Allahabad HC Grants Interim Protection to Magzter Digital Directors in Rs. 1.62 Crore Cheating, Forgery Case

The bench of Justice Salil Kumar Rai and Justice Zafeer Ahmad was hearing a writ petition filed by the company and two others challenging an FIR registered on July 17, 2025, at Sector-126 police station in Gautam Budh Nagar. The FIR, lodged by Gopaisa Netventures Pvt. Ltd., invoked Sections 406, 420, 467, 468, 471 and 34 of the Indian Penal Code, accusing the petitioners of defrauding it to the tune of Rs. 1.62 crore in a commercial transaction. The complaint also alleged a wider conspiracy involving money circulation and laundering through Magzter’s Indian and US entities, its investors, and allied companies.

According to the FIR, the complainant, a Delhi-based digital marketing company, had been engaged by Magzter Inc. (a US-based company) and its Indian subsidiary Magzter Digital Pvt. Ltd. from early 2019 to run online campaigns for the Magzter website and app. The arrangement involved payouts higher than subscription amounts i.e. Rs. 1,200 on subscriptions priced at Rs. 999 in the initial phase, making the campaigns lucrative for digital marketers. Over the years, the payout structures were revised but continued to offer refunds or higher commissions on validated orders, with invoices raised strictly on the basis of validation sheets prepared by Magzter itself.

The complainant alleged that despite running campaigns till September 2022, Magzter defaulted on payments for invoices amounting to over Rs. 1.62 crore. Emails exchanged between October 2022 and mid-2023 showed repeated assurances from Magzter representatives about clearing dues, followed by silence or fresh demands for data under what was termed a “review process". The FIR claimed this was a delaying tactic aimed at evading payments. The complaint further alleged that major investors, including venture capital firm Kalari Capital and cashback platform Cashkaro, were part of a larger “money laundering scam,” wherein subscription money was circulated across entities to inflate revenues and attract fresh investments.

Senior advocate I.K. Chaturvedi, assisted by Advocates Vineet Sankalp and Vineet Vikram, appearing for the petitioners, contended before the court that the allegations were baseless and did not constitute offences of cheating or forgery.

The counsel argued that the FIR itself showed that services were rendered and payments were delayed, which at best amounted to a contractual dispute. “There is no allegation that at the time of executing the contract, the petitioners had intended not to fulfill their part of the contract,” he submitted, pressing for quashing of the FIR.

Opposing the plea, Additional Government Advocate for the state, along with advocate Shreya Gupta representing the complainant, maintained that the allegations revealed not just breach of trust but also fraudulent conduct and money laundering.

After hearing both sides, the bench observed that the matter required consideration and directed the state and the complainant to file counter affidavits within eight weeks.

Court further directed the petitioners to file their rejoinder four weeks thereafter. The case will be listed before an appropriate bench after the exchange of pleadings.

Granting interim relief, court ordered that the petitioners shall not be arrested in connection with the July 17 FIR until the police file a final report under Section 173 CrPC (or Section 193 of the Bharatiya Nagarik Suraksha Sanhita) or until the writ petition is disposed of, whichever is earlier. The bench also clarified that the matter would not remain tied up with the present bench.

Case Title: M/S Magzter Digital Pvt. Ltd. And 2 Others vs. State Of Up And 2 Others

Order Date: September 25, 2025

Bench: Justice Salil Kumar Rai and Justice Zafeer Ahmad