When a company called Ringing Bells made news with a pre-sale booking for a $3.73 (₹251) phone last year, the industry responded in disbelief citing the lowest BoM of $40.

Ringing Bells's Freedom 251 was specified with an Android Lollipop ver. 5.1 using a 1.3GHz quad-core processor, 1GB RAM and 8GB internal memory. The company said the phone had a 4-inch QHD IPS display and offered SD card support up to 32GB, a 3.2Mpixel AF rear camera and 0.3Mpixel front-facing camera. The phone supported 3G.

Too good to be true?

The Indian Cellular Association (ICA) immediately disputed that it was possible to get the costs down so low and wrote the Indian government that the cheapest BoM for those specs is about $40.

While many suspected the company's claims, it is only now that, according to local newspapers, the company's director has been arrested based on a police complaint by an enterprise client, Ayam Enterprises, who were delivered goods worth slightly less than half the price they paid.

It is not clear yet, however, if Ayam's order was for the Freedom 251 model, which would be a steal even at twice the promised price. Of course, that doesn't mean you would actually get a phone after paying for one.

Here's our report from last year: World's cheapest smartphone a hoax?