This FIG paper examines in detail the recent Delhi High Court rulings, which have clarified the scope of judicial remedies available for cryptocurrency exchange users in India and distils important lessons for virtual digital asset (“VDA”) industry players.
On February 11, 2026, the Delhi High Court (“Court”), in Rana Handa v. BitBNS Internet Private Limited & Ors.[1](“Handa Petition”) and Aditya Malhotra & Ors. v. Union of India & Ors.[2](“Malhotra Petition”), dismissed two writ petitions filed by aggrieved users of a cryptocurrency platform against BitBNS Internet Private Limited & Ors. (“BitBNS”), a VDA exchange platform registered with the Financial Intelligence Unit of India (“FIU-Ind”) as a virtual digital asset service provider (“VDASP”). Both petitions dealt with similar underlying issues: (i) allegations of financial mismanagement and irregularities by BitBNS leading to losses to the users and (ii) a lack of regulatory oversight and channels to seek redress for VDA-related losses.
Facts
In both cases, the cause of action arose when the petitioners, i.e., registered BitBNS users, were unable to withdraw funds from the platform. They alleged that BitBNS had (i) imposed withdrawal limits without notice; (ii) displayed inaccurate portfolio valuations; and (iii) engaged in financial mismanagement and fraudulent practices, leading to substantial economic losses and undue distress. Despite having approached other grievance redressal channels, such as the National Cyber Crime Portal, they received no relief.
As a result, the petitioners approached the Court, under writ jurisdiction, seeking three principal reliefs: (i) directions to various government authorities to implement stricter policies pertaining to the workings of intermediaries dealing in VDAs; (ii) constitution of a Special Investigation Team (“SIT”) under supervision of the Central Bureau of Investigation (“CBI”) to investigate the alleged offences by BitBNS; and (iii) a direction to BitBNS and its promoters to jointly and severally release the petitioners’ invested monies.
Additionally, in the Malhotra Petition, the petitioners sought compensation for financial losses suffered.
The Court’s Holdings
BitBNS is not “State”: The Court held that BitBNS and its promoters are private entities/individuals and not “State” within the meaning of Article 12 of the Constitution of India (“Constitution”). They do not discharge public functions and are therefore not amenable to writ jurisdiction.
No CBI/SIT investigation: A High Court may direct a CBI inquiry under Article 226 of the Constitution but may exercise this power sparingly and only in exceptional circumstances. The Court declined to order an SIT investigation, because the petitioners had not exhausted ordinary criminal law remedies available, such as registering a first information report (“FIR”), and there was no material disclosing exceptional circumstances.
No regulatory vacuum: The Court stated that if existing legislative frameworks provided a means of redressal, there was no reason to address the policy question. It found no legislative vacuum that left users without remedy.
Separation of power: The Court reiterated that mandamus can only be issued to enforce existing statutory duties. Courts cannot direct the legislature to enact new laws or frame new policies on a particular subject in a particular manner.
Compensation claims require trial: The Court emphasised that determining compensation requires establishing liability through evidence and cross-examination and disputed questions of fact require appropriate trial. These cannot be determined by a court in writ jurisdiction.
Learnings for VDASPs
Civil remedies remain available: A court exercising writ jurisdiction is not the appropriate forum to determine disputes between VDA exchanges and their users, as such cases are contractual in nature. However, aggrieved users can avail all civil, consumer forum, and criminal remedies, as applicable.
Promoter-level exposure: In the Malhotra Petition, the petitioners impleaded the promoters and management of BitBNS, not just the platform. Directors and senior management of VDASPs may face personal liability risk, through civil suits and potential criminal proceedings.
Contractual safeguards and customer T&Cs: VDASPs should ensure customer terms and conditions (T&C) are clearly drafted, prominently displayed, and actively accepted at onboarding, with acceptance logged and timestamped.
Grievance redressal: An appropriate dispute resolution clause coupled with a consumer grievance redressal mechanism, in line with the Consumer Protection Act, 2019, would facilitate timely resolution of such user disputes, minimising recourse to court proceedings.
Conclusion
The Delhi High Court’s rulings have clarified the bounds of judicial remedies available for VDA-related disputes. Besides providing a useful precedent for VDA intermediaries, these decisions serve as a reminder for businesses and their promoters to re-evaluate their contractual frameworks, improve communication with users, and build robust consumer grievance redressal mechanisms.
[1] W.P.(C) 1928/2026.
[2] W.P.(C) 197/2025.