The High Court of Delhi has ruled that a writ petition under Article 226 of the Constitution challenging a Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act, 2002 (PMLA) is not maintainable when an efficacious alternative statutory remedy exists.
The Division Bench comprising Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar dismissed a batch of petitions challenging the proceedings initiated by the Directorate of Enforcement (ED) in connection with an international cricket betting racket. The Court held that the PMLA is a “self-contained and comprehensive statute” with a complete adjudicatory hierarchy, and bypassing this mechanism to approach the High Court amounts to an abuse of the process of law.
The Court dismissed the writ petitions filed by Mukesh Kumar, Naresh Bansal, and others against the PAO issued under Section 5(1) and Show Cause Notices (SCN) issued under Section 8 of the PMLA. The Bench upheld the preliminary objection raised by the ED regarding maintainability, observing that the petitioners failed to demonstrate any exceptional circumstances—such as a violation of Fundamental Rights or natural justice—that would warrant the invocation of writ jurisdiction. Additionally, the Court affirmed that profits from downstream activities facilitated by scheduled offences constitute “proceeds of crime.”
Background of the Case
The case arose from an investigation into a large-scale international cricket betting racket operated through the website “Betfair.com.” The operation was allegedly run from Vadodara by one Girish Parshottam Patel alias Tommy Patel.
In May 2015, the ED conducted searches under the Foreign Exchange Management Act (FEMA) and subsequently registered an Enforcement Case Information Report (ECIR) based on an FIR (I-CR No. 85/2015) registered by the Vadodara Police under Sections 418, 419, 420, 465, 467, 468, 471, and 120-B of the IPC.
The investigation revealed that the petitioner, Mukesh Kumar, procured “Super Master Login IDs” for the betting website for approximately Rs. 2.4 crores per ID through unauthorized channels. These IDs were distributed without Know Your Customer (KYC) norms. The firm “Maruti Ahmedabad” allegedly generated proceeds of crime amounting to approximately Rs. 2,400 crores. The ED subsequently issued a PAO on September 10, 2015, attaching properties valued at approximately Rs. 20 crores.
Arguments on Maintainability
- The Directorate of Enforcement: Special Counsel Mr. Anupam S. Sharrma raised a preliminary objection that the petitions were not maintainable due to the availability of alternative statutory remedies. He submitted that the PAO could be challenged before the Adjudicating Authority (AA) under Section 8, followed by an appeal to the Appellate Tribunal under Section 26, and finally an appeal to the High Court under Section 42 of the PMLA.
- The Petitioners: The petitioners contended that the PAO and SCN were issued without a valid “reason to believe” and that the Adjudicating Authority was coram non-judice as it was functioning as a single-member bench. They argued that these jurisdictional errors justified the writ petitions.
Court’s Analysis
1. Maintainability and the “Self-Contained” PMLA Code
The Court accepted the ED’s preliminary objection, citing its recent decision in Directorate of Enforcement v M/S Prakash Industries Ltd. (2025) and the Supreme Court’s judgment in Whirlpool Corporation v. Registrar of Trademarks.
The Bench reiterated that writ jurisdiction under Article 226 constitutes an extraordinary remedy to be invoked only in three contingencies:
- Enforcement of Fundamental Rights.
- Violation of principles of natural justice.
- Where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.
The Court observed that the PMLA provides a “robust and multi-tiered mechanism” ensuring adherence to the principles of audi alteram partem (right to be heard) at every stage. Since the statute provides a specific hierarchy of forums—Adjudicating Authority, Appellate Tribunal, and Section 42 appeals—the Court held that bypassing these remedies is impermissible.
The Court observed:
“The recurring practice of invoking the extraordinary writ jurisdiction under Article 226 of the COI to challenge the validity of a PAO at every other opportunity is wholly unwarranted amounting to an abuse of the process of law… The constitutional jurisdiction of this Court, though wide and potent, is not intended to supplant the specialised statutory mechanism envisaged under the PMLA.”
2. Adjudicating Authority as Single-Member Bench
The Court rejected the petitioners’ argument that the Adjudicating Authority was coram non-judice because it functioned with a single member. Interpreting Section 6 of the PMLA, the Bench held that the statute allows for “functional flexibility.” Citing the Telangana High Court’s decision in Enforcement Directorate v. Karvy India Reality Limited, the Court ruled that the Chairperson has the power to constitute benches of one or two members, and a three-member composition is not a mandatory rigid requirement for all cases.
3. “Reason to Believe” and Proceeds of Crime
Although the Court held the petitions were not maintainable, it briefly examined the merits to determine if any jurisdictional error existed.
- Reason to Believe: The Court found that the designated officer had relied on sufficient material, including the FIR, charge sheet, and bank statements, to form a “reason to believe” that was not based on mere suspicion.
- Proceeds of Crime: Addressing the argument that betting is not a scheduled offence, the Court held that the “Super Master Login IDs” were procured through scheduled offences like forgery and cheating. Therefore, profits generated from the downstream activity (betting) using these IDs constituted “proceeds of crime.” The Court termed this the “Fruit of a poisoned tree.”
4. SCN Without Prior Attachment The Court clarified that under Section 8(1) of the PMLA, a Show Cause Notice can be issued if the authority believes a person is in possession of proceeds of crime or has committed an offence. The Court stated:
“The absence of attachment under Section 5 of the PMLA cannot invalidate the SCN, since it is not a jurisdictional pre-requisite.”
Decision The High Court dismissed the writ petitions, holding that they were devoid of merit and that the petitioners must pursue their remedies before the statutory forums provided under the PMLA.
Case Details:
- Case Title: Naresh Bansal and Ors v. Adjudicating Authority and Anr (and connected matters)
- Case No: W.P.(C) 11361/2015
- Bench: Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar
