SC's Vijay Madanlal Judgment Doesn't Exempt Foreign Recipients Of Proceeds Of Crime From Scrutiny On Mere Contractual Legitimacy Of Transaction: Delhi HC

The Delhi High Court has made it clear that foreign recipients of proceeds of crime are not exempted from scrutiny under the Prevention of Money Laundering Act, 2002, on a mere ground of 'contractual legitimacy' of transactions.Justice Ravinder Dudeja thus rejected the plea of one Amrit Pal Singh, a resident of Hong Kong for the past 17 years, being probed by the Enforcement Directorate.As per facts, Singh's company received fraudulent foreign outward remittances amounting to USD 2,880,210 (approximately INR 20.75 crores), originating from Indian shell entities.He sought anticipatory bail on the ground that the test laid down by the Supreme Court in Vijay Madanlal Choudhary v. Union of India (2023) was not satisfied as he was neither booked under the scheduled offence nor any proceeds of crime were attributable to him.In Vijay Madanlal Choudhary (supra), the Supreme Court had observed on establishing the following foundational facts, a legal presumption of commission of money-laundering would arise:“First, that the criminal activity relating to a scheduled offence has been committed. Second, that the property in question has been derived or obtained, directly or indirectly, by any person as a result of that criminal activity. Third, the person concerned is, directly or indirectly, involved in any process or activity connected with the said property being proceeds of crime.”In the case at hand, the Petitioner contended that he was neither named in the predicate offence nor aware of any illegality in the remittances made to his company.The High Court noted that though the Petitioner is not named in the predicate FIR, ED had attributed a portion of proceeds to his company. “In terms of Section 24 of the PMLA, a statutory presumption arises once it is shown that a person is in possession of property linked with a scheduled offence. It is for the applicant to rebut the presumption by demonstrating that such proceeds are untainted. At this stage, no material has been placed on record to displace the statutory presumption,” it observed.The Petitioner then contended that the transaction was a bona fide business deal.At this juncture, the High Court held, “The reliance placed by the applicant on Vijay Madanlal Choudhary v. Union of India, (supra), is misplaced, as the decision does not exempt foreign recipients from scrutiny merely by asserting contractual legitimacy in the face of strong allegations of layered money laundering.”Further noting that Petitioner had ignored summons, Court said presumption of bona fides essential for seeking anticipatory bail stood undermined and ED's apprehension that he poses a flight risk is not without merit. As such, it denied him anticipatory bail.Appearance: Ms. Anjali Jha Manish, Mr. Priyadarshi Manish, Ms. Madhuri Malegaonkar and Mr. Paras Aneja, Advs for Petitioner; Mr. Zoheb Hossain, Spl. Counsel, Mr. Vivek Gurnani, Panel Counsel with Mr. Kartik Sabharwal, Mr. Kanishk Maurya, Mr. Pranjal Tripathi, Mr. Anand Khatri & Ms. Ilma Khan, Advs for RespondentsCase title: Amrit Pal Singh v. EDCitation: 2025 LiveLaw (Del) 759Case no.: BAIL APPLN.1322/2025Click here to read judgment

SC's Vijay Madanlal Judgment Doesn't Exempt Foreign Recipients Of Proceeds Of Crime From Scrutiny On Mere Contractual Legitimacy Of Transaction: Delhi HC

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