ED can attach property from illegal cricket betting money as proceeds of crime: Delhi High Court

The Delhi High Court held on Monday that even though cricket betting is not a scheduled offence under the Prevention of Money Laundering Act, 2002 (PMLA), property generated from illegal betting can be attached as the proceeds of crime by the Enforcement Directorate (ED) [Naresh Bansal and Ors v Adjudicating Authority and Anr]. 

A Division Bench of Justices Anil Kshetarpal and Harish Vaidyanathan Shankar ruled that the money made from betting using criminal acts of forgery, cheating, and conspiracy is 'proceeds of crime' under Section 2(1)(u) of the PMLA. 

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.

“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"... 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 Court said.

The High Court rendered these findings while dismissing a batch of petitions challenging provisional attachment orders (PAOs) issued under PMLA. 

The case stemmed from an ED investigation into large-scale hawala operations and an international betting operation run through the UK-based website Betfair.com from a Vadodara farmhouse. 

It was alleged that the petitioners acted as conduits who procured and distributed Super Master IDs -- digital access credentials that enabled the creation of multiple betting accounts, without any KYC compliance. 

The IDs were allegedly purchased using funds illegally remitted abroad and were central to enabling anonymous betting networks across India, Dubai, Pakistan and other countries. The agency argued that the group generated nearly ₹2,400 crore in betting turnover between December 2014 and March 2015. 

The ED attached movable and immovable properties believed to be proceeds of crime.

However, the accused challenged the attachment, stating that the PAOs and show-cause notices lacked a valid “reason to believe” and that cricket betting is not a scheduled offence under the PMLA.

After considering the Case, the High Court rejected the petitioners’ argument and upheld the attachment of properties. 

It held that the Super Master Login IDs obtained and distributed by the accused fall well within the ambit of “property” under Section 2(1)(v) of the PMLA. 

The Bench also rejected the petitioners’ contention that proceedings conducted by a single-member PMLA adjudicating authority are coram non judice (without jurisdiction). 

The Court said that the PMLA intentionally provides for single, two or three-member benches to maintain efficacy and avoid redundancy.

Advocates Sushil Gupta, Sunita Gupta, Bakul Jain, Mayank Jain, Paramatma Singh, Madhur Jain and Sahil Yadav appeared for the petitioners. 

Special Counsel Anupam S Sharrma with advocates Harpreet Kalsi, Ripudaman Sharma, Vashisht Rao, Riya Sachdeva, Vishal Jain and Anant Mishra appeared for the ED. 

Central Government Standing Counsel Ripudaman Bhardwaj with advocate Amit Kumar Rana represented the Union of India. 

[Read Judgment]