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TEAM CODE: TC 023

PROJECT SAKSHAM 3.0 , A LEGAL LITERACY AND LEGAL AID PROJECT

1ST MOOT COURT COMPETITION 2025

BEFORE THE HON’BLE SUPREME COURT OF INDICA

THE CASES CONCERNING THE CONSTITUTIONAL VALIDITY OF IT PREVENTION
OF MONEY LAUNDERING ACT (PMLA),2002

Under Article 32 of the Constitution of Indica, 1950

Writ Petition No......../2025

In the matter of

Violation of Fundamental Rights guaranteed under Article 14,19 and 21 of the Constitution
of Indica

In the matter between

Mr.ARYAN KAPOOR.............................................................................PETITIONER
V.
DIRECTORATE OF ENFORCEMENT..................................................RESPONDENT

Under the Article 136 of the Constitution of Indica,1950

Special Leave Petition No......../2025

In the matter of

Violation of Fundamental Rights guaranteed under Article 14,19 and 21 of the Constitution
of Indica

In the matter between

Mr.ARYAN KAPOOR.............................................................................PETITIONER
V.
DIRECTORATE OF ENFORCEMENT..................................................RESPONDENT
UPON SUBMISSION TO THE HON’BLE CHIEF JUSTICE AND HIS COMPANION
JUDGES OF THE HON’BLE SUPREME COURT OF INDICA

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TABLE OF CONTENT

TABLE OF CONTENT…………………………………………………………………2

LIST OF ABBREVIATION…………………………………………………………….4

INDEX OF AUTHORITIES…………………………………………………………….5

STATEMENT OF JURISDICTION……………………………………………………8

STATEMENT OF FACTS………………………………………………………………9

STATEMENT OF ISSUES …………………………………………………………….10

SUMMARY OF ARGUMENT………………………………………………………....11

ARGUMENTS ADVANCED…………………………………………………………..13

ISSUE A

WHETHER THE INVESTIGATION AND SEIZURE OF ASSETS UNDER PMLA

VIOLATE FUNDAMENTAL RIGHTS UNDER ARTICLES 14, 19 AND 21 OF THE
CONSTITUTION……………………………...................................................................13

ISSUE B

WHETHER THE ED’S SELECTIVE APPLICATION OF PMLA IN CASES OF

HIGH-PROFILE INDIVIDUALS WHILE IGNORING SIMILAR OFFENCES
COMMITTED BY OTHERS IS VIOLATIVE OF ARTICLE 14 (RIGHT TO
EQUALITY)………………………………………………………………………............16

ISSUE C

WHETHER CRYPTOCURRENCY TRANSACTIONS FALL UNDER THE

DEFINITION OF “PROCEEDS OF CRIME” UNDER PMLA……………………..18

ISSUE D

WHETHER THE SUPREME COURT’S JUDGMENT IN ROHAN MALHOTRA V.

UOI ON THE REQUIREMENT OF WRITTEN REASONS FOR ARREST UNDER
PMLA HAS RETROSPECTIVE OR PROSPECTIVE APPLICATION AND
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WHETHER MR. ARYAN KAPOOR’S ARREST SHOULD ALSO BE DECLARED

ILLEGAL ON THE SAME GROUNDS AS ROHAN MALHOTRA………………….20

ISSUE E

WHETHER THE CROSS-BORDER NATURE OF THE TRANSACTIONS SHIELDS

KAPOOR FROM LIABILITY UNDER PMLA, OR IF INDIA RETAINS
JURISDICTION BASED ON THE ENTRY OF ILLICIT FUNDS INTO ITS
ECONOMY………………………………………………………………………………22

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LIST OF ABBREVIATIONS
S.NO ABBREVIATIONS EXPANSIONS
1 AI Artificial Intelligence
2 AKIPL AK International Private Limited
3 AIR All India Reporter

4 Art Article
5 BNS Bharatiya Nyaya Sanhita
6 BSA Bharatiya Sakshya Adhiniyam
7 Const. Constitution
8 DeFi Decentralized Finance
9 ED Enforcement Director
10 ECIR Enforcement Case Information Report
11 FIU Financial Intelligence Unit
12 FR Fundamental Rights
13 IT Act Information Technology Act,,2000
14 IPC Indian Penal Code
15 IEA Indian Evidence Act
16 NGO Non-Governmental Organisation
17 Ors Others
18 PMLA Prevention of Money Laundering Act,2002
19 Sec Section
20 SC Supreme Court
21 UOI Union Of India
22 U/S Under Section
23 v. Versus

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INDEX OF AUTHORITIES

S.NO CASES REFERRED CITATION

ISSUE A
1 M.Shobana v. The Assistant Director WP. 14084/2013
2 J. Sekar v. UOI & Ors W.P. (C) 8100/2017
3 M. P. Sharma & 4 Ors v. Satish Chandra Distt. 1954 AIR 300, 1954 SCR
Magistrate, Delhi & 4 Ors 1077,AIR 1954 SUPREME
COURT 300, 56 PUN LR 366
4 Dilbag Singh Alias Dilbag Sandhu v. UOI & CWP-22688-2024
Another
5 Nikesh Tarachand Shah v. UOI WRIT PETITION
(CRIMINAL) NO. 67 OF 2017
6 Sanjay Jain v. Directorte of Enforcement 2024 DHC 1900 (Del)
7 Rana Ayyub v. Directorate of Enforcement W.P.(CRL) 714/2022

ISSUE B
8 P.T. Munichikkanna Reddy v. Revamma AIR 2007 SUPREME COURT
1753
9 The Delhi High Court in J. Sekar v. UOI W.P.(C) 8100/2017
10 Malvinder Mohan Singh v. State & Anr W.P.(CRL)-814/2020
11 Swastik Cement Products Pvt ltd. & Ors v. UOI W.P.(C) 8726/2017
& Ors
12 Rakesh Manekchand Kotheri v. Deputy Director Special Criminal
Application(Direction)No.4496
of 2014

ISSUE C
13 M/S Advantage Strategic consulting v. UOI Writ Petition No.40240 of
2015
14 Jafar Mohammand Hasafatta v. Deputy, CRIMINAL REVISION
Directorate of Enforcement APPLICATION (AGAINST

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ORDER PASSED BY
SUBORDINATE
COURT)NO. 926 OF 2016
15 Dilip Lalwani and Anr v. CBI and Anr CRM-M No. 50475 of 2021
16 Eluri Prasad Rao v. UOI WRIT PETITION No. 30097
OF 2023

ISSUE D
17 Pankaj Bansal v. UOI nCriminal Appeal Nos. 3051-
3052 of 2023, SC
18 Sanjay Chandra v. CBI n AIR 2012 SUPREME
COURT 830
19 Deepak Gupta v. ED ABLAPL No. 9695 of 2022,
Orissa HC
20 Stender Kumar Antil v. CBI MA 2034/2022 in MA
1849/2021 in SLP (Crl)
5191/2021 (SC)
21 Malvinder Mohan Singh v. State & Anr Bail Appln. 2810/2021 (Del
HC, 02.06.2023)
22 Nikesh Tarachand Shah v. UOI AIR 2017 SC 5500
23 P.C. Chidambarm v. Directorate of Enforcement AIR 2019 SC 4198

ISSUE E
24 Nitin Jain Liquidator Psl limited v. Enforcement W.P.(C) 3261/2021 (Del HC)
Directorate
25 Shiv Lal Pabbi v. Directorate of Enforcement CRM-M-35662/2021 (O&M)
(P&H HC)
26 Sanjay Bhandari v. Directorate of Enforcement CRL.M.C. 1002/2020 (Del
HC)
27 Adnan Nisar v. Directorate of Enforcement BAIL APPLN. 3056/2023 (Del
HC)
28 Vishal Moral v. Directorate of Enforcement BAIL APPLN. 3056/2023 (Del
HC)

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29 M/S Obulapuram Mining Company pvt. Ltd. v. W.P. 5962/2016 (Karn HC)
UOI
30 Universal Declaration of Human Rights (UDHR),1948
31 International Covenant on Civil and Political (ICCPR),1966
Rights
32 UN Basic Principles on the Independence of the 1985
Judiciary
33 Financial Action Task Force (FATF)
Recommendation

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STATEMENT OF JURISDICTION
The Petitioner has approached the Hon’ble Supreme Court of Indica under Article 32 of the
Constitution of Indica,1950 invoking the epistolary jurisdiction.

Article 32: Remedies for enforcement of rights conferred by this Part

(1) The right to move the Supreme Court by appropriate proceedings of the enforcement
of the rights conferred by this Part is guaranteed.
(2) The Supreme Court shall have power to issue directions or orders or writs, including
writs in the nature of habeas corpus, mandamus, prohibition, quo warrant and
certiorari, whichever may be appropriate, for the enforcement of any of the rights
conferred by this Part.
(3) Without prejudice to the powers conferred on the Supreme Court by clauses (1) and
(2), Parliament may by law empower any other court to exercise within the local
limits of its jurisdiction ill or any of the powers exercisable by the Supreme Court
under clause(2).
(4) The right guaranteed by this article shall not be suspended except as otherwise
provided for by this Constitution.

The Appellant has approaches the Hon’ble Supreme Court of Indica under Article 136 of the
Constitution of Indica,1950.

Article 136: Special leave to appeal by the Supreme Court

(1) Not withstanding anything in this Chapter, the Supreme Court may, in its
discretion, grant special leave to appeal from any judgment, decree, determination,
sentence or order in any cause or matter passed or made by any court or tribunal in
the territory of India.
(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or
order passed or made by any court or tribunal constituted by or under any law
relating to the Armed Forces.

This Memorandum sets forth the facts, laws, and the corresponding arguments on which the
claims are based in the instant case.

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STATEMENT OF FACTS
BACKGROUND: Indica (pari material to India) enforces financial regulations through the
PMLA, IT Act, and FATF compliance to combat money laundering and terror financing,
including crypto-related offenses.

ACCUSED: Mr. Aryan Kapoor, Managing Director of AK International Pvt. Ltd., engaged
in real estate and financial investments.

ALLEGATION:Accused of laundering illicit funds through: AI-generated algorithmic

trading,Blockchain-based cryptocurrency transitions, and Concealing proceeds via offshore
shell companies.CHARGES: Booked under Sections 3 and 4 of the Prevention of Money
Laundering Act,2002.

INVESTIGATION FINDINGS Forensic audit revealed use of: Decentralized Finance

(DeFi) platforms, Encrypted messaging apps, and Blockchain wallets, making tracing
difficult.

ENFORCEMENT ACTIONS: FIU flagged suspicious transactions ED froze AK’s bank

accounts, digital wallets, and AI tools.

DISPARITY IN ENFORCEMENT: Mr. Rajesh Sharma ($ 10 crore IPC & PMLA accused)
faced no ED action. Kapoor was proceeded against, allegedly due to political affiliations.

KAPOOR FOUNDATION: Alleged that Kapoor laundered funds under the guise of
charitable donations via his NGO, the Kapoor Foundation.

ARREST & PROTEST: Arrested on May 10, 2024. Claimed funding was transparent;
challenged arrest citing Rohan Malhotra v. Uinon of Indica (SC, Mar 10, 2024), which held
PMLA arrests without written reasons illrgal.HIGH COURT CLARIFICATION: Court of
Belhi ruled that the Malhotra decision applies prospectively, upholding Kapoor’s arrest.

JURISDICTION DISPUTE: Kapoor argued that the cross-border AI platform lies outside
Indica’s jurisdiction. Government countered that funds affected Indica’s financial system,
invoking PMLA jurisdiction.

LEGAL PROCEEDINGS:Writ petition under Article 226 before Delhi High Court was
dismissed. Kapoor filed SLP under Article 136 before the Supreme Court, citing violations of
Articles 14, 19 and 21.

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STATEMENT OF ISSUES

ISSUE-1

Whether the investigation and seizure of assets under PMLA violate fundamental rights under
Articles 14, 19 and 21 of the Constitution?

ISSUE-2

Whether the ED’s selective application of PMLA in cases of high-profile individuals while
ignoring similar offences committed by others is violative of Article 14 (Right to Equality)?

ISSUE-3

Whether cryptocurrency transactions fall under the definition of “proceeds of crime” under
PMLA?

ISSUE-4

Whether the Supreme Court’s judgment in Rohan Malhotra v. Union of Indica on the
requirement of written reasons for arrest under PMLA has retrospective or prospective
application and Whether Mr. Aryan Kapoor’s arrest should also be declared illegal on the
same grounds as Rohan Malhotra?

ISSUE-5

Whether the cross-border nature of the transactions shields Kapoor from liability under
PMLA, or if India retains jurisdiction based on the entry of illicit funds into its economy?

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SUMMARY OF ARGUMENTS

I. Whether the investigation and seizure of assets under PMLA violate

fundamental rights under Articles 14, 19 and 21 of the Constitution?

The Counsel for the Petitioner respectfully submits that the ED has violated the petitioner’s
fundamental rights, including the right to equality (Art 14), the right to practice any
profession (Art 19(1)(g)), and the right to life and personal liberty (Art 21) under the Const.
of India. The ED’s selective application of PMLA violates right to equality. Furthermore, by
seizing the petitioner’s assets, the ED has interfered with his liberty and right to pursue his
profession, thereby infringing his constitutional rights. Consequently, the ED’s actions are
arbitrary, discriminatory, and liable to be set aside.

II. Whether the ED’s selective application of PMLA in cases of high-profile

individuals while ignoring similar offences committed by others is violative of
Article 14 (Right to Equality)?

The ED has selectively initiated proceedings against Mr.Kapoor while taking no action
against Mr.Sharma, despite both allegedly being involved in offences attracting provisions
under the PMLA Act (2002). Mr.Sharma, a small businessman, is alleged to have committed
fraud involving $10 crores. Although such fraud is punishable under Sec 420 of the IPC or
Sec 318(4) of the BNS, which are scheduled offences under the PMLA, no proceedings have
been initiated against him. In contrast, Mr.Kapoor, a socially reputed individual and a
philanthropic activist who runs the Kapoor Foundation-through which numerous children and
youth have benefited-has been subjected to action under the PMLA. This differential
treatment based on social or economic status amounts to a isolation of Art 14 of the Const. of
India, which guarantees equality before the law and equal protection of the laws. By acting in
a biased and arbitrary manner, the ED has failed in its duty to act impartially and fairly.
Therefore, its actions are liable to be set aside as unconstitutional.

III. Whether cryptocurrency transactions fall under the definition of “proceeds

of crime” under PMLA?

At present, India neither expressly prohibits nor fully regulates investment in the
cryptocurrency market. Due to the absence of a clear legislative framework, cryptocurrency
transactions do not conclusively fall within the definition of “proceeds of crime” under the

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PMLA. The legal status of cryptocurrency remains ambiguous,as there is no specific law that
governs or criminalizes its use in India. Therefore, in the absence of a statutory prohibition or
regulatory clarity, Mr.Kapoor’s involvement in cryptocurrency-related activities cannot be
deemed unlawful or sufficient to attract liability under the PMLA.

IV. Whether the Supreme Court’s judgement in Rohan Malhotra v. UOI on the
requirement of written reasons for arrest under PMLA has retrospective or
prospective application and Whether Mr. Aryan Kapoor’s arrest should also
be declared illegal on the same ground as Rohan Malhotra?

Mr.Rohan Malhotra was arrested o 10.03.2024. The Hon’ble Supreme Court held that his
arrest was illegal as he was not provided with written grounds of arrest at the time of his
detention, which is a mandatory requirement under Sec 19 of the PMLA, and Art 22(1) of the
Const. of India. Subsequently, Mr. Kapoor was also arrested under similar circumstances
without being furnished written reasons. Therefore, the principle laid down in the case of
Rohan Malhotra v. UOI applies prospectively and renders Mr. Kapoor’s arrest illegal on the
same grounds.

V. Whether the cross-border nature of the transactions shields Kapoor from

liability under PMLA, or if Indica jurisdiction based onn the entry off illicit
funds into its economy?

Since a significant portion of Mr. Kapoor’s transactions were executed on decentralized

global networks through AI-generated algorithmic trading and blockchain-based
cryptocurrrency transactios, they arguably fall outside the territorial jurisdiction of Indian
authorities. Given the absence of specific legal provision regulating such decentralized
financial activities in India, and lack of a demonstrable link to any scheduled offence under
the PMLA, the applicability of PMLA to Mr. Kapoor’s case is questionable. Therefore, his
arrest under PMLA may be deemed legally unsustainable.

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ARGUMENTS ADVANCED

I. Whether the investigation an seizure of asset under PMLA violate

fundamental rights under Art 14,19 and 21 of the constitution?

The petitioner challenges the constitutional validity of Sec 44 of the PMLA Act, 2002, on the
ground that it violates fundamental rights under Art 14, 20 an 21 of the Const. of India. Under
the current scheme, even when the scheduled offence is triable by a Magistrate, Sec 44
mandates that the trail must be committed to the Special Court under the PMLA-functtioning
as a Court of Sessions. This deprives the undertrail of a vital procedural safeguard: the
statutory right to appeal before these Sessions Court, which would ordinarily be available in a
Magistrate’s trail. The provision thus eliminates a layer of appellate scrutiny, directly
affecting the right to fair procedure. Furthermore, this shift in jurisdiction imposes
unreasonable procedural burdens on the accused, especially when the trail of both the
predicate offence and the money laundering offence are merged, despite differing stages,
evidentiary standards or procedural frameworks. The provisions also leads to delay in trail, as
Special Courts under PMLA are often overburdened with complex financial matter. This
affects the petitioner’s right to a speedy trail, which is a component of Art21. The section, as
it stands, operates in a blanket and rigid manner without providing judicial discretion or
safeguards to protect the procedural rights of the accused. As such, the provision is arbitrary,
disproportionate, and fails the test of reasonable classification, thereby violating Art 14.

M. Shobana v. The Assistant Director on 25 September, 2013: The petitioner sought to

quash summons issued by the ED under Sec 50(2) & (3) of the PMLA, 2002, related to an
(ECIR) based on a predicate FIR (CRIME NO. 96 of 2010) alleging cheating under Sec 419,
420 IPC. The criminal case, involving A.M. Mohan (husband of one petitioner) and others,
was pending trial, with a compounding petition and Supreme Court stay on further
investigation by CBCID. The petitioner argued the summons were premature, a colourable
exercise of power, and violated their right against self-incrimination under Art 20(3) of the
Const. and the principle of double jeopardy under Art 20(2) given the pending compounding.
They contended that if the predicate offence was compounded, no “ proceeds of crime”
would exist. The ED argued thir investigation under PMLA was independent, aimed at
tracing “proceeds of crime”, and not subject to the criminal proceedings status. They cited
Director of Enforcement v. MCTM Corporation Privat Limited, which held that PMLA
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proceedings are adjudicatory, not criminal, and do not attract Art 20(2). They also highlighted
Constitution of India. Dilbag Singh Alias Dilbag Sandhu v. UOI And Another on 8
February, 2024: This case involved a challenge to the arrests of petitioners Dilbag Singh and
Kulwinder Singh by the ED under the PMLA. Eight FIRs were registered by Bombay
Police, but the petitioners were never accused in them. The ED initiated an ECIR on
23.09.2023. Searches were conducted from 04.01.2024 at their residences, leading to their
arrests on 08.01 that “mens rea” isn’t essential for PMLA penalties. The Court held that the
proceedings as independent and aimed at ascertaining and attaching proceeds of crime, which
is distinct from the criminal prosecution for predicate offfences. It affirmed that summons
under Sc 50 of PMLA are for investigation and not a second prosecution, thus not attracting
double jeopardy. The Court concluded that the summons were valid, the petitions were not
maintainable, and dismissed the writ petitions, declining to interfee with the ED’ preliminary
investigation. J. Sekar v. Union Of India & Ors. on 11 January, 2018: In W.P.(C)
5320/2017 & connected matters, the Delhi High Court dealt with the constitutional validity
and procedural safeguards under Sec 5(1) and Sec 8(1) of the PMLA, which deal with
provisional attachment of property. While the Court upheld the second provisio to Sec 5(1) as
constitutionally valid, it emphasized strict compliance with procedural safeguards. The Court
held that the term "reasons to believe" must not be mechanical and must adhere to statutory
safeguards. Importantly, it mandated that these reasons must be communicated to the notice
at each stage of proceedings under Section 8(1). Further, access to materials forming the basis
of such belief must be provided to the accused, subject to lawful redactions. The judgment
recognizes that failure to follow these safeguards would render the attachment order illegal,
thereby affirming the petitioner’s right to due process under Art 14 and 21. It underscores the
necessity of transparency and accountability in enforcement actions involving property
seizure under PMLA, especially to prevent arbitrary deprivation of property. The eight Judge
Bench judgment in M.P. Sharma and 4 Others v. Satish Chandra Distt. Magistrate, Delhi
and 4 Others 1 . This is notwithstanding the fact that thereafter in many judgments rendered
by this Court, right to privacy was accepted as a facet of Art 21. Contention of the
respondents, however, was that those judgments were contrary to the dicta laid down in M.P.
Sharma and were, therefore, per in curium. The matter on this aspect was heard by a three
Judge Bench and after hearing the parties, the Bench deemed it appropriate to make the
reference to the Constitution Bench. A five Judge Bench was constituted, which after
considering the matter, referred the same to a nine Judge Bench to resolve the controversy in
an authoritative manner. The nine Judge Bench judgment has given an unanimous answer to
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the Reference with conclusive, unambiguous and emphatic determination that right to privacy
is a part of fundamental rights which can be traced to Art 14, 19 and 21 of the.2024. The
petitioners alleged illegal detention/wrongful restraint from 04.01.2024 itself, arguing non-
production within 24 hours, thus violating Sec 19 PMLA and Sec 167 CrPC. The prosecution
maintained arrests were on 08.01.2024, with written grounds of arrest provided then. These
grounds linked Dilbag Singh to a specific FIR, detailing fake e-Rawana purchases of stone
and gravel, NGT penalties, and his financial links to implicated companies. Kulwinder
Singh's involvement through relatives in mining was also alleged.

The Court noted non-application of mind and non-compliance with Sec 19 conditions by the
Special Court during remand. Consequently, the petitions were allowed, and the arrest orders,
memos, and remand orders were set aside, leading to the petitioners' forthwith release.
Nikesh Tarachand Shah v. Union of India [(2018) 11 SCC 1 ], the Supreme Court held that
the twin conditions under Sec 45(1) of the PMLA were unconstitutional, restoring the general
bail standards under Sec 439 of the CrPC. Although these conditions were later revived via
legislative amendment, subsequent judicial interpretations have emphasized the role of the
proviso to Sec 45(1). In Pasumarthi Venkata Satyanarayana v. ED (Gujarat High Court, 6
May 2021 ), the Court granted bail noting that the petitioner was aged, ailing, had cooperated
with the investigation, and that only ₹70 lakhs involved alleged cheating of the government
while ₹2 crores pertained to private parties who had filed no complaints. The Court
considered these factors sufficient to invoke the proviso, stating that continued detention was
unwarranted, especially since custodial interrogation was no longer needed.
Similarly, in P. Chidambaram v. Directorate of Enforcement [(2020) 13 SCC 791] , the SC
clarified that bail must not be denied merely due to the gravity of the offence, especially
when the accused satisfies the twin conditions. Likewise, in D.K. Shivakumar v. ED [(2019)
264 DLT 586], the Delhi High Court held that mere association with alleged transactions is
insufficient unless a direct nexus to the laundering activity is demonstrated. These judgments
collectively underscore that bail under the PMLA must be assessed case-by-case, focusing on
the nature of allegations, the accused’s role, likelihood of reoffending, and personal
circumstances. In the present case, the petitioner fulfills all these criteria—no prior criminal
antecedents, full cooperation with authorities, and the amount involved being below ₹1
crore—which clearly attract the benefit of the proviso to Sec 45, entitling the petitioner to
bail. Learned counsel for the petitioners also brings attention of this Court to the judgment in
Sanjay Jain vs. Directorate of Enforcement, 2024 SCC OnLine Del 1656 , wherein it was

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held by this Court that statement of co-accused under Sec 50 of PMLA is not a substantive
piece of evidence and can only be used for the purpose of corroboration in support of other
evidence to lend assurance to the Court in arriving at a conclusion of guilt. He submits that
even otherwise, the statements under Sec 50 have subsequently been retracted and are not
reliable to form a basis of the guilt of the petitioners for the offences as alleged. Moreover, it
is his submission that any statements made under Sec 50 post arrest would be in the teeth of
Art 20(3) of Constitution of India, rendering the said statements inadmissible in evidence.
Relying upon the decision in Rana Ayyub vs. Directorate of Enforcement, (2023) 4 SCC 357
, he submits that under the said section, if the scheduled or predicate offence is being tried by
a Court other than the Special Court which has taken cognizance of the offence under PMLA,
then upon application, the scheduled offence may be transferred and tried alongside the
offence under PMLA by the same Special Court.

II. Whether the ED’s selective application of PMLA in cases of high-profile

individuals while ignoring similar offences committed by othrs is violative of
Art 14 ( Right to Equality)?
P. T. Munichikkanna Reddy v. Revamma: The second proviso to Sec 5(1) of the PMLA is
manifestly arbitrary and susceptible to misuse, violating Art 14 and 21 of the Constitution. As
recognized in landmark constitutional rulings (F.N. Balsara, Shreya Singhal, Shayara Bano),
laws must not enable arbitrary State action. Moreover, the right to property, acknowledged as
a human right in P.T. Munichikkanna Reddy v. Revamma, is regularly violated by
attachment orders issued under PMLA without adequate material or genuine apprehension of
alienation. Such actions lack proportionality and are applied selectively, justifying judicial
scrutiny under constitutional standards. The Delhi High Court in J.Sekar v UOI case has
stressed that provisional attachment orders under Sec 5(1) and 8(1) PMLA must adhere to
strict procedural safeguards, and failure to do so violates constitutional rights under Art14
and 21. Malvinder Mohan Singh v. State & Anr., the Court emphasized that continued
incarceration post-investigation, especially where co-accused are on bail and the evidence is
documentary, amounts to pre-trial punishment. Applying this rationale, the petitioner
contends that Aryan Kapoor’s arrest — carried out without recorded written reasons — was
not only procedurally flawed as per Rohan Malhotra, but also violates the broader
constitutional protections under Art 14 and 21. Since the purpose of bail is to secure presence
at trial and not to penalize, Kapoor is entitled to relief. Swastik Cement Products Pvt Ltd. &
Ors. vs Union Of India & Ors. on 11 January, 2018 The Delhi High Court in a batch of writ
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petitions upheld the constitutional validity of the second proviso to Sec 5(1) of the PMLA,
rejecting the challenge under Art 14. However, the Court laid down essential procedural
safeguards that the ED must comply with. It held that the phrase "reasons to believe" under
both Sec 5(1) and 8(1) must not be a mechanical formality and must satisfy statutory
standards. Critically, the Court emphasized that these "reasons to believe" must be
communicated to the notice at each stage under Sec 8(1), ensuring transparency. The notice
must also be granted access to the underlying materials that formed the basis for the
attachment, subject to lawful redactions with reasons recorded in writing. The failure to
comply with these procedural safeguards, including proper communication and disclosure,
would render the attachment illegal. This ruling supports the petitioner’s contention that
arbitrary or opaque invocation of provisional attachment powers violates Art 14 and 21 and
undermines the statutory framework of the PMLA. Moreover, the Court clarified that there is
no constitutional requirement for judicial members to preside over Adjudicating Authority
(AA) or Appellate Tribunal (AT) benches under PMLA, as these bodies do not replace High
Court jurisdiction. Unlike the NCLT, which substitutes the High Court in company matters,
PMLA proceedings still allow a full-fledged appeal to the High Court under Sec 42, both on
facts and law. Thus, this decision affirms the importance of procedural due process in
petitioner challenged the constitutional validity of Section 45 of the PMLA, asserting that it
lacked a attachment proceedings and reinforces judicial oversight against arbitrary state
action. The right to equal treatment before the law is not merely a domestic constitutional
guarantee enshrined in Article 14 of the Indian Constitution, but also forms a cornerstone of
international human rights law. India, as a signatory to the Universal Declaration of Human
Rights (UDHR) and the International Covenant on Civil and Political Rights (ICCPR), is
bound to uphold the“All are equal before the law and are entitled without any discrimination
to equal protection of the law.” Similarly, Article 26 of the ICCPR provides: “All persons are
equal before the law and are entitled without any discrimination to the equal protection of the
law.” These provisions demand that state authorities apply laws uniformly and prohibit
arbitrary or selective enforcement based on identity, status, or political affiliation. The
selective invocation of the Prevention of Money Laundering Act (PMLA) by the
Enforcement Directorate (ED) — wherein high-profile individuals are prosecuted, while
others similarly situated are not proceeded against — undermines this principle of equality
before the law. In this context, it is submitted that selective prosecution amounts to hostile
discrimination, which offends both Article 14 and India’s international obligations. The
Supreme Court of India, in Sheo Nandan Paswan v. State of Bihar [(1987) 1 SCC 288],
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acknowledged that arbitrariness in executive decisions, including prosecution, can be

challenged as violative of Article 14. Further, international anti-money laundering bodies,
particularly the Financial Action Task Force (FATF) — to which India is a member — have
issued Recommendations that guide the fair, consistent, and depoliticized enforcement of
AML laws. Specifically: FATF Recommendation 30 & 31 emphasize that law enforcement
authorities must be independent, autonomous, and act without political interference, to ensure
the integrity of anti-money laundering frameworks. Failure to comply with these international
benchmarks may not only erode public confidence in the rule of law but also subject India to
reputational risks in the global financial system. Therefore, the selective and inconsistent
application of the PMLA by the ED — especially in politically sensitive or high-profile
matters — raises grave constitutional concerns under Article 14 and simultaneously reflects
non-compliance with India’s international obligations under the ICCPR and FATF
framework. Such conduct invites judicial scrutiny, as it undermines both procedural fairness
and substantive equality before the law. Rakesh Manekchand Kothari vs Deputy Director
on 31 March, 2015: The rational nexus with the wide range of scheduled offences, many of
which are non-cognizable and bailable. He argued that the bail conditions under Sec 45 were
arbitrary and violated Articles 14, 19, and 21 of the Constitution. Further, the petitioner
questioned the legality of his arrest under Sec 19, contending that the Assistant Director
lacked proper authorization as per Sec 49 and the applicable GSR 446(E) Rules. The arrest
was also alleged to have been made without compliance with mandatory safeguards under
D.K. Basu v State of West Bengal guidelines and without furnishing written reasons to
believe the petitioner was guilty. The petitioner sought a writ of habeas corpus, arguing that
his detention was illegal due to non-compliance with statutory and constitutional safeguards.
The case highlights concerns regarding procedural lapses in enforcement actions under the
PMLA.

III. Whether cryptocurrency transactions fall under the definition of “proceeds

of crime” under PMLA?

M/S. Advantage Strategic Consulting ... v. Union Of India: The petitioner contends that the
ED's authority to initiate or continue investigations under the PMLA is inextricably linked to
the prior establishment of a predicate offence by a primary investigative agency, such as the
Central Bureau of Investigation (CBI). Absent a formal complaint, First Information Report
(FIR), or charge sheet filed by the CBI alleging the commission of an underlying scheduled
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offence, the very foundation for the ED's exercise of powers under the PMLA crumbles.
Crucially, it is argued that the CBI had previously investigated the circumstances pertaining
to the Foreign Investment Promotion Board (FIPB) approval and other related transactions,
including those concerning M/s. Chess Management Services Private Limited, and critically,
had not filed any complaint or charge sheet establishing a predicate offence in these specific
contexts. The affidavit of the former Finance Minister further buttressed this contention,
explicitly asserting the non-existence of a scheduled offence and, by direct corollary, the
absence of any "proceeds of crime" in the case. The absence of a predicate offence is
paramount, as the concept of "proceeds of crime" under the PMLA is defined as property
derived or obtained, directly or indirectly, by any person as a result of criminal activity
relating to a scheduled offence. Consequently, if no scheduled offence has been demonstrably
committed or is being actively prosecuted by the primary agency, there can be no "proceeds
of crime" for the ED to trace, attach, or investigate, thereby divesting the ED of its statutory
mandate. Therefore, the core legal challenge posited is that the ED is attempting to usurp the
jurisdictional ambit of the CBI by embarking upon an investigation under the PMLA into
matters where the predicate offence has either not been established or is not being pursued by
the designated primary agency. The petitioner's stance is that the ED's jurisdiction is not
original in nature concerning the predicate offence, but rather derivative, flowing only from
the commission of a scheduled offence. Without such a foundational predicate, the ED's
investigative actions are assailed as ultra vires and jurisdictionally incompetent. Directorate
of Enforcement In Jafar Mohammed Hasanfatta v. Deputy Director, ED (Criminal Revision
App. No. 926/2016 ), the Gujarat High Court held that the offence of money laundering under
Section 3 of PMLA is not made out unless there is material to show the person is knowingly
involved in handling proceeds of crime and further projects them as untainted property. In the
present case, mere participation in cryptocurrency transactions — which are inherently
neutral and traceable — cannot attract Sec 3 in absence of linkage to a scheduled offence and
an attempt to project the assets as clean. In Dilip Lalwani And Anr vs Central Bureau Of
Investigation And Anr on 19 May, 2022 states that mere financial transactions cannot be
treated as proceeds of crime under Sec 3 of the PMLA without a clear nexus to a scheduled
offence, reliance is placed on the judgment in Gagandeep Singh v. Union of India and Jafar
Mohammed Hasanfatta v. Deputy Director . In these cases, the courts held that unless there
is cogent material to establish that the accused had the requisite mens rea, i.e., knowledge or
intention to project or use the alleged proceeds of crime as untainted property, the offence of
money laundering is not made out. The courts clarified that possession or handling of
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property per se does not attract PMLA provisions unless the ingredients of Sec 3 are fully
satisfied, including a demonstrable link to a scheduled offence. Applying this to the present
case, the petitioners are not accused in the scheduled offence, and the financial transactions in
question were duly accounted for in their Income Tax returns, routed through banking
channels, and no evidence has been produced to show that the petitioners intended to launder
money. Accordingly, the invocation of Section 3 is legally unsustainable, and the proceedings
under PMLA deserve to be quashed.

IV. Whether the Supreme Court’s judgement in Rohan Malhotra v. UOI on the
requirement of written reasons for arrest under PMLA has retrospective or
prospective application and Whether Mr. Aryan Kapoor’s arrest should also
be declared illegal on the same grounds as Rohan Malhotra

Pankaj Bansal v. Union of India, 2023 SCC OnLine SC 1200

In this landmark ruling dated October 3, 2023, the Hon’ble Supreme Court, per Justices A.S.
Bopanna and Sanjay Kumar, addressed procedural non-compliance under Sec 19(1) of the
PMLA, 2002. The petition challenged the legality of arrest of Pankaj Bansal and Basant
Bansal by the ED in connection with alleged offences involving the IREO Group. The core
issue was the non-furnishing of written grounds of arrest, which the petitioners contended
violated both the statutory mandate under Sec 19(1) and their fundamental right under Art
22(1) of the Constitution, which requires the arrested person to be informed, "as soon as may
be," of the grounds for such arrest. The Court held that: Mere oral communication of grounds
does not fulfil the statutory obligation.Written grounds of arrest must be provided at the time
of arrest, failing which the arrest stands vitiated. Remand orders must reflect judicial
satisfaction regarding compliance with procedural safeguards; failure to do so renders such
orders mechanical and legally unsustainable. The Court declared the arrest of the Bansals
unconstitutional and illegal, ordering their immediate release. This judgment has laid down a
binding procedural precedent, reinforcing due process, transparency, and non-arbitrariness in
arrests under the PMLA, thereby impacting the legality of all future detentions under the Act.
Further the Supreme Court of India in Sanjay Chandra v. CBI, // 12 // (2012) 1 SCC 40 , has
observed that: In bail applications, generally, it has been laid down from the earliest times
that the object of bail is to secure the appearance of the accused person at his trial by
reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation

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of liberty must be considered a punishment, unless it is required to ensure that an accused

person will stand his trial when called upon. The courts owe more than verbal respect to the
principle that punishment begins after conviction, and that every man is deemed to be
innocent until duly tried and duly found guilty. In Deepak Gupta v. ED (2022), the High
Court granted anticipatory bail in a PMLA proceeding, emphasizing the importance of
safeguarding personal liberty in the absence of compelling justification for arrest. The
judgment reflects that any arrest under the PMLA must strictly adhere to due process,
including providing written reasons, and that failure to comply with such procedural
safeguards may justify bail or render the arrest unlawful, as later affirmed in Rohan Malhotra.
In Satender Kumar Antil v. CBI, the Hon'ble Supreme Court strongly reaffirmed that liberty is the
very quintessence of civilized existence, cautioning against its unjust curtailment. Applying
this principle, it is submitted that Mr. Aryan Kapoor’s arrest, done without furnishing written
reasons, fails the test of procedural fairness and violates Art 21. In light of Rohan Malhotra,
this Hon'ble Court ought to hold that the arrest is illegal and that liberty cannot be
compromised by procedural shortcuts. In Malvinder Mohan Singh v. State & Anr., the Court
emphasized that continued incarceration post-investigation, especially where co-accused are
on bail and the evidence is documentary, amounts to pre-trial punishment. Applying this
rationale, the petitioner contends that Aryan Kapoor’s arrest — carried out without recorded
written reasons — was not only procedurally flawed as per Rohan Malhotra, but also violates
the broader constitutional protections under Art 14 and 21. Since the purpose of bail is to
secure presence at trial and not to penalize, Kapoor is entitled to relief. Nikesh Tarachand
Shah v. Union of India [(2018) 11 SCC 1 ], the Supreme Court held that the twin conditions
under Sec 45(1) of the PMLA were unconstitutional, restoring the general bail standards
under Sec 439 of the CrPC. Although these conditions were later revived via legislative
amendment, subsequent judicial interpretations have emphasized the role of the proviso to
Sec 45(1). In Pasumarthi Venkata Satyanarayana v. ED (Gujarat High Court, 6 May 2021
), the Court granted bail noting that the petitioner was aged, ailing, had cooperated with the
investigation, and that only ₹70 lakhs involved alleged cheating of the government while ₹2
crores pertained to private parties who had filed no complaints. The Court considered these
factors sufficient to invoke the proviso, stating that continued detention was unwarranted,
especially since custodial interrogation was no longer needed. P. Chidambaram v.
Directorate of Enforcement [(2020) 13 SCC 791] , the Supreme Court clarified that bail
must not be denied merely due to the gravity of the offence, especially when the accused
satisfies the twin conditions. Likewise, in D.K. Shivakumar v. ED [(2019) 264 DLT 586], the
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Delhi High Court held that mere association with alleged transactions is insufficient unless a
direct nexus to the laundering activity is demonstrated. These judgments collectively
underscore that bail under the PMLA must be assessed case-by-case, focusing on the nature
of allegations, the accused’s role, likelihood of reoffending, and personal circumstances. In
the present case, the petitioner fulfills all these criteria—no prior criminal antecedents, full
cooperation with authorities, and the amount involved being below ₹1 crore—which clearly
attract the benefit of the proviso to Sec 45, entitling the petitioner to bail.

V. Whether the cross-border nature of the transactions shields Kapoor from

liability under PML, or if India retains jurisdiction based on the entry of
illicit funds into its economy?
• Chapter II of PMLA contains provisions relating to the offences of money-laundering.
Sec 2(1)(p) of PMLA defines “money-laundering” that it has the same meaning
assigned to it in Sec 3. Sec 2(1)(r) of PMLA defines “offence of cross border
implications”. To prevent offences of “cross border implications”, PMLA contains
Sec 55 to 61 dealing with reciprocal arrangement for assistance in certain matters and
procedure for attachment and confiscation of property between the contracting States
with regard to the offences of money-laundering and predicate offences. Nitin Jain
Liquidator Psl Limited vs Enforcement Directorate Through Raju ... on 15
December, 2021: The Insolvency and Bankruptcy Code (IBC) provides key statutory
stages: the “insolvency commencement date” (on CIRP admission) and the
“liquidation commencement date” (upon a liquidation order). Sec 14 imposes a
moratorium during CIRP, staying all proceedings against the corporate debtor. After
liquidation begins, Sec 33(5) permits initiation or continuation of proceedings. Sec
32A, liquidation as a going concern. Regulation 32A further defines such sale
mechanisms. In Nitin Jain, Liquidator of PSL Ltd. v. ED, the Delhi High Court
addressed whether the ED could attach assets under PMLA after NCLT approved the
sale of the corporate debtor as a going concern (on 08.09.2021). The inserted via 2020
amendment, bars prosecution and attachment of assets for offenses committed prior to
the commencement of CIRP, once a resolution plan is approved or assets are sold
under ED’s provisional attachment dated 02.12.2021 was held void, as Sec 32A’s
protection was triggered upon NCLT’s approval of the sale method. The judgment
affirms that post-approval attachments violate Sec 32A(1)(b), safeguarding the

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liquidation process. However, it leaves ambiguity regarding ED's powers to attach

assets in the interregnum—i.e., after liquidation commencement but before NCLT’s
approval—and on the interpretation of Sec 32A(2) in asset sales. In CRM-M-35662-2021
(O&M) Shiv Lal Pabbi vs Directorate Of Enforcement on 27 October, 2021 , the
Hon’ble Punjab & Haryana High Court granted bail to a Dutch national prosecuted
under PMLA after prior conviction in the Netherlands. The Court observed that the
petitioner had already served sentence abroad and no fresh MLA request or
prosecution basis existed under Indian law. It held that foreign convictions may
invoke double jeopardy under Art 20(2) and questioned the ED's jurisdiction in
absence of a corresponding scheduled offence in India. Further, the Court found the
arrest via Look Out Circular (LOC) illegal as no grounds were communicated. The
petitioner was aged, cooperative, and had no risk of tampering with evidence. Thus,
bail was granted after satisfying Section 45 of PMLA, with passport deposit and local
surety conditions. This case supports the petitioner’s argument that cross-border
convictions and procedural lapses nullify PMLA action. It underscores the need for
strict adherence to Sec 2(ra), Art 20(2), and principles of fair process. Hence,
prosecution against petitioner is vitiated and deserves to be quashed. Sanjay Bhandari
vs Directorate Of Enforcement on 8 November, 2024. The petitioner has alleged that
there is blatant arbitrariness and a lack of application of mind behind instituting the
present impugned application. The petitioner has asserted that the agency has failed to
consider that the alleged proceeds of crime (i.e., the alleged foreign assets of the
petitioner) mentioned in the impugned Miscellaneous Application existed prior to the
commencement of the Black Money Act. It has been submitted that the "proceeds of
crime" must be generated from the commission of the Scheduled Offence and cannot
predate it in any event. The petitioner claims to be facing consistent harassment from
the agency, as the properties of the petitioner were seized under the PMLA via the
First Provisional Attachment Order No. 3/2017 dated 01.06.2017. While adjudicating
on this order, the Adjudicating Authority categorically held that there are no cross-
border implications in the present case and that the Scheduled Offence under the
PMLA is not made out. The Hon’ble Delhi High Court, in Adnan Nisar v.
Directorate of Enforcement (BAIL APPLN. 3056/2023,decided on 17.09.2024),
examined the statutory requirements under Sec 2(1)(y) and Part C of the Schedule to
the PMLA. The petitioner contended that for any foreign offence to qualify as a
"scheduled offence" under Part C, two cumulative conditions must be satisfied: first,
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that the offence has "cross-border implications" as defined under Sec 2(1)(ra); and
second, that the offence must be enumerated in Part A of the Schedule or under
Chapter XVII of the IPC. The alleged predicate offence in that matter was being
investigated by the U.S. Attorney’s Office in Kansas, and not covered under any
provision of Part A or Chapter XVII. The Court held that mere movement of alleged
proceeds of crime into India does not by itself bring the offence within the ambit of
the PMLA unless the foundational offence is scheduled under Indian law.
Consequently, the Court quashed the ECIR and dismissed connected petitions,
reinforcing the proposition that PMLA jurisdiction cannot be invoked solely on the
basis of foreign predicate acts that lack statutory recognition under the Act. This
reasoning squarely supports the petitioner’s contention in the present matter. Vishal
Moral vs Directorate Of Enforcement, ... on 17 September, 2024 : In the context of
cross-border offences under the PMLA, the petitioner refers to the interpretation of
Sec 2(1)(y) and Part C of the Schedule to argue that mere involvement of foreign
elements does not suffice to attract the Act's jurisdiction. It was submitted that for any
offence to fall within Part C, two cumulative conditions must be satisfied: first, the
offence must have cross-border implications as defined under Sec 2(1)(ra) of PMLA,
and second, it must be listed either under Part A of the Schedule or under Chapter XVII of
the IPC. In a recent case, the predicate offence was under investigation by the U.S.
Attorney’s Office, and not covered under either Part A or Chapter XVII. Despite the
proceeds of crime allegedly entering the Indian financial system, the petitioner
contended that ED proceedings in India lacked legal validity. The Delhi High Court
considered this argument and highlighted that the PMLA cannot be invoked solely
based on the foreign investigation unless the scheduled offence criteria are fulfilled.
The Court observed that interpreting PMLA expansively to cover all foreign-origin
offences without proper scheduling would defeat the legislative intent and violate the
principle of legality under Art 20(1) of the Constitution. This reinforces the position
that ED’s jurisdiction under PMLA cannot be assumed where the foreign offence is
not recognized in India’s Schedule. Therefore, Kapoor’s cross-border transactions,
absent a scheduled offence linkage, cannot attract PMLA proceedings. This line of
reasoning limits ED’s extraterritorial reach and supports the petitioner’s argument for
quashing proceedings initiated without jurisdictional foundation. The Karnataka High
Court addressed whether individuals could be prosecuted under the PMLA for
offenses committed before those specific offenses were designated as "scheduled
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offenses" under the Act. M/S. Obulapuram Mining Company Pvt. Ltd. and others v
Union of India were accused of offenses, including illegal mining, that became
scheduled offenses under the PMLA only on June 1, 2009, via an amendment. The
alleged offenses by the petitioners occurred prior to this date. The Court held that the
PMLA cannot be applied retrospectively. Prosecuting individuals for offenses
committed before they were included in the PMLA's schedule would violate Art 20(1)
of the Constitution of India, which prohibits ex-post facto laws (punishing an act that
was not a crime at the time it was committed). Therefore, the Court quashed the
Enforcement Case Information Reports (ECIRs) and provisional attachment orders
issued by the enforcement authorities against the petitioners. It also clarified that final
attachment and confiscation orders cannot be passed without a conviction or judicial
conclusion of trial proceedings in the predicate offense. The Court emphasized that
even allegations like theft or illegal mining, if not scheduled offenses at the time of
commission, cannot trigger PMLA proceedings.

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PRAYER FOR RELIFE

WHEREFORE, IN THE LIGHT OF THE FACTS STATED, ISSUES RAISED,

ARGUMENTS ADVANCED AND AUTHORITIES CITED, IT IS MOST HUMBLY PRAYED
AND IMPLORED BEFORE THE HON'BLE SUPREME COURT MAY PLEASED TO,

1. Declare that the investigation and seizure of assets under PMLA violate
fundamental rights under Art 14, 19 and 21 of the Constitution.
2. Declare that the ED’s selective application of PMLA in cases of high-profile
individuals while ignoring similar offences committed by others is violative of
Art 14 ( Right to Equality).
3. Declare that the Supreme Court’s judgemet in Rohan Malhotra v. UOI on the
requirement of written reasonsfor arrest under PMLA has retrospective or
prospective application.
4. Declare that the MR. Aryan Kapoor’s arrest should also be declared illegal on
the same grounds as Rohan Malhotra.
5. Declare that the cross-border nature of the transaction shields Kapoor from
liability under PMLA, or if India retains jurisdiction based on the entry of illicit
funds into its economy.

AND/OR
ALSO PASS ANY OTHER ORDERTHAT THIS HONOURABLE COURT
DEEMS FIT AND PROPER IN THE INTEREST OF JUSTICE, EQUITY AND
GOOD CONSCIENCE.

For this act of Kindness, the PETITIONER(S) shall be duty bound forever to pray.

All of which is humbly prayed,

Councel appearing on behalf of the PETITIONER(S)

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