Writ Jurisdiction Cannot Be Invoked for Private Commercial Disputes or Claims Against Cryptocurrency Exchanges

The Appellants, users of the cryptocurrency exchange ‘BitBNS’ (operated by Respondent No. 11), sought a writ of mandamus to compel the Government to implement a regulatory framework for virtual digital assets (VDAs), constitute a Special Investigation Team (SIT) under the CBI to investigate alleged financial fraud and cyberattacks at BitBNS, and direct the release of frozen funds.

Following a 2018 RBI circular and the subsequent Supreme Court reversal in Internet and Mobile Association of India v. RBI, BitBNS reported a cyber incident in 2022 and restricted user withdrawals.

A Single Judge dismissed the original Writ Petition, holding that the dispute was private in nature and the exchange was not "State" under Article 12.

The Appellants challenged this via the present Letters Patent Appeal, arguing that regulatory inaction and the scale of the fraud introduced public law elements.

1. Whether a private cryptocurrency exchange platform constitutes "State" or an instrumentality of the State under Article 12 of the Constitution, thereby making it amenable to writ jurisdiction.

2. Whether the Court can direct an investigation by the CBI/SIT or order the release of funds in a dispute involving private commercial transactions under Article 226.

The Court primarily applied Article 12 and Article 226 of the Constitution of India regarding the scope of writ jurisdiction against private entities.

It relied on the precedent Rana Handa v. BitBNS Internet Pvt. Ltd. & Ors. (2026:DHC:1446), which established that in the absence of specific regulatory statutes for cryptocurrency exchanges, monetary claims against them must be pursued in civil courts rather than through writ petitions.

The Court further applied the principle that disputed questions of fact involving evidence and trial are not amenable to summary adjudication under writ jurisdiction.

The Court reasoned that the dispute is essentially a private commercial conflict between individual customers and a private platform regarding withdrawal restrictions and alleged mismanagement.

It held that the mere fact that many investors are affected does not transform a private law grievance into a public law right.

The Court observed that BitBNS is neither financed nor controlled by the State, and the inclusion of VDAs in the Finance Act, 2022 for taxation purposes does not confer "State" status upon private exchanges.

Regarding the prayers for fund release and compensation, the Court found these required factual determinations—such as verifying individual account balances and determining if withdrawal limits were protective or fraudulent—which necessitates a full trial and appreciation of evidence.

The Court noted that the Appellants have alternative efficacious remedies, including the already-filed collective criminal complaint and civil recovery suits.

The Appeal was dismissed, and the Appellants were granted liberty to pursue their grievances through the National Cyber Crime Portal, Civil Courts, or consumer forums; the Court affirmed the Single Judge's judgment, finding no ground to deviate from the precedent in Rana Handa.