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.
