Context : Court Ruling
- The Karnataka High Court ruled that digital payment intermediaries, such as PhonePe, must disclose user transaction details to police during criminal investigations.
- The court emphasized that confidentiality must coexist with accountability, and privacy protection must yield to the public interest when it intersects with criminal investigations.
Relevance : GS 2 (Governance ),GS 3(Indian Economy)
Legal Context
- The court dismissed PhonePe’s claim that it had immunity from disclosing information, citing the Payment and Settlement Systems (PSS) Act, 2007 and the Bankers Books Evidence (BBE) Act.
- PhonePe argued that digital payment firms could not disclose user data to anyone except under court orders.
Duty to Cooperate in Criminal Investigations
- The court held that investigating officers are considered statutory authorities with the legal power to demand information under the Code of Criminal Procedure (CrPC).
- The protection of consumer privacy does not supersede the lawful imperative of aiding criminal investigations and securing evidence.
Implication for Digital Payment Firms
- The court clarified that while privacy protection is important, it does not provide absolute immunity to digital payment firms in criminal cases.
- Payment intermediaries must cooperate with law enforcement if the disclosure is legally justified.
PhonePe’s Stance
- PhonePe had previously argued that disclosing information violated the confidentiality clause of the digital payment system, claiming immunity unless a court order is issued.
Case Details
- The case involved a complaint by a consumer who lost money in 2022 while using several digital payment gateways, leading to an investigation by the CEN police station, Bengaluru Rural district.
- The police summoned PhonePe for transaction data, which the company initially refused to provide.
Broader Implications
- The ruling may set a precedent for data disclosure in cases involving digital payments, possibly affecting other payment firms in future legal scenarios.
- Consumer data protection may have to be reconsidered in light of law enforcement needs and investigative priorities.
