Mohit Goel, the director of Ringing Bells, the Indian firm which claimed to be selling the world’s cheapest smartphone, has been arrested on allegations of fraud.
The Indian Police Service arrested him after one of the phone’s distributors claimed it had not received handsets it had paid for.
The distribution company, Ayam Enterprises, who is accusing Ringing Bells of not fulfilling all of its orders. said it paid 3m rupees ($45K) after Mr Goel persuaded it to distribute the phone.
Police spokesman, Rahul Srivastava who confirmed the arrest to the BBC, and said that Mr Goel would appear in court on Friday, March 3, 2017.
'A number of similar complaints have been filed against him from other parts of the state. We want to investigate these claims thoroughly.
It's important for us to expose these scams because innocent people end up losing their hard-earned money.' He said
However, Ringing Bells which has been described as a 'ponzi scheme', first started taking money for the phones in February last year and promising delivery by June.
Many customers reportedly got their phones, while some didn't.
As some point, the demand for the cheap handset, which is sold through its own website, caused the company’s servers to crash.