The Madras High Court in Rhutikumari v. Zanmai Labs Pvt. Ltd. (2025) ruled that cryptocurrencies such as XRP are legally protected property under Article 300A and confirmed Indian courts’ power to grant interim relief under Section 9 despite foreign-seated arbitration.

Whether Indian courts can grant interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996, in a dispute involving cryptocurrency assets (XRP coins) held on the WazirX platform, despite the arbitration clause providing for Singapore as the seat of arbitration and the cyber-attack affecting foreign-held wallets.

Brief Facts

The applicant, Rhutikumari, invested ?1,98,516 in January 2024 on the WazirX cryptocurrency exchange operated by Zanmai Labs Pvt. Ltd. (respondent no.1), purchasing 3,532.30 XRP coins stored under Client ID No. 1709079. Following a cyber-attack in July 2024 that caused a loss of about USD 230 million in Ethereum-based ERC-20 tokens, WazirX froze all user accounts, including that of the applicant, preventing access to or liquidation of her XRP holdings. The applicant sought an injunction restraining the respondents from interfering with her portfolio. Zanmai Labs contended that custody of crypto assets was held by Zettai Pte. Ltd. (Singapore) and that Indian courts lacked jurisdiction since arbitration was to occur under SIAC Rules with seat in Singapore.

Court’s Reasoning

1. Jurisdiction under Section 9: The Court cited PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd. (2021 7 SCC 1), holding that Indian courts can pass interim orders where assets are located in India, even if the seat of arbitration is abroad. Since the applicant accessed WazirX from Chennai, using Indian currency and banking channels, a part of the cause of action arose in India. Hence, the application under Section 9 was maintainable.

2. Nature of Cryptocurrency: The Court undertook an extensive study on the legal nature of cryptocurrencies, referring to domestic and international precedents. Crypto assets were described as digital property, neither currency stricto sensu nor purely intangible data, but virtual digital assets capable of being owned, traded, and held in trust. Reference was made to: Internet and Mobile Association of India v. RBI (2020 2 SCR 297), Ruscoe v. Cryptopia Ltd. (2020 NZHC 728), AA v. Persons Unknown (2019 EWHC 3556), SEC v. Ripple Labs Inc. (2023 S.D.N.Y.), and Zanmai Labs Pvt. Ltd. v. Bitcipher Labs LLP (Bombay HC, 07.10.2025).

3. Custody and Liability: The Court held that Zanmai Labs, registered in India as a reporting entity under the Financial Intelligence Unit, was responsible for Indian transactions and wallets denominated in INR. The loss affected ERC-20 tokens, not the applicant’s XRP holdings. Thus, the respondent could not freeze unrelated assets or subject them to a “socialisation of losses.” Referring to the Bombay High Court decision, the Court observed that spreading cyber losses across all users was untenable in absence of a contractual clause authorizing such action.

4. Crypto as Property under Indian Law: Relying on Ahmed G.H. Ariff v. CWT (1969 2 SCC 471) and Jilubhai Nanbhai Khachar v. State of Gujarat (1995 Supp 1 SCC 596), the Court concluded that cryptocurrencies are property within Article 300A, capable of being enjoyed, possessed, and held in trust.

Judgment

The Court held that: (a) The application under Section 9 was maintainable in India. (b) Cryptocurrencies constitute property capable of ownership and protection in law. (c) The applicant’s 3,532.30 XRP coins were distinct from the ERC-20 tokens lost in the cyber-attack; hence, the respondents cannot freeze or reallocate the applicant’s assets. (d) The respondents were restrained from interfering with the applicant’s crypto portfolio in WazirX until the conclusion of arbitration.

Subsequent Development

The judgment, delivered on 25.10.2025, marked a landmark precedent in Indian digital asset jurisprudence, recognizing crypto holdings as property and affirming the jurisdiction of Indian courts to protect such assets pending foreign-seated arbitration. It also reinforced user protection against unilateral freezing of assets post-cyber incidents.

Case Title

Rhutikumari v. Zanmai Labs Pvt. Ltd. & Ors.

Neutral Citation

O.A. No. 194 of 2025

Court

Madras High Court

Bench

Justice N. Anand Venkatesh

To read the full judgment, click here