The director of Indian firm Ringing Bells, which was selling the 'world's cheapest smartphone' Freedom 251, has been arrested on allegations of fraud.
Mohit Goel was detained after Ayam Enterprise, one of the distributors of Freedom 251, filed an FIR on Wednesday (22 February) alleging that it did not received delivery of the phones it had paid for.
Priced at 251 rupees (£3, $3.7), the Freedom 251 went on pre-sale in last February.
Ayam Enterprise claimed it had received delivery worth 1.4m rupees (£16,734.6), whereas it had paid 3m rupees after Goel persuaded the company to take up the distributorship of the phone, the Times of India reported.
Rahul Srivastava, a police spokesperson told BBC that Goel would appear in court on Friday (24 February).
Srivastava said, "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."
"We are seeing an increasing number of technology-related frauds. I appeal to people to be sure before investing money into such schemes," he said.
Last February Ringing Bells started taking money from consumers promising to deliver the phone by June.
The demand for the handset, which was being sold through Ringing Bells' website, was so strong that the company's servers crashed.
Goel had then said the phone would be manufactured locally as part of Prime Minister Narendra Modi's Make in India programme.