Policy · Financial Services

Karnataka HC quashes orders favouring Jar in freeze case

By Startup Enthusiast · 17 August 2026

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The Karnataka High Court quashed three Sessions Court orders that had directed release of gold and defreezing of Jar's bank accounts

The Karnataka HC quashed three Sessions Court orders that directed the release of gold/silver and defreezing of Jar's bank accounts

The case stemmed from a suo motu case after RBI flagged concerns about Jar's digital gold business

The Karnataka High Court quashed three Sessions Court orders that had directed the release of gold and silver and the defreezing of Jar's bank accounts.
The court ruled that police do not need prior Magistrate permission to debit-freeze a bank account under Section 106 BNSS as an investigative measure.
The court said police must report a debit-freeze 'forthwith' to the jurisdictional Magistrate.
The court distinguished a Section 106 freeze from Section 107 property attachment, which involves judicial process and may lead to forfeiture.
The court observed that requiring judicial approval before every debit freeze could undermine investigations, especially in cybercrime where funds move in seconds.
The court noted the absence of direct RBI/SEBI regulatory supervision over digital gold does not put transactions beyond criminal law.
The court said the law must examine the economic substance of a transaction, not just its form.
The court noted that financial fraud can involve commodities, digital assets, and gold-linked products instead of conventional cash deposits.

The proceedings stem from a suo motu case after concerns about Jar's digital gold business were raised by the RBI Market Intelligence Unit in October 2025.
The Karnataka CID searched Jar's premises in February 2026.
Jar directors challenged criminal proceedings before the Karnataka HC; the petition was dismissed on March 4.
After the Supreme Court declined a Special Leave Petition, Jar approached the Sessions Court seeking release of seized gold and defreezing of accounts.
The Sessions Court ruled in Jar's favour on April 4, saying transactions resembled completed gold-sale contracts, not deposit-taking.

Jar is a Bengaluru-based digital savings platform for small-ticket digital gold investments.
The platform has >35 million users across 12,000 pin codes.
In October 2024, Jar forayed into the ecommerce jewellery segment under the brand Nek.
In FY25, Jar's consolidated net loss halved to ₹50.5 crore from ₹104 crore in FY24.
FY25 operating revenue zoomed 50X year-on-year to ₹2,447.8 crore from ₹49 crore in FY24.
The revenue jump was due to a shift from a distributor model to a principal model in FY25, recording the full value of gold sold as revenue.
Jar claimed profitability in the first half of calendar 2025.