Freedom 251 handset maker under probe for forex violation

The Directorate of Enforcement is investigating Ringing Bells, the company which has launched smartphone for Rs 251, for alleged contravention of FEMA.

Besides, the Corporate Affairs Ministry has ordered scrutiny of the company's books, while the Department of Electronics and IT (Deity) is reviewing issues related to 'Freedom 251' smartphone, touted as world's cheapest.

Responding to queries related to the smartphone, Telecom Minister Ravi Shankar Prasad said: "The government through various departments is taking steps to protect the interest of consumers."

In a written reply to the Lok Sabha, he said a complaint has been received against the company by the Department of Revenue under Ministry of Finance.

"The Directorate of Enforcement is investigating the matter for possible contraventions of provisions of Foreign Exchange Management Act (FEMA) 1999," Prasad said.

Taking suo moto action based on news coverage related to the company, the Corporate Affairs Ministry on February 19 asked SFIO to keep a watch on the activities of the firm.

Subsequently, on February 23, SFIO sent its research report along with proposal to call for information from Registrar of Companies (RoC).

"On the basis of the report of SFIO, Ministry of Corporate Affairs vide letter dated February 25, 2016 has advised Regional Director (North Region) to direct RoC, Delhi to take up the matter with the company and its directors under Section 206 (1) of the Companies Act, 2013 and send a report through the Directorate," Prasad said.

Under Section 206, RoC can inspect books of a company, among others.

Also, an internal committee was constituted by Deity on February 20 to review the issues related to 'Freedom 251'.

"Ringing Bells was informed vide Deity's letter dated February 22, 2016 that mobile phones have been mandated under 'Electronics and Information Technology Goods (requirements for compulsory registration) Order, 2012' for compliance to Indian safety standards effective September 13, 2015.

Therefore, the company was required to comply with BIS registration based on Indian safety standards," he added.

The minister said concerns were raised regarding the offer made by Ringing Bells. The Indian Cellular Association (ICA) informed that a smartphone with the technical specifications advertised by the company cannot be manufactured and made available at such a low price of Rs 251.