Paytm IPO: Paytm Involved In 23 Litigation Cases Amounting To INR 61.2 Mn

One97 Communications Limited, the parent company of Paytm filed its draft red herring prospectus (DRHP) as it is gearing up to go public in some time. As per the DRHP, the 2000 founded company by Vijay Shekhar Sharma will raise INR 16,600 Cr via a public offering. The company will be issuing fresh shares worth INR 8,300 Cr and will allow its existing investors to sell their shares worth INR 8,300 Cr. 

Paytm hogged the spotlight after Prime Minister Narendra Modi in an unprecedented move in 2016 outlawed high denomination notes of INR 500 and INR 1,000. Some consider demonetisation to be a watershed moment for Paytm as it became a household name. At present, Paytm has around 150 Mn monthly active users and has recently clocked 1.2 Bn transactions monthly.

As per the DRHP, the company is currently involved in 23 litigation cases with a total amount of INR 61.2 Mn. 

According to the DRHP, in 2015 an FIR was filed against Paytm at the Patamata Police Station, Vijayawada City, Andhra Pradesh owing to non-receipt of INR 46,860 by the vendor from whom the complainant had purchased a laptop, by making payment using our Company’s payment port. 

Two FIRs in September 2015, were filed against Paytm with the Cyber and Hi-tech Crime Police Station, Bhopal alleging cheating, criminal conspiracy, and fraud by, among others. 

One97 Communications was served with a notice under Section 91 of the Code of Criminal Procedure, 1973 to certain allegations against Vijay Shekhar Sharma. 

Paytm is involved in 1 case of material civil litigation amounting to INR 383.6 Mn. There are 18 direct (13) and indirect tax (5) proceedings in connection to One97 Communications amounting to INR 37,299 Mn. 

One97 Communications has more than 30 subsidiaries both domestic and international including Paytm Money, Paytm Insurance Booking Limited, Nearbuy India Private Limited among others. Among its subsidiaries, only Nearbuy India Private Limited has filed an FIR against YR Logistics Services Private Limited in 2016. Around 22 direct and indirect tax proceedings are levied against the company’s subsidiaries (foreign subsidiaries) amounting to INR 143.1 Mn.  

According to the DRHP, multiple complaints were initiated against Vijay Shekhar Sharma, alleging fraud. 

The filings mentioned that the complainants fell prey to alleged fraudulent transactions committed by third parties, purportedly either posing as the employees of One97 Communications or using the company’s platform such as Paytm.

Following this, Cyber & Hi-tech Crime Police Station, Bhopal registered 7 FIRs against Sharma, pursuant to which, he preferred applications under S.482 of the Criminal Procedure Code, 1973 (“Applications”) in 2015 before the High Court of Madhya Pradesh. “While the investigating authorities, through their correspondences, have conveyed that Mr. Sharma has been discharged from the FIRs, the applications are pending adjudication,” the DRHP read.

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