Proceeds Of Crime’ Under PMLA Extends To Assets From Cricket Betting; Delhi High Court Upholds ED Attachment Of Properties
Safiya Malik
The High Court of Delhi Division Bench of Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar has held that, although cricket betting is not classified as an independent predicate offence under the Prevention of Money Laundering Act, 2002, assets derived from such unlawful betting activity may be treated as proceeds of crime and attached by the Enforcement Directorate. Deciding a challenge to attachment of properties allegedly linked to cricket betting operations, the Court clarified that what is material is the illicit origin of the funds and their connection with scheduled offences, not the formal listing of cricket betting itself. The Bench noted that the definition of “proceeds of crime” in Section 2(1)(u) PMLA is framed in broad terms, permitting such attachment.
The petitions arose from proceedings initiated by the Directorate of Enforcement under the Prevention of Money Laundering Act (PMLA) concerning alleged large-scale hawala operations and an international cricket-betting network. The Directorate conducted searches in May 2015 at a farmhouse in Vadodara and at the residences of persons allegedly involved in the betting activities, recovering documents, cash and digital records. These searches followed intelligence inputs and the registration of FIR by the Vadodara Police under various provisions of the IPC, relating to forgery, cheating and conspiracy in connection with the procurement of SIM cards under bogus identities.
The Directorate thereafter registered an ECIR and initiated proceedings under Sections 3 and 4 of the PMLA. The material collected during investigation included bank statements, ledger accounts, statements recorded under Section 50 of PMLA and documents recovered during searches. According to the Directorate, a partnership firm, Maruti Ahmedabad, generated approximately Rs. 2,469 crores through betting operations between December 2014 and March 2015, out of which around Rs. 60 crores were settled with the petitioner. The petitioner was alleged to have procured and distributed Super Master Login IDs of the betting website without KYC documentation and to have paid for these IDs through unauthorised channels.
Based on the material collected, the Directorate issued a Provisional Attachment Order under Section 5(1) of the PMLA, followed by an Original Complaint under Section 5(5) seeking confirmation of attachment, and subsequently a Show-Cause Notice under Section 8(1). The petitioners challenged these actions before the High Court, raising objections regarding absence of reason to believe, lack of territorial jurisdiction, maintainability of the proceedings, existence of scheduled offences, and the competence of the Adjudicating Authority functioning as a single-member bench. The Directorate opposed the petitions and relied on statutory provisions and precedents to support the validity of the actions undertaken.
The Court observed that “a substantial part of the cause of action has arisen in Delhi,” noting that the petitioner’s activities relating to procurement and distribution of Super Master Login IDs occurred within its territorial jurisdiction. It recorded that despite the offences originating in Gujarat, the jurisdiction of the Court was not ousted under Article 226(2). “After the passage of long years… it would neither be just nor expedient to relegate the matter to the Gujarat High Court.”
On maintainability, the Court stated that none of the three contingencies identified in Whirlpool Corporation were attracted. It recorded that “there was no infraction of the principles of natural justice,” since the PMLA provides a comprehensive mechanism including adjudication by the Adjudicating Authority, appeal before the Appellate Tribunal and further appeal under Section 42. It stated that “invocation of writ jurisdiction… was wholly inappropriate,” reiterating that the statute’s structure embeds the principle of audi alteram partem.
Addressing the requirement of “reason to believe,” the Court stated that the D/AO relied on FIR No. 85/2015, the DCB Mumbai report, bank records, statements recorded under Section 50 and other materials. It recorded that the PAO showed “a clear nexus between the material collected and the inference drawn regarding the involvement of the Petitioner.” It also observed that the formation of belief was “not mechanical or predicated on mere suspicion.”
On proceeds of crime, the Court observed that intangible assets such as Super Master Login IDs constituted “property” under Section 2(1)(v). It recorded that the petitioner’s acts amounted to forgery, cheating, identity fraud and conspiracy, all relatable to scheduled offences. The Court stated that profits derived from downstream activities remained tainted when originating from criminal activity: “‘Fruit of a poisoned tree’.” It held that approximately Rs. 60 crores settled with the petitioner formed part of proceeds of crime.
Regarding the Adjudicating Authority, the Court stated that Section 6 permits functioning through a single-member bench. It observed that interpreting Section 6(2) as requiring only a three-member authority would render Section 6(5)(b) and Section 6(7) “ineffectual, inoperative or redundant.” It held that a single-member bench was valid and not coram non judice.
On the challenge to SCNs issued without prior attachment, the Court observed that the triggers under Section 8(1) were alternative, and that “absence of attachment… cannot invalidate the SCN.” It noted that the petitioners’ properties had in fact been attached.
The Court recorded: “Keeping in view the above position of law, as well as the facts and circumstances of the present case, this Court finds no merit in the present Petitions.” It directed that “the present Petitions, along with the pending applications, are dismissed.”
“The foregoing discussion was only for the purpose of adjudication of lis raised in the present Petitions and the same shall not be treated as a final expression on the submissions of respective parties and shall also not affect the future adjudication emanating before any other forum in accordance with law.”
Advocates Representing The Parties
For the Petitioners: Mr. Sushil Gupta, Ms. Sunita Gupta, Mr. Bakul Jain, Mr. Mayank Jain, Mr. Paramatma Singh, Mr. Madhur Jain, Mr. Sahil Yadav
For the Respondents: Mr. Anupam S. Sharrma, Ms. Harpreet Kalsi, Mr. Ripudaman Sharma, Mr. Vashisht Rao, Ms. Riya Sachdeva, Mr. Vishal Jain, Mr. Anant Mishra, Mr. Vivek Gurnani, Mr. Kanishk Maurya, Mr. S.K. Raqueeb, Mr. Ripudaman Bhardwaj, Mr. Amit Kumar Rana
Case Title: Naresh Bansal & Ors. v. Adjudicating Authority & Ors.
Neutral Citation: 2025: DHC:10341-DB
Case Number: W.P.(C) 11361/2015 and connected matters
Bench: Justice Anil Kshetrapal, Justice Harish Vaidyanathan Shankar
