KARACHI: Sindh High Court has rejected an application of Digital Bridge Private Limited, seeking to restrain Virtual Remittance Gateway Private Limited from performing any function under the license of Third Party Service Provider (TPSP) for mobile and branchless banking in Pakistan.
Digital Bridge Private Limited had filed a suit in the court, submitting that it was awarded a license to establish, maintain and operate as TPSP for financial and applications services in Pakistan.
According to Digital Bridge, the Information Memorandum was jointly issued by the Pakistan Telecommunication Authority (PTA) and State Bank of Pakistan (SBP) in April 2017 under the regulations of Pakistan Telecommunication Authority of TPSP license for mobile and branchless banking.
The plaintiff, Digital Bridge, submitted that it had over the last three years invested heavily in developing and testing a viable solution as a TPSP in order to provide easily accessible and convenient mobile banking services to unserved segment of the country under Aasan Mobile Account Scheme (AMA Scheme).
The plaintiff claimed to be the only TPSP license holder in the country which has successfully established its own Unstructured Supplementary Service Data (USSD) channel platform, which is a requirement of TPSP license.
The plaintiff stated that in September 2019, it informed the PTA of completion and deployment of its USSD which inspected and approved it but since then had constantly been delaying issuance of service Commencement Certificate.
The plaintiff stated that such inordinate, unexplained and inexcusable delay in issuance of Commencement Certificate had had a detrimental effect because it had been unable to offer services under TPSP license.
Digital Bridge in its plaint alleged that the PTA had shown blatant partiality in favor of Virtual Remittance Gateway and issued them “Readiness of Commercial Launch of AMA Scheme” letter on August 8, 2020 which certified that Virtual Remittance Gateway had established its own USSD platform.
The plaintiff’s counsel, Advocate Haider Waheed, contended that the TPSP license requirements and the Information Memorandum did not contain any provision or reference for issuance of “Readiness of Commercial Launch of AMA Scheme” letter.
He submitted that on August 14, 2020, Virtual Remittance Gateway in an advertisement tried to create an impression that it had been granted all permissions for the launch of its operations.
The counsel for Virtual Remittance Gateway, Advocate Ijaz Ahmed Zahid, submitted that the allegations of plaintiff regarding preferential treatment being given to his client by PTA was misleading because after completing all requirements his client’s application for Commencement Certificate had been pending.
He contended that contrary to SBP’s Regulation 5 of Mobile Banking Regulations and PTA’s Regulation 7 which makes asks for maintaining 200 million rupees paid-up capital for TPSP license holder, the plaintiff had not maintained the requisite amount. Similarly, the plaintiff had not applied to SBP for authorization or Service Commencement Certificate from PTA.
After hearing the arguments of the counsel for plaintiff, PTA and Virtual Remittance Gateway, a one-judge bench comprising Justice Hasan Azhar Rizvi, held that though the plaintiff had challenged the Circular No.26 2020 of SPB which amended the regulations for Mobile Banking Interoperability, the plaintiff had not impleaded the SBP as defendant.
The court held that admittedly counsel for the plaintiff reiterated that the plaintiff had not fulfilled the requirements of Commencement Certificate nor had applied for the same. On the other hand, observed the court, Virtual Remittance Gateway had met all the condition of the Certificate and therefore had been issued authorization by SBP.
The court observed that the Virtual Remittance Gateway had successfully established USSD platform and had demonstrated it to Federal Finance Ministry, SBP and PTA.
The court held that PTA was not issuing Service Commencement Certificate to Virtual Remittance Gateway only because it considered that the license holder had yet to complete some technical requirements.
As regards to the advertisement, the court observed that the notice in this matter was taken by the PTA and press release in this regard was also issued.
Observing that the plaintiff has no connection whatsoever with Virtual Remittance Gateway or any of its grievances, justified or otherwise, against PTA, actual or perceived grievance cannot in any manner be used as a justification for restraining the defendant from operating its business, the court dismissed the application for restraining Virtual Remittance Gateway from performing any function under TPSP license and recalled an interim order passed earlier in this regard.