Chinese loan app scam: Kerala High Court stays PMLA proceedings against cross-border payment platform Nium

The Kerala High Court on Thursday stayed the money laundering case against cross-border payment platform Nium India, a subsidiary of Nium Singapore, in connection with the fake Chinese loan app scam [M/S Nium India Private Limited v. Directorate of Enforcement]..Justice VG Arun on Thursday passed an order staying proceedings against the Nium for a month after the platform moved the Court against the proceedings initiated under the Prevention of Money Laundering Act (PMLA) by the Enforcement Directorate (ED). The single-judge noted that the company was not given an opportunity of hearing before the PMLA court took cognizance of the complaint against it. As per Section 223 of the Bhartiya Nagarik Suraksha Sanhita (BNSS), cognizance cannot be be taken without giving the accused an opportunity of being heard."I find merit in the contention of Senior Advocate Siddarth Agarwal, appearing for the petitioners that, the proceedings are bad, the mandate of the proviso to Section 223(1) BNSS not being complied with. The law on this point is laid down by the Apex Court in Kushal Kumar Agarwal v. Directorate of Enforcement [2025 SCC OnLine SC 1221]. Hence, there shall be an interim stay, as prayed for, for one month," the Court's order stated. .The case stemmed from eleven first information reports (FIRs) lodged in Kerala and Haryana based on complaints by persons claiming to have been extorted in the name of loan facilitation and/ or blackmail. The loan app operators allegedly blackmailed the victims using private data hacked from their mobile phones during installation of the loan app.The investigation revealed that such extorted proceeds were routed through various bank accounts of shell entities and ultimately remitted outside India in the guise of fake import of software, digital services, tour services etc.These transfers were made through normal banking channels and through Nium. The ED estimates that the proceeds of crime in this case amounts to over ₹230 crores.The ED arrested several persons in connection with the case. It also filed a complaint arraying Nium and its director as accused, claiming that the arrested persons misused the platform and that Nium circumvented various reporting requirements under the Income Tax Act, 1961..On May 7, a PMLA Court in Ernakulam took cognizance of the complaint submitted by the ED and issued summons to Nium.Nium then filed the present plea before the High Court to quash the ED complaint and the PMLA court's order taking cognizance and issuing summons..According to Nium, the order was passed without giving them an opportunity of hearing, rendering it inconsistent with the requirements of Section 223 of BNSS.As per the plea, neither the FIRs nor the Enforcement Case Information Report (ECIR) array Nium as accused."The petitioner is not in any manner associated with persons who are allegedly accused of engaging in illegal betting/ gaming/loan application business and/ or generation of purported proceeds of crime," Nium's petition said.Nium also contended that as a mere collection agent acting as an intermediary for facilitating cross-border payments, even if money was transferred through it, no case of money laundering can be made out against the company."The petitioner's role is limited to mere collection of payments and to remit such collections received on behalf of Foreign Sellers to Nium Singapore. The Petitioner does not have the ability to identify the ultimate source of the funds or the original remitter in the entire chain of transactions through which monies came to be deposited in the INR Collection Account, let alone any intent to launder such monies and/or aid or abet the laundering of such monies," it was submitted.Nium also refuted allegations that it contravened regulatory requirements..On these among other grounds, Nium sought orders from the Court to quash ED's complaint and all associated proceedings as far as the company is concerned.It also sought orders for the release of its properties which have been frozen/attached in connection with this case..Nium was represented by Senior Advocate Siddarth Agarwal, a team from Trilegal comprising Anuj Berry, Parimal Kashyap, PSS Bhargava and Atharva Koppal, along with advocates Enoch David Simon Joel, S Sreedev, Rony Jose, Leo Lukose, Karol Mathews Sebastian Alencherry, Derich Mathai Saji , Karan Scaria Abraham and Ittoop Joy Thattil..[Read Order]