Prepaid Payments Instrument (PPI) company TalkCharge Technologies has filed a lawsuit against the Reserve Bank of India (RBI) in the Delhi High Court, seeking to contest the central bank's directive to halt its operations.

The matter was heard by Justice Vikas Mahajan, who has instructed TalkCharge to serve a copy of the suit to the RBI.

Represented by Advocate Sriram Parakkat, TalkCharge's suit stems from an RBI Stop Operation Order (SOO) issued on April 2, which mandated the company to cease issuing and operating its wallets/PPI services and to refund any remaining balances to users within 15 days.

In its July 24 filing, TalkCharge contends that the RBI's action is based on allegations that the company is engaging in third-party transactions, thus operating as an open PPI rather than a closed system PPI. The latter classification, according to TalkCharge, does not require RBI authorization under the Payment and Settlement Systems Act, 2007.

TalkCharge argues that it operates solely as a closed PPI, wherein funds can only be utilized within its platform. The company claims that many users have violated its terms and conditions by employing the service for commercial transactions, leading to increased refunds and chargebacks that have adversely impacted its financial health.

The lawsuit also highlights a demand notice from Razorpay, TalkCharge's payment gateway provider, seeking ₹87.85 lakh due to chargebacks stemming from users misusing the platform for commercial purposes. Additionally, in January 2023, the company experienced technical difficulties due to server overload, which prompted a surge in user withdrawals and led TalkCharge to impose restrictions on wallet usage. This decision triggered numerous complaints from frustrated users seeking cashbacks, despite their unauthorized use of the service.

Following the RBI's intervention, TalkCharge's operations were suspended, and its bank accounts, Demat accounts, and phone numbers were blocked by investigative agencies amid ongoing complaints and alleged illicit activities. As a result, the company claims to face a substantial financial burden, totaling approximately ₹136 crores owed to users.

TalkCharge further alleges that some users are exploiting the situation by filing false complaints to extort money from the company. In light of these challenges, TalkCharge is seeking an ad interim injunction to prevent any further adverse actions by the RBI.