Karnataka High Court: Demands Proof of LegalPay Cyberfraud Link

• The Karnataka High Court has ordered the State government to provide evidence linking LegalPay Technology Private Limited to a cyberfraud case.
• The fraud involved a fake "marriage invitation" APK file sent via WhatsApp, leading to unauthorized money transfers.
• Approximately ₹12.5 lakh was lost by three complainants through the LegalPay payment gateway during March and April 2026.
• Justice V Srishananda directed investigating agencies to submit prima facie material on LegalPay's involvement in writing.
• LegalPay is seeking to quash three criminal cases registered by the Hulimavu Police in connection with the alleged fraud.

By demanding explicit proof of connection, the court is signaling a heightened judicial scrutiny on the evidentiary standards required to implicate payment gateway providers in complex cyberfraud cases.

The Karnataka High Court has recently directed the State government to present concrete evidence establishing a link between LegalPay Technology Private Limited and a sophisticated cyberfraud scheme. This directive came during proceedings for petitions filed by LegalPay, which seeks to nullify three criminal cases initiated by the Hulimavu Police. The court's order underscores the necessity for investigating agencies to provide substantial material demonstrating the petitioner's involvement before further legal action can be taken or sustained.

The fraud in question centered around a deceptive "marriage invitation" APK file distributed via WhatsApp. Victims who clicked on the embedded link reportedly experienced unauthorized transfers of funds to fraudsters, highlighting a common tactic in digital scams. Three separate complaints were lodged concerning these incidents, collectively reporting losses totaling approximately ₹12.5 lakh, indicating the significant financial impact on individuals.

Specific complainants, including BK Nageshiah, Subhash Chandra Jujarth, and Vashishtha Narayan Jha, allegedly lost ₹7,44,989, ₹2,69,729, and ₹2,34,917, respectively, during March and April 2026. These illicit transactions were reportedly facilitated through the LegalPay payment gateway, prompting the registration of First Information Reports by the Hulimavu Police, who are now tasked with proving the alleged connection.

Justice V Srishananda, presiding over the case of Legal Pay Technology Private Limited v. State of Karnataka, issued a clear mandate for the State. The court explicitly required either the Hulimavu Police Station or the cybercrime police station, depending on which agency is handling the investigation, to formally submit prima facie evidence detailing LegalPay's alleged role in the fraudulent activities. This directive is crucial for the court to proceed and render an appropriate decision on LegalPay's petitions, emphasizing that mere suspicion is insufficient.

The court's insistence on written, preliminary material highlights a critical aspect of payment gateway fraud liability in India. It suggests that merely being the conduit for funds in a cybercrime is not sufficient to establish culpability without direct evidence of involvement or negligence on the part of the payment processor. This approach places a significant burden on law enforcement to substantiate claims against financial technology intermediaries, ensuring due process and preventing arbitrary implication.

This ruling from the Karnataka High Court regarding the LegalPay cyberfraud link carries significant implications for the fintech industry and the investigation of digital crimes. By demanding explicit proof of connection, the court is signaling a heightened judicial scrutiny on the evidentiary standards required to implicate payment gateway providers in complex cyberfraud cases. It emphasizes that allegations must be backed by concrete findings, moving beyond mere transactional pathways and into demonstrable links of complicity or failure to act.

The case, involving a "marriage invitation" APK cyberfraud, serves as a precedent for how courts may evaluate the responsibility of technology companies whose platforms are exploited by criminals. It underscores the need for thorough investigations by agencies like the Hulimavu Police and cybercrime units to clearly delineate the roles of all parties, ensuring that justice is served while also protecting legitimate businesses from unsubstantiated accusations. This judicial stance encourages payment gateways to maintain robust fraud detection and reporting mechanisms to mitigate their legal exposure.

This ruling indicates heightened judicial scrutiny on the evidentiary burden required to implicate payment gateway providers in cyberfraud cases. Lawyers advising fintech companies and payment platforms should ensure their clients have robust fraud detection, reporting, and due diligence processes to demonstrate non-involvement and mitigate legal exposure.

Source: Original reporting via court documents and legal sources