Daijiworld Media Network – New Delhi
New Delhi, Nov 26: In a landmark judgment with far-reaching implications for money-laundering investigations, the Delhi High Court has ruled that profits earned from illegal betting can be classified as "proceeds of crime" under the Prevention of Money Laundering Act (PMLA) if they originate from or are funded by illicit money.
The bench, comprising Justices Anil Kshetarpal and Harish Vaidyanathan Shankar, explained that once the source of funds is unlawful, any subsequent profit carries the same taint, drawing an analogy to the “fruit of a poisoned tree.” They emphasised that the criminal character of the original funds “continues to travel downstream,” even if later activities are not explicitly listed as scheduled offences under PMLA.
The ruling arose from petitions linked to a 2015 Enforcement Directorate (ED) investigation into a large-scale cricket-betting network. The agency claimed the network employed offshore platforms, hawala operators, and domestic agents to circulate money, generating nearly Rs 2,400 crore in transactions over a year. Searches yielded cash, documents, and digital evidence showing that key accused controlled access to foreign betting portals via special login IDs.
The accused argued that betting is not a scheduled offence, and therefore, profits should not be attached under PMLA. The High Court rejected this, stating that the law’s definition of ‘proceeds of crime’ is deliberately broad. The bench clarified that the focus is on the illicit origin of the funds, not the nature of the subsequent activity. Any profit derived from tainted money remains inseparable from the original illegality and is liable for attachment.
Legal experts suggest that the judgment significantly strengthens the ED’s ability to pursue cases where illegal funds are channelled into activities not explicitly covered under the PMLA schedule. This approach could extend to inflated stock profits, unauthorised businesses, or ventures financed through illegal kickbacks, as long as the underlying money is tainted.
The decision marks a shift in enforcement strategy, focusing on tracing the lineage of money rather than limiting scrutiny to the nature of the immediate transaction.