Karnataka High Court Issues Notice On PhonePe's Appeal Against Order Allowing Police To Seek User Details, Transaction Data

The Karnataka High Court on Wednesday issued notice to the State Government on an appeal preferred by digital payment intermediary 'Phonepe', challenging a single judge order which had dismissed its petition questioning a police notice seeking transaction details/ full account credentials of its registered users and merchants, while investigating a criminal case.A division bench of Chief Justice Vibhu Bakhru and Justice C M Poonacha issued notice and posted the appeal for further hearing on February 12, 2026. The single judge vide order dated April 29 had dismissed the intermediary's plea holding that “The duty to protect data must yield, where public interest and criminal investigation intersect."Advocate Nitin Ramesh appearing for the company submitted that the Bankers Book Evidence Act 1891 acts as an exception to the general information that the Police can seek under Section 91 CrPC. However, "here the learned single judge has not appreciated that there is a layer of protection that is provided for the UPI intermediaries. The only manner in which such information can be sought for by the investigator is by taking permission of the court.” The company had filed the petition challenging a Section 91 CrPC notice, which empowers a Court or an officer in charge of a police station to issue a summons or a written order for the production of any document or other thing.The prosecution had opposed the plea contending that in the days of rising number of cyber crimes, the police have the power to seek necessary information to conduct a fair investigation. It referred to Central Government guidelines under Section 87 of the IT Act and alleged that Phonepe had violated the guidelines to safeguard merchants involved in Cricket betting.The single judge had emphasised that in times when conventional crimes have receded and new age cyber crimes have sprung in large numbers, swift, targeted and effective response is need of the hour. It had said "The police must be empowered within the limits of law to unearth digital footprints that could otherwise vanish. Therefore, while privacy as contended by petitioner should be maintained, it cannot be wielded as a shield against lawful investigation.” Rejecting Phonepe's contention, the court had said that inspection of books under the Bankers Books Evidence Act is only after the Court passes an order.Further turning down the argument that PhonePe being a digital system payment gateway will not divulge any information as sought by the Investigating Officer, the Court had said, “The Investigating Officer is a statutory authority, who is acting in terms of the powers conferred under the Cr.P.C., while conducting investigation. Therefore, the submission that the documents cannot be divulged is only noted to be rejected.”Stating that Section 2(4) of the Bankers Books Evidence Act defines a legal proceeding by which an inquiry in which evidence may be required or in which any investigation or inquiry under the CrPC is contemplated, the court had said “Therefore, notice under Section 91 of the Cr.P.C, in pursuance to an investigation or inquiry can be construed to be a notice under Section 2(4) of the 1891 Act.”Case Title: PhonePe Private Limited AND State of Karnataka & ANRCase No: WA 997/2025

Karnataka High Court Issues Notice On PhonePe's Appeal Against Order Allowing Police To Seek User Details, Transaction Data

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