The Delhi High Court’s recent judgement in Sanjay Aggarwal & Ors. v. Union of India & Ors. (W.P.(C) 2819/2016 & connected matters), pronounced on November 27, 2025, offers a significant perspective on the application of India’s Prevention of Money Laundering Act (PMLA), 2002. This case, rooted in allegations of a massive Rs. 6,000 crore foreign exchange scam involving shell companies, provides valuable insights into the legal framework governing financial crimes. Delivered after a detailed hearing with judgement reserved on September 24, 2025, the ruling addresses the validity of provisional attachment orders and the interplay of various statutes. This article explores the factual background, legal principles, and judicial findings, offering a detailed resource for legal professionals, compliance officers, and individuals interested in India’s anti-money laundering efforts. With its implications for corporate governance and financial regulation, this judgement is a key reference for understanding modern legal challenges in economic offences.

Key Takeaways from the Judgement

1. Independent PMLA Proceedings: The court affirmed that PMLA actions remain unaffected by investigations under the Companies Act, 2013, transferred to the Serious Fraud Investigation Office (SFIO).
2. No Mandatory Chargesheet Required: Provisional attachments under Section 5 of PMLA can be initiated without a chargesheet under Section 173 of the CrPC, based on sufficient material.
3. Adequate Procedural Safeguards: The absence of a pre-attachment hearing is balanced by subsequent review mechanisms within the PMLA framework.
4. Judicial Restraint: With appeals pending before the Appellate Tribunal, the High Court directed petitioners to exhaust statutory remedies.

This decision aligns with India’s growing focus on financial crime prevention, with the Enforcement Directorate (ED) handling thousands of cases annually, reflecting the scale of such investigations in the country.

Case Background: Unraveling a Complex Financial Scheme

The case originates from a complaint lodged by Praveen Kumar, Deputy General Manager of Bank of Baroda, highlighting irregularities in foreign exchange transactions. The complaint detailed the involvement of numerous shell companies, which facilitated overseas remittances totaling approximately Rs. 6,000 crores without corresponding genuine imports. This led the Central Bureau of Investigation (CBI) to register a First Information Report (FIR No. RCBD1/2015/E/0009) on October 9, 2015, under Sections 420 (cheating) and 120B (conspiracy) of the Indian Penal Code (IPC), 1860, and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act (PCA), 1988, targeting 59 companies and unidentified bank officials or private individuals.

Subsequently, the ED initiated an Enforcement Case Information Report (ECIR No. ECIR/DLZO/20/2015) under Section 3 of PMLA to trace and provisionally attach properties linked to the proceeds of crime. Investigations revealed a network where shell companies, established with minimal documentation such as PAN cards, obtained Import Export Codes (IEC) and maintained accounts with Bank of Baroda. These accounts channeled substantial cash deposits, while parallel entities in Dubai and Hong Kong, controlled by facilitators, received the funds. The scheme involved falsified documentation to disguise the flow of money, with exporters and importers further manipulating invoices to siphon off funds under the pretext of legitimate international trade.

On February 10, 2016, the ED issued Provisional Attachment Order (PAO No. 21/2015) under Section 5(1) of PMLA, attaching properties deemed proceeds of crime. This was followed by an Original Complaint (OC No. 539/2016) under Section 5(5) and a Show Cause Notice (SCN) under Section 8(1) on January 12, 2016, with the Adjudicating Authority (AA) confirming the PAO on August 29, 2016. The petitioners challenged these actions, leading to the matter being referred to the Division Bench by a Single Judge on April 1, 2016.

Core Legal Issues: Balancing Enforcement and Fairness

The judgement addresses several pivotal legal questions, reflecting the complexity of overlapping statutes and procedural requirements:

1. Impact of SFIO Transfer on PMLA Proceedings The petitioners argued that the transfer of the investigation to SFIO under Section 212(2) of the Companies Act, 2013, on October 15, 2015, barred parallel CBI/ED actions. They cited judicial precedents like Ashish Bhalla v. State (2023 SCC OnLine Del 5818) and SFIO v. Rahul Modi (2019 5 SCC 266), asserting that Section 447 (fraud) of the 2013 Act, added to PMLA’s schedule in 2018, required a CrPC chargesheet for validity.
2. Necessity of a CrPC Chargesheet Relying on the first proviso to Section 5(1) of PMLA, the petitioners contended that a PAO could not be issued without a Section 173 CrPC report, viewing the second proviso as an exception inapplicable without a chargesheet naming them.
3. Validity of ‘Reason to Believe’ and Pre-Attachment Hearing The petitioners challenged the PAO’s basis, alleging insufficient recorded reasons under Section 5(1) and a violation of natural justice due to the lack of a pre-attachment hearing, supported by references to Supreme Court stays.

The ED countered that PMLA operates independently, with Vijay Madanlal Choudhary v. Union of India (2022 SCC OnLine SC 929) affirming attachments based on "reason to believe," regardless of a chargesheet, and argued the petition was moot post-AA confirmation.

Court’s Findings: Upholding PMLA’s Framework

The Division Bench, comprising Justices Anil Kshetarpal and Harish Vaidyanathan Shankar, dismissed the petitions, reinforcing PMLA’s enforcement mechanisms while maintaining procedural integrity. Key findings include:

1. SFIO Transfer Does Not Impede PMLA Actions

1. The court interpreted Section 212(2) of the 2013 Act as limiting SFIO’s jurisdiction to company-specific offences under Section 447, leaving PMLA’s focus on proceeds of crime (from IPC/PCA offences) unaffected.
2. Citing Vijay Madanlal Choudhary and Vinod Kumar v. State of Haryana (2024 PHHC 059827), the Bench clarified distinct scopes: the Companies Act addresses corporate governance, while PMLA targets laundering. Section 212(17)(b)’s information-sharing provision supports parallel probes.
3. Ashish Bhalla was distinguished as inapplicable to PCA/PMLA overlaps, with its appeal leaving the issue unresolved.

2. PAO Valid Without CrPC Chargesheet

1. Referencing Directorate of Enforcement v. M/s Hi-tech Merchantile (LPA 588/2022, October 17, 2025), the court held that Section 5(1)’s first proviso is not mandatory if material supports "reason to believe." This aligns with Radha Mohan Lakhotia v. Deputy Director (2010 SCC OnLine Bom 1116).

3. ‘Reason to Believe’ Sufficiently Established

1. Drawing from Radhika Agarwal v. Union of India (2025 SCC OnLine SC 449) and Directorate of Enforcement v. Poonam Malik (MISC. APPEAL (PMLA) 4/2021, November 14, 2025), the court defined "reason to believe" as evidence-based, not mere suspicion. Material like the CBI FIR, ECIR, and Section 50 statements showed Rs. 450 crores remitted without genuine trade.

4. No Pre-Attachment Hearing Required

1. Section 5’s requirement to record reasons and forward to AA, followed by SCN, suffices. Safeguards like appeals ensure fairness, as per the PMLA framework.

The court directed petitioners to the Appellate Tribunal, citing limited writ jurisdiction when statutory remedies are available (Jai Singh v. Union of India, 1977 1 SCC 1).

Broader Implications: Strengthening Financial Crime Prevention

This judgement enhances ED’s ability to act swiftly in financial crime cases, clarifying that technical objections won’t derail PMLA attachments. It underscores the importance of robust compliance measures for businesses engaged in cross-border transactions, where shell companies pose significant risks. The ruling also highlights the procedural balance, offering affected parties avenues for redressal through appeals.

In summary, the Delhi High Court’s ruling in this Rs. 6,000 crore case strengthens India’s anti-money laundering framework, ensuring effective enforcement while preserving judicial oversight. It serves as a critical guide for navigating the intersection of corporate and criminal law in financial crime cases.