The High Court of Karnataka on Wednesday said that a thorough investigation is required into the business of Bengaluru-based digital gold investment start-up company, JAR Gold Retail Private, while refusing to quash the First Information Report (FIR) registered against it by the city police under the provisions of the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019.
The company, which has recorded a turnover of ₹4,000 crore since its inception in 2021 with 3.3 crore investor accounts, had questioned the legality of FIR registered under the BUDS Act while claiming that it is not engaged or dealing with deposits, regulated or unregulated, and that company’s digital gold investment does not come under the perview of the BUDS Act.
Definition of ‘deposit’
Refusing to accept these contention of the company, Justice M. Nagaprasanna said the provisions of BUDS the Act define “deposit” in ‘expansive terms’ and the argument that the statute must be construed narrowly, so as to exclude digital or gold backed arrangements, stands repelled.
The court passed the order while dismissing the petitions filed by the company, which has arraigned as accused number 4 and one of its directors, Nishchay Babu Arkalgud, who is arraigned as accused number 3 in the FIR. The other directors, Misbah Ashraf, accused number 1, who co-founded the company as an e-commerce seller of gold, and Sandesh Nahar, accused number 2, have not filed petition against the FIR, the court noted.
The FIR was registered on January 16 after the police conducted a preliminary investigation between August-December 2025 based on the alert received from the Market Intelligence unit of the Reserve Bank of India (RBI), which acted on a complaint, indicating that digital gold scheme of the JAR is not coming under the purview of either the RBI or the Security and Exchange Board of India (SEBI).
The company allows investment in gold, starting from ₹10, through its JAR App claiming to be “India’s number-1 gold saving app”.
Gold found
Though the company had claimed before the court that it has an agreement with Brinks India Private Ltd. for storage of gold and all the gold, purchased by the investors, is stored in the vault of Brinks, the court, from the investigation papers, pointed out that that police searches have allegedly yielded gold bearing the company’s branding at the premises of the office bearers of the company.
“Investigation in such cases is imperative, as the investors have already made hue and cry through communications between them that there is no gold and no money,” the Justice Nagaprasanna observed while stating that the court cannot interfere at this stage.
Noticing the apprehension raised about the credibility of the gold investment scheme by users of Jar App and observations by several customers/users about “purported fraud” in comments section of the app, the court said that with all the communications in public domain, “the police ostensibly cannot keep quiet, as every citizen is involved in this and it has a potential of growing up into a huge problem”.
Published – March 04, 2026 10:13 pm IST
