The police registered the case under Section 420 (cheating) of IPC and the IT Act on Tuesday. The owner of Ringing Bells Mohit Goel and company president Ashok Chaddha have been named in the FIR, police said.
But Somaiya, in his complaint, said it was not possible to manufacture a smartphone at Rs. 251 and the owner of the company was fooling the people.
"Primary investigation found the matter fit for FIR. A case has been lodged and a team has been constituted to investigate the case," SSP, S Kiran said.
(Also see: Freedom 251 Company's Books to Be Scrutinised)
"We have asked the company to submit documents required for the investigation," said DSP Anup Singh.
The firm said it is ready to cooperate with the police.
"We remain committed to cooperating with any government agency that may require inquiring our organisation for any reason or suspicion.
"I do maintain that we will deliver the most-affordable quality products to our customers through our various range of smartphones, including the Freedom 251," Mohit Goel said.
In a statement, Ringing Bells Managing Director Mohit Goel said, "In Freedom 251, as presented to several authorities and agencies, and explained at our various forums, we are able to price our product at lower than production cost due to innovative e-commerce cross promotions and we will complete delivery of the quantities as committed by June 30, 2016."