Expansive Concept of “Proceeds of Crime” and Validity of Single‑Member Adjudicating Authority under PMLA: Commentary on Naresh Bansal & Ors v. Adjudicating Authority & Anr (2025 DHC 10341-DB)

Expansive Concept of “Proceeds of Crime” and Validity of Single‑Member Adjudicating Authority under PMLA: Commentary on Naresh Bansal & Ors v. Adjudicating Authority & Anr, 2025 DHC 10341‑DB

1. Introduction

The Delhi High Court’s Division Bench decision in Naresh Bansal and Ors v. Adjudicating Authority and Anr, 2025 DHC 10341‑DB (24 November 2025), is a significant addition to Indian money‑laundering jurisprudence under the Prevention of Money Laundering Act, 2002 (PMLA).

Although the petitions were ultimately dismissed in limine because of the availability of an effective statutory remedy, the Court went on to analyse in detail:

  • the scope of the High Court’s writ jurisdiction against provisional attachment orders (PAOs) under the PMLA;
  • what qualifies as “proceeds of crime”, especially where downstream conduct (here, cricket betting) is not itself a scheduled offence;
  • whether intangible digital assets (such as online betting “Super Master Login IDs”) constitute “property” under the PMLA;
  • whether the Adjudicating Authority (AA) can act through a single‑member bench (including a technical member alone), or whether it is coram non judice if not constituted by three members; and
  • whether a show‑cause notice (SCN) under Section 8 can validly issue in the absence of prior attachment of a person’s properties.

The judgment thus lays down important principles on:

  • the limits of Article 226 intervention in PMLA matters;
  • an expansive and functional understanding of “proceeds of crime”, including profits from downstream non‑scheduled activities where the root property is tainted; and
  • the institutional design and functioning of the Adjudicating Authority under Section 6 PMLA.

2. Factual and Procedural Background

2.1 The alleged international cricket betting racket

The Directorate of Enforcement (“ED” / “the Directorate”) received intelligence inputs about a large‑scale international cricket betting and hawala network operated through the UK‑based website Betfair.com. The operations were allegedly conducted from a farmhouse near Vadodara by Girish Parshottam Patel @ Tommy Patel and his associate Kiran Jayantilal Mala, acting through an informal partnership firm “Maruti Ahmedabad” (“MA”).

Searches were first conducted in May 2015 under the Foreign Exchange Management Act, 1999 (FEMA) at the farmhouse and residential premises of associates. Seizures included documents, digital records and cash linked to the hawala‑fuelled betting operations. Documents were shared with the Vadodara Police, revealing, inter alia, that SIM cards were obtained using forged signatures and bogus identities – leading to an FIR.

2.2 Predicate offences and ECIR

  • FIR No. I‑CR 85/2015 dated 25.03.2015 was registered by Vadodara Police under Sections 418, 419, 420, 465, 467, 468, 471 and 120‑B IPC against Girish @ Tommy Patel, Kirankumar Jentilal Mala, Dharmendra @ Dharmin Vishwanath Chauhan and Chirag Parikh – the partners of MA.
  • On 26.03.2015, the ED, Ahmedabad, registered ECIR No. ECIR/03/AMZO/2015 against the above individuals under Sections 3/4 PMLA.

During this PMLA investigation, the ED conducted a raid on 22.05.2015 at the residence of Mukesh Kumar (one of the petitioners) in Delhi. The search yielded incriminating documents and cash of Rs. 10 lakh.

2.3 Role attributed to the petitioners: Super Master Login IDs

The investigation suggested that Mukesh Kumar (referred to as “Mukesh Delhi”) was a key conduit:

  • He allegedly purchased “Super Master Login IDs” of Betfair.com from one Sukhminder Singh Sodhi against payments of about Rs. 2.4 crore (USD 30,000) per ID through unauthorised remittances abroad.
  • Each Super Master ID allowed creation of multiple subordinate “Master” and “Client” IDs used by bookies and punters for betting.
  • Mukesh distributed these IDs to persons including Kiran Jayantilal Mala, earning Rs. 30–110 per USD on net winning/losing positions of users connected to those IDs.
  • IDs were allegedly issued without KYC documents, enabling anonymous, unregulated betting.

A prosecution complaint (PMLA Case No. 08/2015) was filed before the Special Court, Ahmedabad, and some properties of Mukesh Kumar were provisionally attached via PAO No. 08/2015 dated 12.06.2015, which he challenged before the Gujarat High Court.

2.4 Second round: Larger betting racket and massive proceeds

Further investigation revealed a parallel Mumbai case: the Detection Crime Branch (DCB), Mumbai had previously filed a report under Section 173 CrPC in relation to a similar betting racket.

The ED’s analysis showed that during 04.12.2014–19.03.2015, MA had allegedly:

  • generated proceeds of crime of approximately Rs. 2,400 crore through illegal betting;
  • settled these amounts with multiple bookies across India, Dubai, Pakistan and elsewhere; and
  • settled Rs. 60 crore with Mukesh Kumar between 01.12.2014 and 16.03.2015, representing part of the betting settlements routed via him.

On 10.09.2015, ED issued a fresh Provisional Attachment Order (PAO No. 10/2015) under Section 5(1) PMLA attaching movable and immovable properties worth about Rs. 20 crore as alleged “proceeds of crime”. An Original Complaint (OC No. 523/2015) followed under Section 5(5) PMLA before the Adjudicating Authority, and a Show‑Cause Notice (SCN) dated 14.10.2015 was issued under Section 8(1) PMLA.

2.5 Petitions before Delhi High Court

Multiple writ petitions (including W.P.(C) 11361/2015, 12261/2015, 12274/2015, 68/2016, 78/2016) were filed before a Single Judge of the Delhi High Court challenging:

  • the PAO(s) issued under Section 5(1);
  • the Original Complaint(s) under Section 5(5); and
  • the SCNs issued under Section 8(1).

Key challenges included:

  • lack of “reason to believe” at both the attachment and SCN stages;
  • absence of any scheduled/predicate offence in the form of cricket betting;
  • assertion that the Adjudicating Authority was coram non judice since it was allegedly functioning as a single‑member bench; and
  • contention that SCNs could not be issued against persons whose properties were not attached.

The Single Judge referred the batch of writ petitions to a Division Bench, which decided them by the present judgment.

3. Issues Before the Court

The Bench (Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar) distilled the controversy into four principal issues:

  1. Maintainability: Whether the writ petitions were maintainable in view of the alternative statutory remedies under the PMLA, and whether the Delhi High Court had territorial jurisdiction.
  2. “Reason to believe” (Sections 5(1) & 8(1) PMLA): Whether the PAO dated 10.09.2015 and the consequent SCN dated 14.10.2015 were vitiated for lack of valid “reason to believe”.
  3. “Proceeds of crime” (Section 2(1)(u) PMLA): Whether the attached properties constituted “proceeds of crime”, especially when cricket betting itself is not a scheduled offence.
  4. Validity of SCN and constitution of Adjudicating Authority (Section 6 PMLA):
    • whether the AA was coram non judice when functioning as a single‑member bench; and
    • whether an SCN under Section 8 could issue where Petitioners’ properties were not attached in the PAO.

4. Summary of the Judgment

4.1 Territorial jurisdiction and maintainability

  • The Court held that it did have territorial jurisdiction under Article 226(2) because a substantial part of the cause of action arose in Delhi: notably, procurement and distribution of Super Master Login IDs by the petitioners occurred in Delhi.
  • Nonetheless, the writ petitions were held not maintainable because an effective and complete statutory mechanism exists under the PMLA (Adjudicating Authority → Appellate Tribunal → High Court under Section 42).
  • Applying the Supreme Court’s decision in Whirlpool Corporation v. Registrar of Trademarks, the Court held that none of the three exceptions (violation of fundamental rights, violation of natural justice, or lack of jurisdiction/vires challenge) were satisfied. Hence Article 226 should not have been invoked to quash PAOs and SCNs.

4.2 “Reason to believe” was properly recorded

  • The Court reiterated that “reason to believe” (for both Section 5 PAO and Section 8 SCN) must be objective, based on material, and more than mere suspicion, citing the Supreme Court’s recent decision in Radhika Agarwal v. Union of India and the Delhi High Court’s own decision in ED v. Poonam Malik.
  • On the facts, the Court held that ED did possess sufficient material: FIR 85/2015, Mumbai DCB’s Section 173 CrPC report, bank and ledger statements, Section 50 PMLA statements, and other documents, showing:
    • a Rs. 2,469.99 crore betting turnover through MA; and
    • settlement of Rs. 60.71 crore with Mukesh Kumar, tied to his role in the betting operation.
  • Therefore, neither the PAO nor the SCN could be said to be without “reason to believe”.

4.3 “Property” and “proceeds of crime” – even if cricket betting is not a scheduled offence

  • Building on its earlier decision in ED v. Hi‑Tech Merchantile India Pvt. Ltd. (LPA 588/2022), the Court stressed that “property” under Section 2(1)(v) PMLA is very broad and includes intangible digital assets like Super Master Login IDs that have commercial value and confer access rights.
  • It emphasised that “proceeds of crime” under Section 2(1)(u), especially after its Explanation, includes property directly or indirectly derived from criminal activity “relatable to” a scheduled offence.
  • The Court held that:
    • the acquisition and distribution of Super Master IDs without KYC using forged documents, cheating, identity fraud and criminal conspiracy is itself criminal activity relatable to scheduled IPC offences;
    • these IDs are tainted property at inception because they are procured through scheduled offences;
    • the profits from cricket betting using these tainted IDs – even though betting per se is not a scheduled offence – are still “proceeds of crime” as they are indirectly derived from the initial tainted property.
  • The Court encapsulated this by invoking the criminal‑law analogy: “fruit of a poisoned tree”.

4.4 Adjudicating Authority can function as a single‑member bench

  • Analysing Section 6(2), 6(5)(b) and 6(7) PMLA together, the Court held that:
    • though the AA is composed of a Chairperson and two members,
    • the Chairperson is expressly empowered to constitute benches of one or two members for exercising jurisdiction.
  • Reading Section 6(2) in isolation to insist on a 3‑member bench as the only valid AA would render Section 6(5)(b) and 6(7) nugatory, contrary to the principle ut res magis valeat quam pereat (statute should be interpreted so that all provisions are effective).
  • The Court agreed with the Telangana High Court’s view in Enforcement Directorate v. Karvy India Realty Ltd. & Ors that:
    • the AA, though quasi‑judicial, is not a tribunal under Articles 323A or 323B; and
    • a single technical member can validly exercise AA powers under Section 8, subject to appellate oversight.
  • Accordingly, the AA in the present case was not coram non judice, and the SCN was validly issued.

4.5 Validity of SCN where petitioner’s property is (allegedly) not attached

  • The Court clarified that Section 8(1) PMLA allows the AA to issue an SCN upon:
    • receipt of a complaint under Section 5(5); or
    • an application under Section 17(4); or
    • an application under Section 18(10).
  • These triggers are alternative, not cumulative. Hence, prior attachment of the noticee’s property is not a jurisdictional precondition for issuing an SCN.
  • An SCN is merely the starting point of adjudication – enabling the person to be heard – whereas attachment under Section 5 is a protective, provisional measure.
  • The Court therefore rejected the argument that SCNs to certain petitioners were invalid because their properties were allegedly not attached – noting in any event that their properties had in fact been provisionally attached.

4.6 Outcome

In conclusion, the Division Bench:

  • dismissed all the writ petitions for want of merit and because an alternative statutory remedy exists;
  • emphasised that its discussion on merits is only for resolving the present writ challenge and does not foreclose the issues before other statutory fora (AA, Appellate Tribunal, High Court under Section 42).

5. Detailed Analysis

5.1 Precedents and Authorities Cited

5.1.1 Whirlpool Corporation v. Registrar of Trademarks

The Court leaned heavily on the three‑fold test laid down in Whirlpool Corporation v. Registrar of Trademarks, (1998) 8 SCC 1, for when writ jurisdiction can be invoked despite an alternate remedy:

  1. enforcement of fundamental rights;
  2. violation of principles of natural justice; or
  3. orders passed without jurisdiction or where the vires of a statute is challenged.

The Division Bench in Naresh Bansal applied this framework and concluded that none of these conditions was satisfied:

  • no fundamental right violation was pleaded;
  • no denial of audi alteram partem, given the detailed PMLA mechanism; and
  • no challenge to jurisdiction or vires of PMLA itself.

5.1.2 Vijay Madanlal Chaudhary, Radha Mohan Lakhotia, Dilbag Singh

The ED cited, and the Court endorsed, the principle that:

  • a person need not be an accused in the predicate/scheduled offence for his property to be attached as “proceeds of crime” under PMLA.

This flows from:

  • Vijay Madanlal Chaudhary v. Union of India, 2022 SCC OnLine SC 929 (Supreme Court), which upheld the wide scheme of PMLA and clarified that the focus is on property involved in money‑laundering rather than merely the status of the holder; and
  • High Court decisions like Radha Mohan Lakhotia v. Deputy Director, 2010 SCC OnLine Bom 1116 (Bombay HC), and Dilbag Singh @ Dilbag Sandhu v. UOI & Ors, 2024:PHHC:143784‑DB (Punjab & Haryana HC), which reiterated this principle.

5.1.3 The J. Sekar line of cases

The petitioners relied on the Delhi High Court Division Bench decision in J. Sekar v. Union of India, W.P.(C) 5320/2017 (11.01.2018), which had commented on the functioning and composition of the Adjudicating Authority and Appellate Tribunal, and held that the reasons to believe must be fully communicated at various stages.

However:

  • The Supreme Court stayed J. Sekar in SLP (C) No. 12865/2018, Union of India v. J. Sekar, on 04.07.2018.
  • Related challenges to the interpretation of Section 6 PMLA were stated to be pending in Virender Jain v. Union of India (SLP (C) Diary No. 5616/2019).
  • The Division Bench in the present case considered that, with J. Sekar stayed, its ratio could not be used to undermine the functioning of the AA as a single‑member bench.

5.1.4 Radhika Agarwal and ED v. Poonam Malik – “reason to believe”

The Court relied on:

  • Radhika Agarwal v. Union of India, 2025 SCC OnLine SC 449 (Supreme Court), which clarified that “reason to believe” must be:
    • recorded in writing;
    • founded on material; and
    • reflect a rational nexus between the material and the belief.
  • The Delhi High Court’s own decision in Directorate of Enforcement v. Poonam Malik, Misc. Appeal (PMLA) 4/2021, which elaborated that “reason to believe” is not mere suspicion, but an objective satisfaction based on evidence.

5.1.5 ED v. Prakash Industries Ltd. – Alternative remedy doctrine in PMLA

The Court quoted extensively from its recent Division Bench judgment in Directorate of Enforcement v. M/s Prakash Industries Ltd., LPA 102/2023 (03.11.2025), which had:

  • restated the Whirlpool doctrine in the PMLA context;
  • emphasised that PMLA is a self‑contained code with an internal, multi‑tier appellate structure; and
  • criticised the “recurring practice” of challenging PAOs directly under Article 226 as abuse of process when statutory remedies exist.

Naresh Bansal directly follows and re‑applies the reasoning of Prakash Industries.

5.1.6 ED v. Hi‑Tech Merchantile India – breadth of “property”

In LPA 588/2022, ED v. M/s Hi‑Tech Merchantile India Pvt. Ltd. & Ors. (17.10.2025), the Delhi High Court held that:

  • “property” under Section 2(1)(v) PMLA must be read expansively;
  • it includes modern intangible assets such as digital rights, data, and incorporeal interests with exchangeable value.

Naresh Bansal uses this reasoning to classify Betfair “Super Master Login IDs” as “property”.

5.1.7 ED v. Karvy India Realty Ltd. – composition of AA

The Division Bench aligned with the Telangana High Court’s view in Enforcement Directorate v. Karvy India Realty Ltd. & Ors., 2024 SCC OnLine TS 18, which held that:

  • the Adjudicating Authority under PMLA, although quasi‑judicial, is not a tribunal under Articles 323A or 323B of the Constitution;
  • Section 6 PMLA permits the AA to function through single‑member benches; and
  • the absence of a judicial member per se does not invalidate its actions, given the appellate safeguards.

5.2 Legal Reasoning

5.2.1 Maintainability: alternative remedy and Article 226

The Court first addressed the preliminary objection that the writ petitions were barred by the availability of statutory remedies. It held:

  • PMLA provides a complete hierarchy of redressal:
    • Section 8 – Adjudication before the Adjudicating Authority;
    • Section 26 – Appeal to the Appellate Tribunal; and
    • Section 42 – Appeal to the High Court.
  • The attachment under Section 5(1) is provisional and subject to confirmation by the AA, which must follow due process including issuance of SCN, receiving replies, and granting a hearing.
  • The existence of such a structured, multi‑stage mechanism indicates that Parliament intended challenges to PAOs to be routed through the PMLA framework itself.

On applying the Whirlpool exceptions, the Court concluded:

  • Fundamental rights: No specific fundamental right violation was pleaded or made out.
  • Natural justice: The PMLA’s scheme (notice, reply, hearing, appeal) itself satisfies audi alteram partem. No denial of a hearing at any stage was shown.
  • Lack of jurisdiction/vires: There was no attack on the competence of the Director or ED to issue a PAO under Section 5 nor any challenge to the vires of PMLA.

The Court also underlined that Article 226 jurisdiction is discretionary and equitable and is not to be treated as a forum of first instance when a special statute has provided adequate remedies.

5.2.2 Territorial jurisdiction under Article 226(2)

On territorial jurisdiction, the Court:

  • invoked Article 226(2), which allows a High Court to exercise jurisdiction where any part of the cause of action arises within its territory;
  • held that a substantial part of the cause of action arose in Delhi since:
    • Mukesh Kumar’s acquisition and distribution of Super Master IDs took place from Delhi; and
    • a significant portion of the alleged proceeds (Rs. 60 crore) flowed to him there.
  • added a pragmatic note that, given the decade‑long pendency of these petitions, it would be neither just nor expedient to relegate the matter to the Gujarat High Court.

5.2.3 “Reason to believe” at the PAO and SCN stages

The Court analysed the statutory language:

  • Section 5(1): Director / authorised officer must have “reason to believe” that:
    • a person is in possession of proceeds of crime; and
    • such proceeds are likely to be dealt with so as to frustrate confiscation proceedings.
  • Section 8(1): The AA, after receiving a complaint under Section 5(5) (or applications under Sections 17(4) or 18(10)), must have “reason to believe” that:
    • any person has committed an offence under Section 3; or
    • is in possession of proceeds of crime, before issuing an SCN.

The Bench reiterated that “reason to believe”:

  • is an objective standard, not a subjective hunch;
  • requires a demonstrable nexus between material and belief; and
  • cannot be equated with mere suspicion or conjecture.

On the facts, the Court examined the PAO and noted it relied on:

  • FIR No. 85/2015 (Vadodara);
  • Mumbai DCB’s Section 173 CrPC report;;
  • bank account statements and ledgers;
  • statements under Section 50 PMLA; and
  • documents showing turnover of Rs. 2,469.99 crore in betting and Rs. 60.71 crore settled with Mukesh Kumar.

It found that:

  • ED’s conclusion that urgent attachment was needed was materially grounded;
  • there was a clear nexus between Mukesh’s conduct, receipt of funds and the betting racket;
  • therefore, the PAO and SCN could not be characterised as mechanical or without “reason to believe”.

5.2.4 Scope of “property” and “proceeds of crime”

The Court then engaged in a two‑step analysis:

  1. What constitutes “property” under Section 2(1)(v)?
  2. What counts as “proceeds of crime” under Section 2(1)(u) when the downstream activity is not a scheduled offence?

On “property”:

  • Following Hi‑Tech Merchantile, the Court held that “property” includes digital assets and intangible access rights that carry value – including Betfair Super Master IDs.
  • These IDs, by enabling access to a betting platform, have clear economic utility and exchange value, and thus fall squarely within Section 2(1)(v).

On “proceeds of crime”:

  • Section 2(1)(u) covers property:
    • derived or obtained directly or indirectly from criminal activity relating to a scheduled offence;
    • including any property indirectly derived from such activity (as clarified by the statutory Explanation).
  • The Court reasoned that:
    • procuring login IDs and operating the network via forged documents, cheating, identity fraud and conspiracy are criminal activities linked to scheduled IPC offences;
    • the IDs are thus tainted property at their inception;
    • profits from cricket betting using these tainted IDs, even though betting itself is not a scheduled offence, remain traceable to the original criminal activity and thus are “proceeds of crime”.

The Court illustrated this with a hypothetical: if a person acquires immovable property through forgery and cheating (scheduled offences) and then uses it for an otherwise non‑scheduled business, the profits from that business remain proceeds of crime because they stem from the initial tainted asset. Similarly, in the present case, the betting revenue generated through illicitly obtained Super Master IDs is the “fruit of a poisoned tree”.

5.2.5 No requirement to be an accused in the predicate offence

Responding to the petitioners’ grievance that they were not named as accused in the predicate FIR, the Court, relying on Vijay Madanlal and other decisions, held:

  • The PMLA targets property involved in money‑laundering, not only those formally arraigned in the predicate case.
  • “Proceeds of crime can be in the hands of any person”; attachment is directed at the property, not solely at the status of the holder as an accused in the scheduled offence.

5.2.6 Adjudicating Authority and single‑member benches (Section 6 PMLA)

The petitioners contended that because the AA was functioning through a single member (Chairperson/technical member), its orders were coram non judice and void. The Court rejected this, reasoning:

  • Section 6(2) states that the AA shall consist of a Chairperson and two members. But Section 6(5)(b) authorises the Chairperson to constitute benches of one or two members.
  • Section 6(7) further allows transfer of cases to a two‑member bench where the Chairperson considers the matter suitable for such hearing.
  • Reading these provisions harmoniously shows a deliberate legislative design:
    • the AA as an institution consists of three members in all; but
    • for functional purposes, it may act through single‑ or two‑member benches.
  • To interpret Section 6(2) as mandating only a three‑member quorum for all actions would render Sections 6(5)(b) and 6(7) ineffective – contrary to ut res magis valeat quam pereat.
  • Given the availability of appellate oversight before a tribunal presided by a retired Chief Justice, the system contains adequate checks and balances.

Thus, the AA was validly constituted, and the SCNs and proceedings before it were not vitiated on the ground of coram non judice.

5.2.7 SCN without prior attachment

Addressing petitions where SCNs were issued to persons whose properties were allegedly not attached, the Court held:

  • Section 8(1) allows the AA to issue an SCN if, upon:
    • a Section 5(5) complaint, or
    • a Section 17(4) application, or
    • a Section 18(10) application,
    the AA has reason to believe the person has committed money‑laundering or is in possession of proceeds of crime.
  • The disjunctive word “or” makes it clear that these are alternative triggers; they do not all need to co‑exist.
  • The SCN is an instrument for initiating adjudication, giving the noticee an opportunity to explain. It is distinct from:
    • provisional attachment under Section 5(1), which is preventive and urgent; and
    • final confiscation under Section 8(3) and 8(5).
  • Therefore, an SCN is not invalid merely because the noticee’s properties are not already attached.
  • Furthermore, as a factual matter, the Court noted that in W.P.(C) 68/2016 and 12274/2015, the petitioners’ properties had, in fact, been attached.

6. Simplifying Key Legal Concepts

6.1 Scheduled (predicate) offence and PMLA

The PMLA does not operate in a vacuum. It requires a connection with a “scheduled offence” listed in the Schedule to the Act. That base/offence is commonly called the predicate offence.

  • If property is derived from or through a scheduled offence (for example, cheating, forgery, corruption), it becomes “proceeds of crime”.
  • PMLA then criminalises the process of laundering these proceeds (Section 3) – whether by concealment, possession, acquisition, use, or projecting them as untainted.

In this case, although cricket betting itself is not a scheduled offence, the Court found that:

  • the use of forged documents, cheating, and identity fraud to obtain SIM cards and operate IDs are scheduled offences; and
  • the betting profits are indirectly derived from these scheduled offences and hence fall within “proceeds of crime”.

6.2 “Proceeds of crime” and indirect taint

“Proceeds of crime” includes not just money directly obtained from the scheduled offence but any property indirectly derived from it. This is crucial:

  • If tainted funds are used in a new business, profits of that business can also become proceeds of crime because they flow from the original taint.
  • The law thus prevents criminals from “washing” illegal money by layering it into apparently legal activities.

6.3 “Reason to believe” vs. suspicion

“Reason to believe” is a core safeguard in many statutes. It means:

  • the officer must have concrete material suggesting wrongdoing;
  • he must form a rational opinion and record it in writing;
  • mere gut feeling, hunch or suspicion is not enough.

However, at the provisional attachment stage, the standard is not proof beyond reasonable doubt. The officer only needs enough material to justify a temporary freeze, pending full adjudication.

6.4 Coram non judice

“Coram non judice” literally means “before a person who is not a judge”. A proceeding is coram non judice when:

  • the person or body hearing the matter has no legal authority to do so; or
  • the tribunal/court is not constituted in accordance with the statute.

If an authority acts coram non judice, its orders are null and void. In Naresh Bansal, the petitioners argued the AA was coram non judice because it was a single‑member body. The Court rejected this, holding that the statute itself authorises single‑member benches.

6.5 Alternative remedy doctrine

Courts discourage direct writ petitions when a statute provides its own appeal/review structure, unless:

  • fundamental rights are clearly violated;
  • natural justice is denied (e.g., no notice or hearing); or
  • the authority plainly lacks jurisdiction, or the statute itself is under constitutional challenge.

In PMLA, the existence of AA → Appellate Tribunal → High Court makes it almost always necessary to first exhaust those remedies before invoking Article 226.

7. Likely Impact of the Judgment

7.1 On writ litigation against PAOs under PMLA

The judgment strongly reinforces the view that:

  • challenges to provisional attachments and SCNs under PMLA should primarily proceed through statutory channels;
  • Article 226 is not meant to be the first forum of challenge to PAOs, absent exceptional circumstances under Whirlpool;
  • repeated or routine filing of writ petitions against PAOs may be treated as abuse of process.

Future litigants are likely to find it increasingly difficult to sustain writ petitions against PAOs in Delhi without demonstrating a clear Whirlpool‑type exception.

7.2 On PMLA enforcement in betting and hawala‑linked cases

The decision is particularly significant for cases involving:

  • online gambling and betting platforms (domestic or foreign), and
  • hawala‑based settlement mechanisms.

Key takeaways:

  • Even if betting per se is not a scheduled offence, PMLA can still apply if:
    • the operation relies on scheduled offences (e.g., forgery, cheating, identity fraud); and
    • profits are generated using property tainted by those offences (e.g., SIMs/IDs obtained through forgery).
  • Intangible digital rights (like access credentials to platforms) may be attached as “property” and the related profits treated as proceeds of crime.

7.3 On composition and functioning of the Adjudicating Authority

The ruling:

  • provides judicial affirmation that single‑member benches of the AA are valid;
  • reduces uncertainty created by earlier conflicting interpretations (such as in J. Sekar, now stayed);
  • supports administrative flexibility in managing heavy PMLA dockets, particularly in Delhi and other large centres.

Unless the Supreme Court rules otherwise in pending SLPs, this reasoning is likely to influence other High Courts on the validity of AA composition.

7.4 On treatment of digital and intangible assets under PMLA

The decision confirms a technology‑neutral, substance‑over‑form approach:

  • Any asset – tangible or intangible, physical or digital – that carries tradable or usable value can constitute “property”.
  • This approach is readily extendable to emerging asset classes such as:
    • digital tokens or in‑game assets used for wagering;
    • access keys for darknet marketplaces;
    • licences, vouchers or credits on online platforms.

ED and other agencies can thus confidently treat digital access rights at the heart of illicit schemes as attachable “property”.

7.5 On interpretation of “proceeds of crime” generally

The judgment endorses a broad and functional reading of “proceeds of crime”:

  • It is not confined to the immediate fruits of the scheduled offence, but extends to any downstream benefits obtained through the exploitation of tainted property.
  • This reinforces PMLA’s design to attack the economic value of crime and not merely its direct spoils.

8. Conclusion

Naresh Bansal & Ors v. Adjudicating Authority & Anr is a multi‑layered judgment that does far more than dismiss a set of writ petitions. It clarifies and strengthens several important aspects of PMLA jurisprudence:

  • Article 226 is not a substitute for PMLA’s appellate structure; writs against PAOs will be entertained only in narrowly defined exceptional circumstances.
  • The Adjudicating Authority is empowered to function through single‑member benches, including technical members, and such functioning is not coram non judice.
  • “Reason to believe” remains a crucial, objective safeguard – but on the facts, ED’s PAO and the AA’s SCN in this case met that threshold.
  • Intangible digital assets like Super Master Login IDs clearly fall within the concept of “property”; and profits derived from their use in betting, though betting is not a scheduled offence, are nonetheless “proceeds of crime” due to their link to scheduled offences – the “fruit of the poisoned tree”.
  • SCNs under Section 8 do not require prior attachment of the noticee’s property as a jurisdictional precondition; they are validly triggered by receipt of a complaint/application and “reason to believe”.

Collectively, these holdings enhance the PMLA’s effectiveness against sophisticated financial and digital crime structures while preserving procedural safeguards. Simultaneously, they signal a firm judicial stance against the indiscriminate use of writ jurisdiction to sidestep carefully constructed statutory remedies.

Case Details

Year: 2025
Court: Delhi High Court

Judge(s)

Justice Harish Vaidyanathan ShankarJUSTICE ANIL KSHETARPAL

Advocates

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