Delhi High Court: While hearing a batch of six writ petitions challenging the proceedings initiated by the Directorate of Enforcement (‘ED’) in connection with large scale hawala transactions and illegal international cricket betting operations (‘International Cricket Betting Racket’), the Division Bench of *Anil Kshetrapal, J and Harish Vaidyanathan Shankar, J, held that profits earned from cricket betting could be attached as ‘proceeds of crime’ under the Prevention of Money Laundering Act, 2002 (‘Act’). Thus, the Court declined to interfere with the Provisional Attachment Orders (‘PAOs’) and Show Cause Notices (‘SCNs’) issued by the ED.
Background
The petitioners in the instant batch of petitions had challenged the:
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Original Complaints filed before the Adjudicating Authority (‘AA’) under Section 5(5) of the Act, and
The ED’s actions stemmed from investigations into an alleged international cricket betting racket operated through a U.K. based website whereby hawala channels were used to remit funds for procuring ‘Super Master Login IDs’ enabling illegal betting. Searches conducted in May 2015 under the Foreign Exchange Management Act, 1999 (‘FEMA’) at premises in Vadodara had allegedly uncovered documents, digital data and cash linked to the operation. An FIR had been subsequently registered in Gujarat, identifying the involvement of individuals connected to ‘Maruti Ahmedabad,’ a partnership alleged to have generated approximately Rs. 2,400 crores in betting proceeds over a four-month period.
During the investigation, the ED had recorded statements and reconstructed the flow of funds. ED averred that the petitioners had procured and distributed Super Master Login IDs, which were considered digital access assets, without KYC compliance, enabling clandestine betting activity. Subsequently, two PAOs dated 12-06-2015 and 10-09-2015 had been issued attaching movable and immovable properties as ‘proceeds of crime.’
Aggrieved, the petitioners sought quashing of the PAOs, SCNs and related proceedings. They argued that there was absence of ‘reason to believe,’ lack of nexus between the attached properties and any scheduled offence, and contended that the AA was coram non judice by functioning as a single-member bench. The petitioners also contended that the issuance of SCNs where no property belonging to particular petitioners had been attached was arbitrary.
Analysis, Law and Decision
i. Maintainability
The Court first addressed ED’s preliminary objection that the writ petitions were not maintainable due to the existence of a comprehensive statutory mechanism under PMLA involving adjudication before the AA, appeal under Section 26, and a further statutory appeal to the High Court under Section 42. Relying on the Supreme Court’s decision in Whirlpool Corporation v. Registrar of Trademarks, (1998) 8 SCC 1, which states that writ jurisdiction may be exercised despite alternate remedies only in three situations: enforcement of fundamental rights, violation of natural justice, or lack of jurisdiction, the Court observed that none of these contingencies were attracted in the present case. The Court further stated,
“The constitutional jurisdiction of this Court, though wide and potent, is not intended to supplant the specialised statutory mechanism envisaged under the PMLA and must yield to the legislative framework when none of the exceptional circumstances warranting its invocation are demonstrated.”
On the question of territorial jurisdiction, the Court held that although the International Cricket Betting Racket had occurred in Gujarat, substantial components of the alleged conduct, particularly procurement and distribution of login IDs, had occurred in Delhi. Accordingly, a part of the cause of action arose within Delhi, satisfying the conditions for invocation of jurisdiction under Article 226(2) of the Constitution.
ii. Whether the PAO and SCN stood vitiated for lack of proper ‘Reason to Believe’ under Sections 5(1) and 8(1) of the Act
The Court noted that Section 5(1) of the Act empowered the ED to provisionally attach any property constituting ‘proceeds of crime’, subject to recording a ‘reason to believe’, that, the person is in possession of such proceeds which if not attached forthwith, is likely to result in the property being concealed, transferred or otherwise dealt with in a manner that may frustrate the proceeding under the Act.
Furthermore, Section 8(1) of the Act enables the AA to initiate adjudicatory proceedings by issuing an SCN to the concerned person, it has a ‘reason to believe’ that the concerned person has committed an offence under Section 3 of the Act.
The Court noted that the pre-condition of ‘reason to believe’ is instrumental to enable the ED and the AA to exercise their powers.
Assessing whether the PAO and SCN suffered from lack of ‘reason to believe,’ the Court noted that the ED had relied upon the FIR, the DCB Mumbai final report, bank and ledger statements, and statements recorded by the ED under Section 50 of the Act. The Court held that this constituted tangible, objective material sufficient to form the statutory satisfaction and that the belief was neither mechanical nor based on suspicion.
The Court declined to enter into a deeper factual evaluation given the circumscribed scope of judicial review at the pre-adjudication stage.
iii. Whether properties attached under PAO constitute ‘proceeds of crime’ vis-à-vis the argument that cricket betting is not a scheduled offence
The Court noted that in the case of Directorate of Enforcement v. Prakash Industries Ltd., L.P.A No 102 of 2023, the Court had examined the meaning of proceeds of crime in context of PMLA and stated that it covers not only property directly obtained from a scheduled offence but also includes any property indirectly derived. The usage of the phrase ‘directly or indirectly’ denoted the wider scope of the provision.
In light of the aforementioned legal principle, the Court opined that Super Master IDs, being digital access assets, fell within the definition of ‘property’ under Section 2(1)(v) of the Act. Their subsequent use facilitated the betting operations, and profits generated thereby were inseparably linked to the initial taint. The Court opined that even if the downstream betting activity was not independently scheduled, the proceeds derived through utilisation of tainted assets remained ‘proceeds of crime.’ The Court noted that the petitioner obtained and distributed these IDs without documentation or any KYC verification which amounted to forgery, cheating and conspiracy, all of which are scheduled offences.
Therefore, the Court held that even if cricket betting is not a separate predicate offence, the profits earned from it constituted ‘proceeds of crime’.
iv. Validity of SCNs and Composition of Adjudicating Authority
The Court rejected the contention that the AA was coram non judice by functioning as a single-member bench. Interpreting Section 6 of the Act, the Court held that the statutory scheme expressly permits constitution of benches with one or two members, and the use of ‘shall’ in Section 6(2) of the Act could not nullify the flexibility in Sections 6(5)(b) and (7) of the Act. The issuance of SCNs was therefore held to be valid.
On the issue that SCNs could not be issued where no property was attached, the Court held that under Section 8(1) of the Act, attachment is not a jurisdictional pre-condition. The AA may issue a SCN upon receiving a complaint under Section 5(5) of the Act or an application under Sections 17(4) or 18(10) of the Act. The triggers are alternative, not cumulative.
Finding no violation of natural justice, no jurisdictional infirmity, and no reason to invoke writ jurisdiction in the face of a complete statutory framework, the Court declined to interfere. The writ petitions, along with pending applications, were dismissed.
[Naresh Bansal v. Adjudicating Authority, W.P.(C) No. 11361 of 2015, decided on 24-11-2025]
*Judgement authored by: Justice Anil Kshetarpal
Advocates who appeared in this case:
For the Petitioner: Sushil Gupta, Sunita Gupta, Bakul Jain, Mayank Jain, Paramatma Singh, Madhur Jain, Sahil Yadav, Advocates
For the Respondent: Anupam S. Sharrma, Special Counsel, Ripudaman Bhardwaj, CGSC, Harpreet Kalsi, Ripudaman Sharma, Vashisht Rao, Riya Sachdeva, Vishal Jain, Anant Mishra, Amit Kumar Rana, Advocates
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