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Mohit Goel, the Director of Noida-based company Ringing Bells which had announced Freedom 251 smartphones at an astonishingly low price of Rs 251 apiece, was detained in Ghaziabad on Thursday on allegations of fraud, police said.
Goel has been detained after owner of Ghaziabad-based Ayam Enterprises filed an FIR on Wednesday alleging that Ringing Bells "defrauded" it of Rs 16 lakh.
Ghaziabad Deputy SP Manish Mishra said Goel has been detained for interrogation in the matter.
In the FIR, Ayam Enterprises has claimed it was persuaded by Goel and others from Ringing Bells to take up the distributorship of the Freedom 251 phones in November 2015.
"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 totaling Rs 14 lakh," it claimed in the FIR.
Ringing Bells had begun the sale of Freedom 251 handsets, touted as the world's cheapest, via its website in February last year.
It landed in a controversy, however, with some alleging it was like ponzi scheme. The firm had claimed that around 30,000 customers had booked the phone despite some glitch and seven crore people registered for it.