Profit Derived From Illegal Cricket Betting Constitutes Proceeds Of Crime Under PMLA: Delhi High Court

The Delhi High Court held that the profit derived from the illegal cricket betting constitutes “proceeds of crime” within the contours of the Prevention of Money Laundering Act, 2002 (PMLA).

The Court held thus in a batch of Writ Petitions challenging the proceedings initiated by the Enforcement Directorate (ED) and the validity of issuance of the Provisional Attachment Order (PAO) under Section 5(1) of PMLA.

A Division Bench of Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar observed, “With respect to the application of Section 2(1)(u) of the PMLA, it is pertinent to note that the scope of this provision is wide, encompassing not only immediate profits from a criminal act but also any advantage derived from the utilisation, transfer or subsequent exploitation of property obtained from a scheduled offence. It is also important to note that, even if a downstream activity, such as conducting betting, is not a scheduled offence, profits generated from such activity remain traceable to the original tainted property, especially when the said downstream activity is a final manifestation of a chain of criminality, intricately interwoven with multiple preceding criminal acts, any profit derived therefrom clearly constituting “proceeds of crime” within the contours of the PMLA.”

The Bench said that even if cricket betting is not a separate predicate offence, non-availability of the Super Master IDs, which was a culmination of a series of criminal activities related to a scheduled offence, would have made the International Cricket Betting Racket non-functional.

Advocate Sushil Gupta appeared for the Petitioners, while Advocate (Special Counsel) Anupam S. Sharma and CGSC Ripudaman Bhardwaj appeared for the Respondents.

Factual Background

The Petitions in this case arose out of a similar ECIR (Enforcement Case Information Report) registered by the ED, challenging the proceedings initiated by ED under the PMLA on substantially similar factual matrix with the Petitioners. In the lead case, the dispute between the parties arose out of the actions initiated by the ED against the Petitioner in connection with large scale hawala transactions and illegal international cricket betting operations (Int’l Cricket Betting Racket) conducted through a U.K. based website. The said operations were stated to have been carried out from a Farmhouse situated in a village.

In May 2015, the ED acting upon specific intelligence inputs, conducted a search operation under Section 37 of the Foreign Exchange Management Act, 1999 (FEMA) at the said farmhouse and the residential premises. These searches resulted in the recovery and seizure of incriminating documents, digital records and cash, allegedly linked to the operation of the hawala network facilitating international betting activities. Thereafter, the ED shared the seized documents with the Commissioner of Police, Vadodara, for further investigation, whereafter, it was revealed that certain SIM Cards had also been procured through forged signatures in bogus names as a part of Int’l Cricket Betting Racket.

Court’s Observations

The High Court in view of the facts and circumstances of the case, noted, “… this Court is of the considered view that it would be wholly inappropriate, both in law and in principle, to intercede in the present proceedings under Article 226 of the COI. 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.”

The Court was of the view that the Designated/Authorised Officer (D/AO) possessed sufficient and cogent material to form the requisite reason to believe and the formation of such belief under Section 5(1) of the PMLA was not mechanical or predicated on mere suspicion.

“Further, the PAO also indicates the existence of a clear nexus between the material collected and the inference drawn regarding the involvement of the Petitioner in process of money-laundering. In the aforesaid circumstances, and in view of the limited scope of judicial review at this stage, this Court finds no infirmity in the issuance of the PAO or the consequential SCN”, it added.

Whether the properties attached under PAO constitute “proceeds of crime” particularly in light of the argument that cricket betting is not a scheduled offence?

The Court said that the Super Master Login IDs obtained and distributed by the Petitioner fall well within the ambit of ‘property’ under Section 2(1)(v) of the PMLA and in particular, these IDs constitute intangible digital assets, conferring valuable and operative access rights to the website, enabling the ID holders to carry out betting operations.

“In the present case, the act of the Petitioner to procure and distribute these IDs, without any KYC verification or lawful documentation amounts to forgery, cheating, identity fraud and criminal conspiracy, all of which constitute as a scheduled offence. Moreover, the conduct of the Petitioner was not merely incidental; rather, it was a deliberate act undertaken in furtherance of a larger criminal conspiracy aimed at facilitating the running of an illegal betting racket. Therefore, any benefit indirectly derived by the usage of Super Master Login IDs, would constitute proceeds of crime”, it observed.

The Court explained that if a person acquires any immovable property through acts of forgery, cheating and criminal conspiracy and thereafter utilises such property for a downstream activity, such as conducting an unlicensed real-estate business which is not a scheduled offence, the proceeds generated from the latter activity nonetheless constitute “proceeds of crime” under Section 2(1)(u) of the PMLA, and this is because the taint attached to the property at its very inception, originated from a criminal activity relatable to a scheduled offence, persists throughout its subsequent use: pithily put, “Fruit of a poisoned tree”.

“In the present case, MA, through utilisation and continuous use of the Super Master Login IDs, generated approximately Rs. 2400 crores as proceeds of crime, from the Int’l Cricket Betting Racket. Out of the said amount, Rs. 60 Crores were transferred to the Petitioner, as such the active role of the Petitioner in procuring and distributing Super Master IDs, which were an indispensable requirement for continuation of the Int’l Cricket Betting Racket, clearly amounts to participation in the generation of proceeds of crime arising from scheduled offences”, it further said.

Conclusion

The Court also noted that the SCN (Show-Cause Notice) issued by a Bench, comprising of a technical member, was valid and consequently, the contention that the Adjudicating Authority (AA) was acting coram non judice is founded on a misinterpretation or ignorance of the statutory framework.

“Thus, in the view of this Court, the issuance of the SCN is well within the contours of the PMLA, and as such, the first limb of argument advanced by the Petitioners, in furtherance of validity of SCN, is devoid of merit”, it held.

Moreover, the Court observed that the absence of attachment under Section 5 of the PMLA cannot invalidate the SCN, since it is not a jurisdictional pre requisite, absence of which will disable the AA to issue such notice in contravention of the provisions of the Act.

“Even otherwise, the property of the Petitioners in W.P. (C) 68/2015 and W.P. (C) 12274/2015 have, in fact, already been attached by the impugned PAO. Accordingly, in view of the aforesaid, the second limb of the argument advanced by the Petitioner also fails. … 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 concluded.

Accordingly, the High Court dismissed the Writ Petitions.

Cause Title- Naresh Bansal and Ors. v. Adjudicating Authority and Anr. (Neutral Citation: 2025:DHC:10341-DB)

Appearance:

Petitioners: Advocates Sushil Gupta, Sunita Gupta, Bakul Jain, Mayank Jain, Paramatma Singh, Madhur Jain, and Sahil Yadav.

Respondents: Special Counsel Anupam S. Sharma, CGSC Ripudaman Bhardwaj, Panel Counsel Vivek Gurnani, Advocates Harpreet Kalsi, Ripudaman Sharma, Vashisht Rao, Riya Sachdeva, Vishal Jain, Anant Mishra, and Amit Kumar Rana, Kanishk Maurya, and S.K. Raqueeb.

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