BENGALURU: Noting that the allegations disclose serious and triable issues which demand thorough investigation against Jar Gold Retail Private Limited and its Director, Nischay Babu Arakalgud, over the collection of crores of rupees in unregulated deposits, the Karnataka High Court on Wednesday refused to quash the suo motu crime registered by the Koramangala police against them.
Justice M Nagaprasanna, rejecting the petition filed by them questioning the legality of the crime registered observed, “The absence of express regulatory supervision by bodies such as SEBI or the RBI over the purchase or storage of gold, be it in tangible form or in its digital avatar, does not confer upon such transactions a sanctuary beyond the reach of the statute.
The arguments that a deposit is not in currency or hard cash but in gold, physical or digital, are equally unavailing.
Law is concerned not with the cosmetic garb in which a transaction is clothed, but with its intrinsic character and its economic substance. In the rapidly mutating landscapes of cyber-enabled financial frauds, deception no longer adheres to the crude paradigm of cash deposits...”.
Koramangala police have registered the suomoto complaint against four accused, including Nischay and the company. Therefore, the Market Intelligence Unit of RBI sent a communication to all states, particularly to Karnataka. Thereafter, SEBI issued a public notice on November 8, 2025, warning citizens about investing in digital gold of any company. Later, the offices and houses of the accused were searched.
Additional State Public Prosecutor BN Jagadeesha submitted that it must not be allowed to cause a problem resulting in a huge scam. If SEBI and RBI are not regulating who is regulating the Rs 4,000 crore business of the firm? Therefore, these unregulated deposits should be nipped in the bud, failing which, it would lead to a huge scam.
The investigation at least must be permitted to be continued, so that the money invested by of people is not looted by these petitioners, he told the court.