Introduction:

In the case of Amrit Pal Singh v. Enforcement Directorate (BAIL APPLN.1322/2025), the Delhi High Court, presided over by Justice Ravinder Dudeja, delivered a significant ruling that reaffirmed the wide net of the Prevention of Money Laundering Act, 2002 (PMLA), making it clear that foreign recipients of proceeds of crime are not insulated from investigation merely because they claim the transactions were legitimate under contractual obligations. The Petitioner, Amrit Pal Singh, a resident of Hong Kong for the past 17 years, approached the High Court seeking anticipatory bail after his company was accused of receiving fraudulent foreign outward remittances amounting to USD 2,880,210 (approximately INR 20.75 crores), sent from Indian shell entities. Singh argued that he could not be prosecuted under PMLA since he was not named in any scheduled offence nor directly involved in any predicate crime, relying on the Supreme Court’s precedent in Vijay Madanlal Choudhary v. Union of India (2023) which laid down specific foundational facts that must be established for the presumption of money laundering to arise, namely: first, that a criminal activity relating to a scheduled offence has been committed; second, that the property in question has been derived or obtained directly or indirectly as a result of such criminal activity; and third, that the person concerned is directly or indirectly involved in any process or activity connected with such proceeds of crime. Singh claimed none of these applied to him, contending that he was an innocent businessman engaged in a legitimate commercial transaction with no knowledge of any criminal activity or shell companies behind the remittances, and that he could not be held liable merely because funds reached his company’s account.

Arguments:

Represented by Ms. Anjali Jha Manish and her team, Singh argued that since he was neither named in the FIR for the scheduled offence nor shown to have participated in any criminal conspiracy, the Enforcement Directorate (ED) had no legal basis to initiate proceedings or seek custodial interrogation under PMLA. He further emphasized that the ED’s case lacked concrete evidence tying him personally to the alleged offence, and that the funds his company received were consideration for bona fide business deals involving import and export contracts duly supported by paperwork and bank channels.

On the other side, the ED, represented by Special Counsel Mr. Zoheb Hossain along with a team of government lawyers, argued that Singh’s company was one of the ultimate recipients of the proceeds of crime arising from a complex web of fraudulent foreign outward remittances involving Indian shell companies created solely for the purpose of siphoning funds abroad. The ED contended that under Section 24 of the PMLA, a statutory presumption arises once it is shown that a person is in possession of property linked to a scheduled offence, shifting the burden on the recipient to demonstrate that such proceeds are untainted. It highlighted that despite repeated summons, Singh had evaded appearance before the ED, demonstrating his unwillingness to cooperate and increasing the apprehension that he posed a flight risk, particularly given his permanent residence outside India. The ED also pointed out that Singh’s arguments relied on a misreading of Vijay Madanlal Choudhary, which, it argued, does not create a blanket immunity for foreign entities or individuals from investigation under PMLA merely because they claim transactions were commercially legitimate; instead, it places a statutory burden on the person in possession of proceeds of crime to establish their innocence. The ED submitted that layered transactions, the lack of proper due diligence, and the sheer magnitude of remittances suggested a prima facie case of laundering and involvement in placement, layering, and integration stages of money laundering.

Judgement:

After considering the rival submissions, Justice Dudeja held that although Singh was not named in the predicate FIR, the ED had attributed proceeds of crime to his company, triggering the statutory presumption under Section 24 of the PMLA. The Court noted that at the anticipatory bail stage, it was not sufficient for the applicant to merely claim contractual legitimacy without placing credible material on record to rebut the statutory presumption that the funds were tainted. The High Court clarified that the reliance placed on Vijay Madanlal Choudhary was misplaced because that judgment does not exempt foreign recipients from scrutiny if there are credible allegations of layered money laundering. The Court also took serious note of Singh’s deliberate non-compliance with ED summons, observing that anticipatory bail is an equitable relief where presumption of bona fides is essential, and the applicant’s conduct in ignoring investigative summons undermined such a presumption. Given these facts and circumstances, and keeping in mind the seriousness of allegations, flight risk concerns, and the statutory scheme of PMLA which places a reverse burden of proof on persons in possession of suspected proceeds of crime, the Court concluded that Singh’s case did not warrant the extraordinary relief of anticipatory bail. Accordingly, the High Court dismissed the petition, reiterating that persons outside India cannot shield themselves from PMLA proceedings merely by claiming contractual legitimacy, especially when faced with strong indications of financial layering intended to launder money derived from a scheduled offence. The decision underscores the robust approach courts are adopting to combat cross-border money laundering and highlights the increasing responsibility on individuals and entities receiving large sums from India to ensure thorough due diligence, lest they find themselves embroiled in PMLA proceedings. The judgment serves as a strong message to international businessmen dealing with Indian counterparties, emphasizing that statutory presumptions under PMLA can extend across borders and contractual paperwork alone will not absolve recipients from scrutiny if the funds originate from criminal activity. By denying anticipatory bail, the Delhi High Court reinforced the legislative intent of PMLA to curb laundering activities that often involve sophisticated layering of funds across jurisdictions, and demonstrated that courts will prioritize effective investigation over premature relief when strong prima facie material points to a nexus between recipients and proceeds of crime, thereby ensuring the efficacy of India’s anti-money laundering regime.