Mohit Goel, managing director of Ringing Bells -- the company that launched the "cheapest phone", Freedom 251 -- was detained on charges of fraud by Ghaziabad police on Thursday.
In December 2016, the company was fighting closure rumours. However, the company denied the rumours and claimed to have delivered nearly 70,000 phone sets in West Bengal, Haryana, Himachal, Bihar, Uttarakhand, New Delhi, Punjab, Jammu and Kashmir, Maharashtra, Madhya Pradesh, Jharkhand, Rajasthan and Uttar Pradesh.
The company initially promised to deliver 2,00,000 devices by June. But by July 2016, they had only delivered 5,000 units. They promised to deliver 65,000 units to those had booked in Cash on Delivery mode. In July, the company launched Freedom HD LED TV, the cheapest LED TV in India. The company said it would start deliveries from August 15, but failed to do so. The company also launched other smartphones and power banks.
The company's website is dysfunctional since September 2016.
The Noida-based company had made headlines in February 2016 when they announced the launch of the 'cheapest' phone at Rs 251 apiece. The company which had set out to take Prime Minister Narendra Modi's Digital India project to next level, ended up requesting the prime minister for Rs 50,000 crore.
"We have brought 'Freedom 251' which we offer on 'Cash on Delivery' terms but we have a gap between the BOM (Bill of Materials) and the Selling Price. We, therefore, humble request government support to actualise the objective to cascade the availability and usage of smartphones all through the far reaches of our great nation," Goel said in a letter to Modi.
Goel is now accused of defrauding Ayam Enterprises, the distributors of the phone, to the tune of Rs 16 lakh.
"We paid Rs 30 lakh to Ringing Bells through RTGS on different occasions. But it delivered us product worth Rs 13 lakh only. Upon follow-up, we could get products plus money totalling Rs 14 lakh," it claimed in the FIR. They added that Goel persuaded them to take up the distribution of the Freedom 251 phones.
The owners of Ayam Enterprises alleged that they were threatened with life if they asked for Rs. 16 lakh "again and again".