Legal Updates

Naresh Bansal vs Adjudicating Authority: Delhi High Court Rules Profits from Illegal Betting as "Proceeds of Crime" under PMLA

Author: Aishwarya Mahajan, InternUpdated on: January 15, 2026Tags: #ED (PMLA/FEMA)

Introduction to PMLA and Money Laundering in India

Money laundering poses a serious threat to the integrity of financial systems and the rule of law. To combat this issue, India enacted the Prevention of Money Laundering Act, 2002 (PMLA), which aims to prevent money laundering, confiscate proceeds of crime, and punish offenders. Over the years, Indian courts have adopted a broad interpretation of the PMLA to ensure its objectives are not undermined by technical loopholes.


The Delhi High Court's judgment in Naresh Bansal & Others v. Adjudicating Authority (2025) DHC 10341-DB marks a significant development in PMLA jurisprudence. This case arose from large-scale illegal cricket betting operations with international connections. The Enforcement Directorate (ED) attached substantial assets generated from these activities. The key issue was whether profits from illegal betting qualify as "proceeds of crime" under the PMLA, even though betting itself is not a scheduled offence. However, the operations involved linked crimes like cheating, forgery, conspiracy, and hawala transactions, which are scheduled offences.


What is Illegal Betting?

Illegal betting refers to unauthorized wagering activities, often classified as res extra commercium (things outside commerce). These fall outside the protection of Article 19(1)(g) of the Indian Constitution and attract penalties when conducted without statutory approval or in violation of regulations aimed at preserving public morality and order.


Factual Background of the Naresh Bansal Case

The petitioners, Naresh Bansal and others, were allegedly involved in running an extensive illegal cricket betting racket with domestic and international dimensions, known as the "Int’l Cricket Betting Racket." The ED's investigation revealed that the network handled massive illicit funds through a UK-based platform like Betfair.com, facilitated by hawala channels and forged documents. These funds were then invested in movable and immovable properties.


In May 2015, based on intelligence, the ED conducted searches under the Foreign Exchange Management Act, 1999 (FEMA) at premises in Vadodara, Gujarat, targeting four individuals. The raids led to the seizure of incriminating documents, digital records, and cash. Further probes uncovered the use of bogus SIM cards, fake identities, and unregulated digital credentials to support the betting network.


An FIR was subsequently registered under Sections 420 (cheating), 467 (forgery), 468 (forgery for cheating), 471 (using forged documents), and 120-B (criminal conspiracy) of the Indian Penal Code (IPC)—all scheduled offences under the PMLA. Using this FIR and other evidence, the ED filed an Enforcement Case Information Report (ECIR) and initiated proceedings under Sections 3 and 4 of the PMLA.


The ED raided residential premises and provisionally attached properties under Section 5(1) of the PMLA, which allows for the seizure of proceeds of crime. The Adjudicating Authority confirmed the attachment, deeming the properties as "proceeds of crime." Aggrieved, the petitioners challenged this in the Delhi High Court, questioning the PMLA's applicability to illegal betting.


Key Issues Before the Delhi High Court

The court addressed several critical questions in this PMLA case:

  1. Can profits from illegal betting be classified as "proceeds of crime" under Section 2(1)(u) of the PMLA when betting is not a scheduled offence?
  2. Is the involvement of related scheduled offences (e.g., cheating, forgery, criminal conspiracy, or hawala) sufficient to trigger PMLA proceedings?
  3. Did the Enforcement Directorate exceed its jurisdiction in attaching properties linked to betting activities?
  4. Should the writ petition be maintainable despite alternative remedies under the PMLA?


Delhi High Court's Findings on Illegal Betting and PMLA

1. Illegal Betting and Scheduled Offences

The court rejected the petitioners' narrow argument that PMLA cannot apply since betting is not a scheduled offence. It emphasized that the PMLA focuses on the criminal origin of funds, not the activity's classification. If illegal betting leads to scheduled offences like cheating, forgery, or conspiracy, the resulting proceeds qualify as "proceeds of crime."

2. Illicit Origin of Funds

The court stressed that the unlawful source of funds is paramount. Here, the ED established a direct link between the betting operations and scheduled offences, including financial manipulation and cross-border hawala. Thus, assets derived from these funds were attachable under the PMLA.

3. Powers of the Enforcement Directorate

The court upheld the ED's actions, noting that the PMLA is a special law for tackling complex economic crimes. The ED's broad powers are essential to counter money laundering's threat to the economy. Early judicial interference, the court warned, could weaken the law's effectiveness.

4. Rejection of the Petitioners' Challenge

The petitions were dismissed, with the court affirming the Adjudicating Authority's orders as lawful and aligned with the PMLA's objectives.


Arguments Presented in the Case

Petitioners' Contentions

  1. Betting is not a scheduled offence under the PMLA, so derived assets cannot be "proceeds of crime."
  2. The Provisional Attachment Orders (PAO) lacked a valid "reason to believe" under Section 5(1).
  3. Petitioners were not named in the original FIR, so they shouldn't face attachment.
  4. The single-member Adjudicating Authority lacked jurisdiction under Section 6.
  5. Writ petitions are maintainable due to violations of natural justice, despite alternative remedies.


Enforcement Directorate's Arguments

  1. Under PMLA, anyone can possess "proceeds of crime" without being accused in the underlying offence.
  2. "Proceeds of crime" under Section 2(1)(u) includes property from activities linked to scheduled offences.
  3. Illegal betting was intertwined with scheduled crimes like cheating and hawala.
  4. Writ jurisdiction is unsuitable at this stage, as the PMLA provides robust safeguards.
  5. Single-member benches are authorized under Section 6(5).


Significance of the Naresh Bansal Judgment

This landmark PMLA ruling has far-reaching implications:

  1. Broad Interpretation of "Proceeds of Crime": It ensures offenders can't evade liability through technicalities.
  2. Crackdown on Betting Syndicates: Targets international networks using sophisticated laundering methods.
  3. Empowering the ED: Reinforces the agency's role in combating financial crimes.
  4. Alignment with Supreme Court Precedents: Echoes Vijay Madanlal Choudhary v. Union of India (2022), treating money laundering as a standalone offence.


Critical Analysis of the Judgment

This decision strengthens PMLA enforcement but raises concerns about overreach. An expansive view of "proceeds of crime" could impact individual rights. While linking betting to scheduled offences widens the PMLA's scope, it must align with the Act's intent—laundering tied to listed crimes. The court's approval of single-member benches highlights institutional issues, as administrative-led decisions may question fairness without judicial oversight. Balancing civil liberties with economic security is crucial. As PMLA evolves, procedural safeguards must prevent misuse while upholding constitutional principles.


Conclusion: Impact on India's Money Laundering Laws

The Naresh Bansal judgment advances a decisive advancement in the interpretation and enforcement of the Prevention of Money Laundering Act, 2002. By affirming that profits derived from illegal betting when fundamentally linked with scheduled offences such as cheating, forgery, criminal conspiracy, and hawala transactions that constitute “proceeds of crime,” the Court has effectively protected the statutory framework against advanced economic offences that operate through layered and transnational mechanisms. The ruling also strengthens the institutional authority of the Enforcement Directorate, recognising the necessity of broad investigatory and attachment powers while addressing complex financial crimes that pose systemic risks to the national economy.

The Court has prevented a narrow or technical interpretation from undermining the legislative intent for combating money laundering and confiscating unlawfully acquired assets. Overall, the ruling stands as a significant precedent in India’s evolving money-laundering jurisprudence