Delhi court on Monday, 23 August gave police three weeks to investigate allegations made by a former Paytm director Ashok Kumar Saxena, who said he co-founded the digital payment platform but did not receive the owned shares.
The development comes at a time when Paytm looks to launch a Rs 16,600-crore IPO.
According to a report by Reuters, Saxena claimed that he invested USD 27,500 20 years ago in Paytm parent One97 Communications, but was never allotted any stock.
Saxena, also wrote to the market regulator, Securities and Exchange Board (SEBI), urging it to stop Paytm from proceeding with the IPO.
Meanwhile, Paytm said that the claim amounts to harassment and cited it under "criminal proceedings".
Experts told Reuters that the tussle could complicate the approval of an IPO that could value Paytm, backed by Chinese e-commerce leader Alibaba Group Holding Ltd, at up to USD 25 billion.
Metropolitan Magistrate Animesh Kumar told the court, "I am directing them to conclude the enquiry as soon as possible."
Senior lawyer Anupam Lal Das, representing Saxena, told Reuters that the police submitted a status report to the court but was yet to conclude the investigation.
(With inputs from Reuters)
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