

5. On the strength of these submissions, it is urged by the Id. Senior Counsels that the impugned order, holding that the Petitioner would be liable to be a reporting entity under the PML Act, is not tenable.

6.