The Delhi High Court has held that a dispute between cryptocurrency users and a private crypto-exchange over a cyber incident, withdrawal restrictions and alleged fund mismanagement does not warrant a CBI enquiry merely because several investors may have been affected.

The Court further held that the taxation of Virtual Digital Assets under the Finance Act does not make such private entities “State” under Article 12 of the Constitution.

The Court was hearing a Letters Patent Appeal against an order disposing of a writ petition seeking, among other reliefs, a regulatory framework for cryptocurrency exchanges, constitution of a Special Investigation Team under the Central Bureau of Investigation, release of investor funds, lifting of withdrawal restrictions and compensation for alleged losses.

A Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia, while taking note that “the dispute, in essence, has been between a set of individual customers and a private cryptocurrency exchange in relation to a cyber incident, withdrawal restrictions, and alleged fund mismanagement”, further held:

“The controversy is, therefore, in the nature of a private commercial dispute. The mere fact that a large number of investors may have been affected does not, by itself, transform the dispute into one involving enforceable public law rights. Respondent Nos. 11 to 13 are private entities, neither created, financed, nor controlled by the State or instrumentalities of the State. Further, the taxation of VDAs under the Finance Act does not render such entities ‘State’ within the meaning of Article 12 of the Constitution, nor does it, by itself, subject them to public law scrutiny. Hence, no case has been made out for directing an investigation by the CBI or an SIT.”

Advocate Dinesh Jotwani appeared for the appellants, while CGSC Amit Tiwari appeared for the Union of India, and Advocate Rohan Kothari appeared for the private exchange entities.

Background

The appellants were users of the cryptocurrency exchange platform BitBNS. Their grievance arose from a reported cyber incident affecting the platform, after which users were permitted to withdraw wallet balances subject to a daily limit. A collective criminal complaint was also filed on the National Cyber Crime Portal.

In the writ petition, the users sought directions to government authorities to implement a regulatory framework for cryptocurrency exchanges, constitute an SIT under the CBI to investigate alleged financial fraud, cyberattack, fund mismanagement and operational lapses, direct investigation by government agencies, release funds and lift withdrawal restrictions, and award compensation to affected users.

The Single Judge disposed of the writ petition by relying on Rana Handa v. BitBNS Internet Pvt. Ltd. (2026), holding that the dispute arose out of private law transactions, that the private exchange entities were not “State” under Article 12, and that no exceptional circumstances warranted a CBI or SIT investigation. Liberty was granted to the appellants to pursue appropriate remedies in law.

Court’s Observation

The Court rejected the argument that the dispute acquired a public law character merely because a large number of investors were allegedly affected. It noted that the controversy remained essentially between customers and a private cryptocurrency exchange.

The Court held that the private entities were not created, financed or controlled by the State, and taxation of VDAs under the Finance Act did not alter their constitutional status.

The Bench agreed with the earlier view in Rana Handa v. BitBNS Internet Pvt. Ltd. (2026), which dealt with the same platform and the same public statement.

The Court stated: “The dispute in the present case, involving the same platform and the same Public Statement, was considered in Rana Handa (supra), wherein this Court held that, in the absence of a specific regulatory statute governing such exchanges, writ jurisdiction cannot be invoked merely on the ground that a large number of investors are affected.”

The Court added that it was in “complete agreement” with that view and found no reason to take a different approach.

On the prayer seeking release of funds and lifting of withdrawal restrictions, the Court held that such relief could not be granted in writ proceedings because it required individual factual determination.

The Bench noted: “We are in complete agreement with the said view and find no reason to take a different view in the present matter. Prayer No. 4 seeks release of the Appellants’ funds and lifting of withdrawal restrictions. Grant of such relief would require a factual determination as to the amount, if any, actually standing to the credit of each individual investor, and to further examine whether the restrictions imposed after the Public Statement were in the nature of a protective measure or constituted mismanagement. These are disputed questions of fact which are not amenable to adjudication in writ proceedings.”

The Court also declined to entertain the claim for compensation in writ jurisdiction, holding that questions of loss, culpability and quantification would require evidence.

The Bench observed: “Prayer No. 5 seeks compensation for losses allegedly occasioned by fraud and mismanagement on the part of Respondent Nos. 12 and 13. Adjudication of this relief would necessarily require proof of the cause of loss, determination of culpability of the persons concerned, and quantification of the amount payable, if any, to each investor. Such issues again require evidence and trial and cannot be determined summarily in exercise of jurisdiction under Article 226 of the Constitution.”

It further held that such monetary claims were required to be pursued before a civil court or any other competent forum.

The Court emphasised that dismissal of the writ remedy did not leave the investors without recourse. It noted the existing criminal complaint and the availability of civil or consumer remedies.

The Court stated: “The learned Single Judge has rightly observed in the Impugned Judgment that the Appellants are not without remedy. A collective criminal complaint already stands filed on the National Cyber Crime Portal, and remedies for recovery of funds and compensation remain available before the appropriate Civil Courts or consumer fora. The liberty granted by the learned Single Judge to pursue such remedies adequately safeguards the rights of the Appellants and does not foreclose their claims. We are, therefore, of the view that the Appellants cannot be said to be remediless, particularly in view of the pending criminal complaint and the availability of civil and / or consumer remedies.”

Conclusion

The High Court concluded that the appellants had failed to distinguish their case from Rana Handa v. BitBNS Internet Pvt. Ltd. (2026), or to make out grounds for regulatory mandamus, CBI/SIT investigation, release of funds or compensation in writ proceedings.

The Court remarked:

“Accordingly, we find no infirmity in the Impugned Judgment, as the Appellants have failed to make out any ground to distinguish the facts in Rana Handa (supra) or to warrant issuance of a regulatory mandamus, or grant the prayer for release of funds/compensation in writ proceedings. Consequently, the Appeal is dismissed, and the pending Application also stands disposed of. There shall be no order as to costs.”

Cause Title: Amit Ranjan & Ors. v. Union of India and Others (Neutral Citation: 2026:DHC:5442-DB)

Appearances

Appellants: Dinesh Jotwani, Advocate, with Syed Adil Muneer, AOR, and Sharanya Tripathi, Advocate

Respondents: Amit Tiwari, CGSC, with Advocate Ayushi Srivastava, Arpan Narwal and Kushagra Malik, Advocates for Union of India; Abhinav Sharma, Dipan Sethi and Snehashish Bhattacharya, Advocates; Premtosh K. Mishra, SPP, with Anubhav Upadhyay, Advocate; Rohan Kothari and Shivani Pegatraju, Advocates

Click here to read/download Judgment

Tags: