The Bombay High Court has set aside orders that kept about ₹100 crore in Coda Payments India bank and payment accounts frozen, finding that authorities did not comply with statutory safeguards under India’s Prevention of Money Laundering Act.

In a judgment pronounced on September 2, a two-judge bench allowed Coda Payments India’s appeal against a March 2025 Appellate Tribunal decision. That tribunal had upheld a March 2023 order continuing the freeze.

The ruling addresses the legality of the freezing and adjudication orders. It does not determine whether Coda committed a scheduled offense or money laundering, a limitation the court expressly recorded.

Court finds mandatory steps were missed

The case arose from an Enforcement Directorate case registered in December 2021 on the basis of 10 police complaints. The complaints alleged cheating and unauthorized deductions from users of online games after an initial transaction, with Garena Free Fire identified in the case record.

Following searches in September 2022, the agency froze five bank accounts and merchant identifiers that Coda Payments India maintained with payment aggregators and payment gateways. The Adjudicating Authority later approved the continuation of that freeze, and the Appellate Tribunal dismissed Coda’s appeal.

The High Court bench of Justices A. S. Gadkari and Kamal Khata found multiple defects in that process. It held that the Adjudicating Authority had not followed statutory requirements governing its composition and had not made the property-specific finding required by Section 8(2) of the anti-money laundering law.

Under that provision, the authority must assess the parties’ submissions and the record before deciding whether the property identified in a notice is involved in money laundering. The court found that the authority had only concluded that continued freezing was needed for adjudication, without separately identifying the property considered tainted or explaining its link to alleged criminal activity.

The judges also held that the Appellate Tribunal could not repair that omission by making the required finding itself. Independent legal publication LiveLaw reported that the bench treated the original finding as a mandatory safeguard rather than a formality.

Turnover does not automatically equal proceeds of crime

The appellate tribunal had referred to roughly ₹2,850 crore collected by the company and approximately ₹2,320 crore remitted outside India. The High Court said gross turnover and overseas transfers could be relevant to an investigation, but did not by themselves establish that all money in the company’s accounts was proceeds of crime.

The judgment said authorities needed to distinguish legitimate receipts from proceeds derived from a scheduled offense and property held at an equivalent value. It found that this property-level assessment had not been performed.

The bench also considered the scale of the freeze. According to the judgment, nine of the 10 underlying complaints had been closed or settled by the time of the appeal hearing, while the remaining complaint involved ₹85,650. The total amount cited across all 10 complaints was about ₹25 lakh. Against that background, the court characterized the freeze of approximately ₹100 crore as excessive and disproportionate.

The court nevertheless stopped short of resolving the factual dispute over the alleged deductions. It said it was neither necessary nor appropriate at this stage to decide conclusively between Coda’s explanation that transactions required authentication and the Enforcement Directorate’s allegations.

Implementation and related proceedings remain open

Coda said in a statement emailed to TNGlobal that it welcomed the decision and expected the authorities to implement it. The company also said it had cooperated with the proceedings and would continue to comply with applicable laws. It noted that other related proceedings remain ongoing.

Coda Payments India is a subsidiary of Singapore-headquartered Coda, a digital-content monetization and payments company whose products include Codashop and Codapay. The court record says the Indian operation began around 2018 and works with payment channels and aggregators to process purchases of digital content.

The judgment does not state when the accounts will become operational, whether the Enforcement Directorate will pursue further legal remedies, or whether any stay applies. Those issues will determine the immediate practical effect on Coda’s Indian payment operations.

Coda Payments licensed by Singapore monetary authority for cross-border money transfer