Freedom 251-maker launches cheapest LED TV at Rs. 9,990
[Representational Image] Marquee of Freedom 251 smartphoneReuters

Ringing Bells continues to face legal pressure even as the company's top executives deny accusations of a scam surrounding the world's cheapest smartphone, Freedom 251. Adding to the troubles of Ringing Bells, Adcom, short for Advantage Computers, said it could take legal action against the Noida-based smartphone vendor selling its phones for Rs 251 despite buying them for Rs 3,600 a unit.

Ringing Bells could face legal actions on the grounds of adverse impact on Adcom's brand name or any other kind of losses, Economic Times reported Friday. The claims come while Ringing Bells already faces scrutiny from the government as well as consumers.

"We sold the handsets to 'Ringing Bells' earlier like we sell Adcom mobiles to lakhs of users. We were absolutely unaware of the reselling plans of the company in question," Sanjeev Bhatia, founder and chairman of Adcom, was quoted by Et as saying in a statement. "To clear the air, I would like to underline a few facts pertaining to case, as this scam exhibits the potential of maligning our brand name Adcom, which is our trademark since 2001."

International Business Times, India, tried to reach out to Ringing Bells for its side of the story, but received no response from the company.

Adcom's statement refutes Ringing Bells' claims of how the company managed to keep the cost of the device so low by cutting down on marketing and sales expenses. The company's director, Mohit Goel, and president Ashok Chadha emphasised on the fact that the Freedom 251 was not a scam and the company would make Rs 31 profit on every handset.

After being strongly condemned for taking money from buyers several months in advance, the company issued refunds and introduced a cash-on-delivery system. CCAvenue, the payment gateway used by Ringing Bells, said it had refunded Rs 84 lakh to 30,000 transactions made by nearly 14,800 customers.

"There was a lot of negativity around us, so we have decided to take money from customers only after delivering phones to them. We are refunding the money to those who have paid for booking the phones, and giving them the option of cash on delivery," Goel had told the Press Trust of India.

In a recent interview with IBTimes India, Chadha had said the company would deliver by June 30, 2016, the first batch of 50 lakh Freedom 251 smartphones to customers who booked it.

Adcom's comments might overshadow Ringing Bells' promises. Bhatia also denied Adcom's association in any form with Ringing Bells or the Freedom 251.

In response to the accusations about the Adcom branding on Freedom 251, Chadha had said last month the company had sourced the screen panels from Adcom and assured the final device would have Ringing Bells' branding.

The government is also closely monitoring Ringing Bells, and would take action if the company failed to hold up its end of the bargain, Telecom Minister Ravi Shankar Prasad had said last month. Ringing Bells had received more than 6 crore registrations for the phone in just two days.

It remains to be seen which side of the story turns out to be true.