"We condemn these raids to harass and intimidate a leading human rights and peace activist who has done nothing but work for peace and harmony, consistently upholding the highest moral standards of honesty and probity."
Justice Saral Srivastava directed the authorities to conclude the inquiry against Khan within one month.
India also called UN high commissioner for human rights Michele Bachelet's remarks on rights violations in Kashmir "unwarranted."
In a statement given to the police after being taken into custody, the man has claimed that he has already spent the funds which had been wrongly credited to his account in March.