An FIR is registered against the company's promoter Mohit Goel and president Ashok Chaddha under section 420 of the Indian Penal Code (IPC) and Information Technology (IT) Act
An FIR has been registered against the top management of Ringing Bells, which claims it will manufacture and offer the world's cheapest smartphone -- Freedom 251 -- soon.
The Noida police registered an FIR against the company's promoter Mohit Goel and president Ashok Chaddha under Section 420 (cheating) of the Indian Penal Code (IPC) and Information Technology (IT) Act on a complaint filed by BJP MP Kirit Somaiya.
Somaiya has accused the company of raising funds through misleading ads and social media promotions to take people for a ride.
While the company claimed that it will manufacture the Freedom 251 phone, it has been found that the phones shown during the unveiling event were actually "Adcom" phones, bought from a company in Kirti Nagar, New Delhi, for Rs 3,600 a piece.
According to an India Today report, Chaddha had admitted that the phone cost about Rs 2,200 - 2,300 depending on the quantity. He said they could sell the phone at Rs 251 was because of an import duty hedge of about 13.5% as per Make in India. "There's an economics of scale," he said, "We are looking at a production when people want about a lakh (phones) a month. We are looking at multipliers of that, which is economic of scale in terms of production."
The management has also been asked to show the manufacturing units of Freedom 251 mobiles to the Police, a CNN-IBN report said.
Earlier this month, the Enforcement Directorate (ED) launched an investigation into Freedom 251 for the alleged contravention of Foreign Exchange Management Act (FEMA). The Corporate Affairs Ministry has also ordered for the scrutiny of the company's books.
Last month, Telecom Minister Ravi Shankar Prasad asked Aruna Sharma, Department of Electronics and IT Secretary (Deity), to look into the scheme of Ringing Bells.
After the initial introductory event, Ringing Bells had opened online bookings for the phone, getting as many as 30,000 bookings (after paying online) and over seven crore registrations. In a bid to calm nerves, the company announced in February-end that it will refund all the payments made for booking the phone online, and will only take cash on delivery once the phones are ready.
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