Introduction
In a significant development concerning the scope of the Prevention of Money Laundering Act, 2002 (PMLA), the Supreme Court of India has stayed a Delhi High Court ruling that permitted the Enforcement Directorate (ED) to attach properties linked to illegal online cricket betting. The case, Tushar Bansal & Ors. v. Adjudicating Authority & Anr., raises crucial questions about whether funds generated from online gambling can legally qualify as “proceeds of crime” under the PMLA.
The interim order by a Bench comprising Justice MM Sundresh and Justice N Kotiswar Singh has sparked renewed debate on the limits of ED’s jurisdiction, the interpretation of “scheduled offences,” and constitutional safeguards under Articles 14 and 21.
Background of the Case
The dispute originates from allegations of large-scale hawala transactions and an international cricket betting network allegedly operated through a UK-based platform, Betfair.com, from a Vadodara farmhouse. According to the ED, the accused facilitated betting operations by distributing “Super Master IDs,” which allowed users to create multiple betting accounts without mandatory Know Your Customer (KYC) compliance.
In November 2025, the Delhi High Court upheld the ED’s provisional attachment of properties, holding that money derived from betting activities linked with offences like forgery, cheating, and conspiracy could be treated as “proceeds of crime” under Section 2(1)(u) of the PMLA.
The petitioners subsequently approached the Supreme Court, challenging both the legal reasoning and jurisdictional basis of the High Court’s decision.
Key Legal Issue: Can Betting Money Be ‘Proceeds of Crime’?
At the heart of the dispute lies the interpretation of “proceeds of crime” under the PMLA. The statute empowers the ED to attach assets only when they are derived from criminal activities connected to offences listed in the Act’s Schedule.
The petitioners argued that:
- Online betting and gambling are not included as scheduled offences under the PMLA.
- Therefore, money generated directly from betting cannot automatically attract money-laundering proceedings.
- The ED allegedly attempted to establish jurisdiction by linking betting proceeds to a separate SIM card forgery case, which the petitioners claim is a “remote” or artificial connection.
This argument highlights a fundamental statutory limitation — the ED’s authority is contingent upon the existence of a predicate or scheduled offence.
Delhi High Court’s Reasoning
The Delhi High Court had taken a broader interpretative approach. It concluded that where betting proceeds arise from criminal acts such as forgery or cheating, they may constitute proceeds of crime under the PMLA framework.
Interestingly, the High Court initially observed that the writ petition before it might not be maintainable due to the availability of alternative statutory remedies. However, it proceeded to examine the merits and upheld the ED’s actions, a step that has now become one of the primary grounds of challenge before the Supreme Court.
The petitioners contend that once the High Court declined to exercise writ jurisdiction, it became functus officio and could not adjudicate issues reserved for authorities under Sections 5 and 8 of the PMLA.
Arguments Raised Before the Supreme Court
The challenge before the apex court focuses on three major legal themes:
1. Limits of ED’s Jurisdiction Under PMLA
The petition argues that extending the definition of proceeds of crime to non-scheduled activities dilutes the legislative scheme of the Act. According to the plea, Parliament intentionally restricted the ED’s powers to offences listed in the Schedule, and courts cannot expand this scope through interpretation.
2. “Downstream Activity” Theory
The petitioners criticised the High Court’s reliance on what they describe as an “extra-statutory downstream activity” approach — linking betting proceeds indirectly to alleged forgery. They claim this interpretation rewrites the statutory requirement that proceeds must arise “as a result of criminal activity relating to a scheduled offence.”
3. Constitutional Concerns
The plea also raises constitutional arguments, asserting that the High Court’s decision undermines Articles 14 and 21 by rendering statutory remedies illusory and exposing individuals to arbitrary attachment of property.
Supreme Court’s Interim Order
While issuing notice to the Enforcement Directorate, the Supreme Court stayed the operation of the Delhi High Court’s ruling. Although the Bench has not yet delivered a final verdict, the interim stay indicates that the Court considers the legal questions involved to be substantial and deserving of detailed examination.
The matter is likely to have far-reaching implications for how enforcement agencies interpret the PMLA in cases involving emerging digital activities such as online betting and gambling.
Broader Legal Implications
1. Clarification of Scheduled Offence Requirement
If the Supreme Court ultimately narrows the interpretation adopted by the High Court, it may reaffirm that the ED cannot initiate money-laundering proceedings unless the underlying activity falls squarely within the statutory schedule.
2. Impact on Online Betting Investigations
India’s legal framework for online betting remains fragmented, with varying state laws and regulatory gaps. A clear ruling could determine whether enforcement agencies can use anti-money-laundering laws as an indirect tool to regulate gambling-related activities.
3. Judicial Oversight Over ED’s Powers
The case also reflects ongoing judicial scrutiny of the ED’s expansive powers under the PMLA. Recent litigation trends show courts increasingly examining whether enforcement actions adhere strictly to statutory limits and due process requirements.
Intersection of Technology, Gambling, and Financial Regulation
The controversy underscores the challenges faced by Indian courts in dealing with technologically driven offences. Online betting platforms often operate across jurisdictions, making it difficult to classify activities under traditional criminal statutes.
If proceeds from such platforms are considered outside the ambit of PMLA unless tied to a scheduled offence, enforcement agencies may need legislative amendments to address regulatory gaps.
Conversely, a broader interpretation could significantly expand the ED’s investigative reach into digital financial ecosystems.
Conclusion
The Supreme Court’s decision to stay the Delhi High Court verdict marks a crucial moment in the evolving jurisprudence on money laundering and online betting in India. The outcome of Tushar Bansal & Ors. v. Adjudicating Authority & Anr. will likely shape the boundaries of ED’s authority, clarify the meaning of “proceeds of crime,” and influence how courts balance statutory interpretation with constitutional protections.
As the case proceeds, legal observers and stakeholders in the fintech and gaming industries will closely watch whether the apex court adopts a strict textual approach to the PMLA or allows a more expansive interpretation aligned with contemporary enforcement challenges.
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