3rd P.N.

Mathur Memorial National Moot Court Competition 2024

3rd P.N. MATHUR MEMORIAL NATIONAL MOOT COURT COMPETITION

2024

P (TC - 01)

BEFORE

THE HON’BLE SUPREME COURT OF AAKU

Criminal Appeal No. of 2024

[Arising out of Special Leave Petition (Crl.) no. ___ of 2024]

IN THE MATTER OF:

RAMESH MEHTA........................................................................................APPELLANT

V.

THE STATE OF AAKU…………………………………………………..RESPONDENT

UPON SUBMISSION

TO THE HON’BLE SUPREME COURT OF AAKU

MEMORANDUM ON BEHALF OF THE APPELLANT

Memorandum on Behalf of Appellant

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TABLE OF CONTENTS

TABLE OF CONTENTS...........................................................................................................2
TABLE OF ABBREVIATIONS...............................................................................................4
INDEX OF AUTHORITIES......................................................................................................5
STATUTORY COMPILATIONS.............................................................................................7
STATEMENT OF JURISDICTION..........................................................................................9
FACTS OF THE CASE...........................................................................................................10
ISSUES RAISED.....................................................................................................................12
Whether Ramesh Mehta and his associates committed the offense under Sections 420 and
120B of IPC read with 3 Money Laundering Act, 2002. Whether provisions under Sections
420 and 120B of IPC suffer arbitrariness are violative Constitution of India for blanket
investigation inquiry powers?...............................................................................................12
Whether the provisional attachment of properties and bank accounts by the Activity
General is justified under the provisions of the Money Laundering Act?...........................12
Whether Tinna Group of Companies and GTL violate the provisions of the Telecom Act,
2023, and the Data Protection and Privacy Act, 2023 by collecting and sharing personal
data without consent?...........................................................................................................12
Whether Mr. Ramesh Mehta should be released on Bail?...................................................12
SUMMARY OF ADVANCED ARGUMENTS......................................................................13
ARGUMENTS ADVANCED.................................................................................................15
ISSUE I - WHETHER MR. RAMESH MEHTA AND HIS ASSOCIATES COMMITTED
THE OFFENSE UNDER SECTIONS 420 AND 120B OF IPC READ WITH 3 MONEY
LAUNDERING ACT, 2002. WHETHER PROVISIONS UNDER SECTIONS 420 AND
120B OF IPC SUFFER ARBITRARINESS ARE VIOLATIVE CONSTITUTION OF
INDIA FOR BLANKET INVESTIGATION INQUIRY POWERS?..................................15
[1.1] Scheduled Offenses under Sections 120B and 420 under the PMLA, 2002............15
[1.2] Prevention of Money Laundering Act, 2002............................................................16
[1.3] Blanket Investigation and Inquiry Powers under Section 120B and 420 IPC.........22
ISSUE 2 - WHETHER THE PROVISIONAL ATTACHMENT OF PROPERTIES AND
BANK ACCOUNTS BY THE ACTIVITY GENERAL IS JUSTIFIED UNDER THE
PROVISIONS OF THE MONEY LAUNDERING ACT?..................................................24
[2.1] Loop holes in Provisional Attachment under Section 5 of PMLA, 2002................25
[2.2] Arbitrariness and disruption in legitimate business due the Provisional Attachment
..........................................................................................................................................27
ISSUE – 3 WHETHER TINNA GROUP OF COMPANIES AND GTL VIOLATE THE
PROVISIONS OF THE TELECOM ACT, 2023, AND THE DATA PROTECTION AND
PRIVACY ACT, 2023 BY COLLECTING AND SHARING PERSONAL DATA
WITHOUT CONSENT?......................................................................................................31
[3.1] No violations within the provisions within the Digital Personal Data Protection,
2023..................................................................................................................................31

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[3.2] Compliance with the Telecommunications Act, 2023.............................................36

ISSUE – 4 WHETHER MR RAMESH MEHTA SHOULD BE RELEASED ON BAIL?
..............................................................................................................................................40
PRAYER..................................................................................................................................45

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TABLE OF ABBREVIATIONS

I.P.C Indian Penal Code

CrPC. Criminal Procedure Code

IEA Indian Evidence Act

& And
v. Verses

Para Paragraph

Pg. Page number

No. Number

TC Team Code
Del Delhi
Mad Madras
Hyd Hyderabad
P&H Punjab and Haryana
UP Uttar Pradesh
MP Madhya Pradesh
HC High Court
SC Supreme Court
SCC Supreme Court Cases
INSC Indian Supreme Court
AIR All India Reporter
PMLA Prevention of Monet Laundering Act, 2002
DPDPA Digital Personal Data Protection Act, 2023
Real Estate (Regulation and Development)
RERA Act, 2016
Maharashtra Control of Organised Crime Act,
MCOCA 1999
TGC Tinna Group of Companies
GTL Global Telecom Limited
ED Directorate of Enforcement
CBI Central Bureau of Investigation
IB Internal Bureau
Hon’ble Honourable
SFIO Serious Fraud Investigation Office
IBA Indian Bankers’ Association
FIR First Information Report
ECIR Enforcement Case Information Report
M/S Messers
Ltd Limited

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INDEX OF AUTHORITIES
CASE LAWS:
1. State of Maharashtra v. Somnath Thapa [1996 SCC (4) 659]
2. Mohan lal v. State of Punjab [AIR 2018 SC 3853]
3. Maneka Gandhi v. Union of India [1978 SCR (2) 621]
4. K.S. Puttaswamy v. Union of India [(2017) 10 SCC 1]
5. State of Haryana v. Bhajan Lal [1992 INSC 357]
6. Vijay Madanlal Choudhary vs. Union of India [(2022) SCC Online SC 929]
7. M/S. Satyam Computer Services Limited, vs Directorate of Enforcement (2018)
8. Ketan V. Parekh v. Special Director, Directorate of Enforcement [(2011) 15 SCC
30]
9. Subrata Chattoraj v. Union of India and Others [(2014) 8 SCC 768]
10. Bikram Chatterji v Union of India [2019 19 SCC 161]
11. Joginder Kumar v. State of UP [(1994) 3 SC 423 (430)]
12. Rajesh Ranjan Yadav v. CBI [2007) 1 SCC 70]
13. Noor Aga v. The State of Punjab [2008 AIR SCW 5964]
14. Anand Kumar Jain v. Directorate of Enforcement [2020 SCC OnLine Del 849]
15. B. Rama Raju v. Union of India [(2011) 10 SCC 1]
16. Radha Krishna Industries v. State of Himachal Pradesh [2021 SCC OnLine SC
334]
17. Maneka Gandhi v. Union of India [(1978) 1 SCC 248]
18. Seema Garg v. Directorate of Enforcement [2021) 2 SCC 279]
19. Tata Communications Ltd vs. Telecom Regulatory Authority of India
20. Google India Pvt. Ltd. v. Visakha Industries [2017 SCC OnLine Hyd 455]
21. Telecom Regulatory Authority of India v. Bharat Sanchar Nigam Ltd. [Civil
Appeal No. 5253 Of 2010]
22. Radha Mohan Lakhotia v. Deputy Director, Directorate of Enforcement [2020 SCC
OnLine Bom 3821]
23. M/S Aasia Industrial v. Deputy Director, Directorate of Enforcement [2018 SCC
OnLine Del 1033]
24. Dalmia Cement (Bharat) Ltd. v. Directorate of Enforcement [2021 SCC OnLine SC
149]
25. Babulal Verma v. Directorate of Enforcement [2021 SCC OnLine Bom 330]

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26. J Sekar v. Union of India [2018 SCC OnLine Mad 2210]

27. Rohit Tandon v. Directorate of Enforcement [2018 SCC OnLine SC 46]
28. Usha Martin Ltd. v. Directorate of Enforcement [2018 SCC OnLine Del 1072]
29. Nikesh Tarachand Shah vs Union of India [(2018) 11 SCC 1]
30. Sameer Bhujbal vs Assistant Director [BA No. 286 of 2018]
31. Upendra Rai vs Directorate of Enforcement [2019 SCC Online Del 9086]
32. Ahilya Devi vs State of Bihar [Criminal Miscellaneous No. 41413 of 2019]
33. Dr. Vinod Bhandari vs Asst. Director [2018 SCC Online MP 1559]
34. Raj Kumar Modi v SFIO [2019 SCC Online P&H 4987]
35. SFIO v Nittin Johari (2019) [2019 9 SCC 165]
36. Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra [(2005) 5 SCC 294]
37. Tarsem Lal v Directorate of Enforcement, 2024 [2024 INSC 434]

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STATUTORY COMPILATIONS

1. Indian Penal code,1860

2. Criminal Procedure Code,1973

3. Indian Evidence Act, 1872
4. The Prevention of Money Laundering Act, 2002
5. The Uttar Pradesh Apartment (Promotion of Construction, Ownership and
Maintenance) Act, 2010
6. The Real Estate (Regulation and Development) Act, 2016
7. The Digital Personal Data Protection Act, 2023
8. The Telecommunications Act, 2023

BOOKS REFERED

1. Ratanlal & Dhiraj Lal: The Indian Penal Code.

2. K.D Gaur Textbook on Indian Penal Code.
3. Ratanlal & Dhiraj Lal: Criminal procedure Code.
4. The law of Evidence: Ratanlal & Dhiraj lal
5. Textbook On law of Evidence: M. Monir
6. Prevention of Money Laundering in India: Law and Practice by K.K. Patel.
7. Proceeds of Crime and Asset Forfeiture: Legal Perspectives by H.R. Kamath.
8. Money Laundering: A Comparative Study of India and International Law” by Dr.
Anjali Sinha.
9. Jain, M.P. (2020). Indian Constitutional Law, 9th ed. LexisNexis.

JOUNALS AND ARTICLES REFERED

1. Attachment Orders Under PMLA: A Critical Analysis", Journal of Law and Public
Policy (2022)

2. Vasani,Bharat; Kannan, Varun; Seal, Rajashri; (31 January, 2022), SC’s decision in
the Devas Antrix Case: Does it dilute evidentiary value of the Auditor’s Report under
the Companies Act?, India Corporate Law Blog, Cyril Amarchand Mangaldas

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3. Naz, Iram; Khan, Saleh Nawaz, (03 June 2024), Impact of forensic accounting on
fraud detection and prevention: a case of firms in Pakistan, Journal of financial
crime, Emerald Group Publishing Limited ISSN: 1359-0790

4. Sharma, Harshvardhan, (02 March, 2024), What is Forensic Audit: Know India's
Legal Framework for Combating Financial Crimes, Law Street Journal

5. Mondaq Editorial Team and Metalegal Adovates, (7 June 2023), Twin Conditions For
Bail Under The PMLA

ONLINE SOURCES

1. scconline.com
2. manupatra.com

3. scienceabc.com
4. indiankanoon.com
5. casemine.com
6. livelaw.com

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STATEMENT OF JURISDICTION

The Appellant has respectfully approached the Hon’ble Supreme Court of India under
Article 136 of the Constitution of Aaku, seeking Special Leave to appeal against the
order of the Hon’ble High Court of New Arrakis.
Article 136 empowers Hon’ble Supreme Court to grant special leave to appeal
against any judgment, decree, determination, sentence, or order passed by any court
or tribunal within the territory of India.
Furthermore, the Appellant submits that this Hon’ble Court, under its powers
conferred by Article 142 and Article 139A of the Constitution, has the authority to
transfer and consolidate related proceedings that raise substantial questions of law.

The Appellant, therefore, most respectfully and humbly submits to the jurisdiction of
this Hon’ble Court to adjudicate upon the present appeal and the related matters in the
interest of justice.
.

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FACTS OF THE CASE

Background and Economic Context

The Republic of Aaku, characterized by its rich cultural heritage and economic diversity,
underwent significant economic reforms post-2014. These reforms were pivotal in
accelerating the nation's economic growth, particularly within the real estate sector. Urban
centres such as New Arrakis witnessed a surge in infrastructural development, attracting
substantial investment. In this backdrop, the Tinna Group of Companies (TGC), a prominent
entity in the real estate sector, embarked on a project to construct 116 luxury flats in New
Arrakis. The project, heavily advertised for its affordability, timely delivery, and world-class
amenities, garnered significant public interest, resulting in an oversubscription of applications
by 50 times.

Real Estate Development and Alleged Breaches

On 25th December 2020, TGC conducted a public allotment of flats, marked by extensive
media coverage and the involvement of high-profile celebrities. The Allotment-cum-Flat
Buyers Agreements mandated buyers to make substantial upfront payments, ranging between
30-80% of the flat's value. Additionally, the buyers were required to enter into a separate
agreement with Global Telecom Ltd. (GTL), a major telecom service provider, for the
dissemination of project updates. However, on 18th March 2022, reports emerged alleging
significant delays in the project. TGC was purportedly unable to fulfill its contractual
obligation to deliver the flats within the stipulated 12 months. Furthermore, allegations
surfaced that TGC had defaulted on its payments to the relevant authorities and financial
institutions, leading to increasing concerns among the allottees and financial stakeholders.

Investigations and Legal Proceedings

The subsequent legal turmoil began with buyers instituting actions against TGC, while Sonu
Bank, a key financier of the project, issued a loan repayment notice to TGC on 8th April
2023. The growing unrest prompted the Internal Bureau to initiate an investigation under
Section 420 read with Section 120B of the Indian Penal Code (IPC). The investigation
expanded following a whistleblower's disclosure, revealing that funds allocated for the
project were allegedly diverted to other ventures and used in creating assets through related
companies. The investigating authorities, in collaboration with the Activity General,

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registered an Enforcement Case Information Report (ECIR) under the Prevention of Money
Laundering Act, 2002. Subsequently, on 28th September 2023, an order was passed under
Section 5 of the Act, attaching properties linked to Mr. Ramesh Mehta, a key promoter of
TGC.

Data Privacy Concerns and Supreme Court Proceedings

In December 2023, further complexities arose when a whistleblower within GTL leaked
documents suggesting that the company had been engaged in the unauthorized collection,
storage, and monetization of personal data, including that of the prospective buyers involved
in TGC's project. This data was allegedly shared with third-party entities without proper
consent, raising significant data privacy concerns. In response, affected homebuyers filed a
petition before the Supreme Court, citing violations of data protection laws and unauthorized
financial gains through illicit data usage. The Supreme Court, recognizing the substantial
public interest and the gravity of the allegations, took cognizance of the matter. Preliminary
findings from the Court indicated possible violations of statutory regulations, including the
Foreign Exchange Management Act (FEMA), Real Estate Regulatory Authority (RERA)
provisions, and the Money Laundering Act. The Court ordered a forensic audit and clubbed
all related proceedings for final adjudication.

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ISSUES RAISED

I
Whether Ramesh Mehta and his associates committed the offense under Sections 420
and 120B of IPC read with 3 Money Laundering Act, 2002. Whether provisions under
Sections 420 and 120B of IPC suffer arbitrariness are violative Constitution of India for
blanket investigation inquiry powers?

II
Whether the provisional attachment of properties and bank accounts by the Activity
General is justified under the provisions of the Money Laundering Act?

III
Whether Tinna Group of Companies and GTL violate the provisions of the Telecom
Act, 2023, and the Data Protection and Privacy Act, 2023 by collecting and sharing
personal data without consent?

IV
Whether Mr. Ramesh Mehta should be released on Bail?

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SUMMARY OF ADVANCED ARGUMENTS

1. Whether Ramesh Mehta and his associates committed the offense under Sections 420
and 120B of IPC read with 3 Money Laundering Act, 2002. Whether provisions under
Sections 420 and 120B of IPC suffer arbitrariness are violative Constitution of India
for blanket investigation inquiry powers?
It is humbly submitted that Mr. Mehta and his associates have not committed offence under
Sections 420 (Cheating) and 120B (Criminal Conspiracy) of the IPC, along with violations
under the PMLA. Section 420 IPC requires proof of cheating and dishonest inducement,
while Section 120B demands evidence of an agreement to commit a crime. The PMLA
criminalizes money laundering, but to prove this, a predicate offense must first be
established. There is no concrete evidence supporting cheating or conspiracy by Mehta and
associates, and no predicate offense has been conclusively proven under the PMLA.
Additionally, forensic audits by private firms raise questions regarding reliability and
impartiality. Arbitrary investigation powers under the IPC and PMLA violate constitutional
protections, including Articles 14 and 21.

2. Whether the provisional attachment of properties and bank accounts by the Activity
General is justified under the provisions of the Money Laundering Act?
The appellant submits that the provisional attachment of properties and bank accounts by
the authorities under the PMLA, 2002, is unjustified. The attachment was based on
subjective "reason to believe," which lacks concrete evidence linking the properties to
money laundering. This arbitrary application of Section 5 has disrupted legitimate business
operations, particularly in completing real estate projects, causing undue harm to
homebuyers. Additionally, the authorities have not demonstrated urgency or complied with
procedural safeguards. The attachment is disproportionate, as it affects properties essential
for ongoing projects and business continuity. Thus, the appellant seeks revocation of the
provisional attachment order.

3. Whether Tinna Group of Companies and GTL violate the provisions of the Telecom
Act, 2023, and the Data Protection and Privacy Act, 2023 by collecting and sharing
personal data without consent?

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The Appellant submits that Tinna Group of Companies (TGC) and Global Telecom Limited
(GTL) have not violated the Telecommunications Act, 2023 or the Digital Personal Data
Protection Act, 2023 (DPDP Act). The personal data of homebuyers was collected and
shared with explicit consent under the Allotment-cum-Flat Buyers Agreement, meeting the
requirements of Sections 4, 5, and 6 of the DPDP Act. Any use of personal data for research
and analysis purposes was lawful and aligned with Section 17(2)(b), which provides
exemptions for certain types of processing. Grievance redressal mechanisms were provided,
but the buyers failed to exhaust them before seeking legal action.
Under the Telecommunications Act, GTL was duly authorized to provide telecom services,
including message dissemination on behalf of TGC. GTL adhered to spectrum allocation
rules and obtained prior consent for communications as required by law. The company's
cybersecurity measures ensured that data was handled securely, and no unauthorized
breaches occurred. Therefore, TGC and GTL acted lawfully under both statutes.

4. Should Mr. Ramesh Mehta be released on Bail?

The Respondent submits that Mr. Mehta should be released on bail based on several
grounds. Section 45 of the PMLA, which imposes strict conditions for granting bail, was
struck down by the Supreme Court in Nikesh Tarachand Shah vs Union of India as arbitrary
and violative of Articles 14 and 21. Despite subsequent amendments, various High Courts
have ruled that the twin conditions under Section 45 are not mandatory. Judicial opinions
affirm that a law struck down under Article 13 becomes void and cannot be revived by mere
amendments. Additionally, courts have established that the evidence examined at the bail
stage should not be exhaustive and must not pre-empt the trial. Furthermore, Section 45's
stringent conditions cannot override the fundamental right to liberty under Article 21,
especially when offences are punishable by less than seven years. Recent rulings, like
Tarsem Lal v Directorate of Enforcement, also clarify that the ED has limited powers to
arrest after a court takes cognizance of the case. Thus, Mr. Mehta's bail is justifiable based
on these legal principles and the absence of mandatory applicability of Section 45’s
conditions.

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ARGUMENTS ADVANCED

ISSUE I - WHETHER MR. RAMESH MEHTA AND HIS ASSOCIATES

COMMITTED THE OFFENSE UNDER SECTIONS 420 AND 120B OF IPC READ
WITH 3 MONEY LAUNDERING ACT, 2002. WHETHER PROVISIONS UNDER
SECTIONS 420 AND 120B OF IPC SUFFER ARBITRARINESS ARE VIOLATIVE
CONSTITUTION OF INDIA FOR BLANKET INVESTIGATION INQUIRY
POWERS?

To determine if Ramesh Mehta and his associates committed offenses under Sections 420 and
120B of the Indian Penal Code (IPC) read with the Prevention of Money Laundering Act
(PMLA), 2002, we need to analyze the key elements IPC Provisions of section 120B and 420
under the Scheduled Offenses in PMLA [1.1]; and Section 3 under the PMLA, 2002 [1.2].

[1.1] Scheduled Offenses under Sections 120B and 420 under the PMLA, 2002

[1.1.1] Section 420 IPC - Cheating and Dishonestly Inducing Delivery of Property
Section 420 IPC deals with cheating and dishonestly inducing delivery of property. It
requires proof of deception with the intention to cause wrongful gain or loss.
The essential elements of an offense under Section 420 IPC are:
1. Cheating as defined under Section 415 IPC
2. Dishonest inducement of the person deceived
3. Delivery of property or making/altering/destroying a valuable security
The Supreme Court has held that cheating is a necessary ingredient under Section 420 IPC.
The person must be dishonestly induced to deliver property or interfere with a valuable
security. To be charged under 420 IPC, it must be shown that the company made false
promises with the intention of deceiving the customers into paying money, and that there was
an actual delivery of money based on this deception.

[1.1.2] Section 120B IPC - Criminal Conspiracy

The key components of a criminal conspiracy under Section 120B IPC are:
1. An agreement between two or more persons
2. To do an illegal act or a legal act by illegal means

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Section 120B of IPC deals with criminal conspiracy. It states that when two or more persons
agree to commit a crime or to achieve a lawful object by unlawful means, they are
committing a criminal conspiracy.
For 120B IPC to be applicable, there must be a clear agreement or plan among the
conspirators to commit a crime or achieve a goal through illegal means. Common intention
pre-supposes prior concert. It requires meeting of minds, a pre-arranged plan before a man
can be vicariously convicted for the criminal act of another. It cannot be proved from the
facts if there was any agreement or plan among the alleged conspirators to commit a crime.
Rather, TGC was and is a reputed company, known for its track record of before time
completion of projects as well as affordability. 1 TGC enjoys overwhelming popularity among
the people and this can be ascertained by the fact that the application for allotment was
oversubscribed by the 50%. And the allotments were also done with much fanfare. 2 These
facts clearly indicate the purity of the promise and absence of any ill-intention to cheat or
conspire against or launder public’s money and divert it to alleged bogus companies.
In State of Maharashtra v. Somnath Thapa3 (2000) the hon’ble Supreme Court held that
mere delay in performance of contractual obligations does not amount to criminal conspiracy
unless there is evidence of an agreement to commit an unlawful act.
In the present case it cannot be concluded that merely because of the delay in construction of
the apartments there was a criminal conspiracy to defraud the homebuyers. It is submitted
that TGC is a reputed company and enjoys popularity among the masses of Aaku because of
the quality and experience it delivers. TGC has no reason to defraud its customers.

[1.2] Prevention of Money Laundering Act, 2002

The PMLA criminalizes the act of money laundering, which involves directly or indirectly
attempting to indulge, knowingly assist, or be a party to a process or activity connected with
the proceeds of crime and projecting it as untainted property. To prove money laundering, the
predicate offense from which the proceeds of crime are generated must first be established.
In the present case, it shall be acknowledged that there is a:
1. Lack of evidence to prove cheating and dishonest inducement under Section 420 IPC
2. Mere agreement is insufficient to prove criminal conspiracy under Section 120B
IPC. Overt acts in furtherance of the agreement must be established.

1
Moot Proposition, para 3
2
Moot Proposition, para 4
3
1996 SCC (4) 659

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3. Predicate offense from which the alleged proceeds of crime are derived has not been
conclusively proven.
4. Blanket investigation powers under the PMLA may be arbitrary and violate the
Constitution.
Based on the analysis of the key elements of Sections 420, 120B IPC, and the provisions of
PMLA, the charges against Ramesh Mehta and his associates are not sustainable on the
following points.

[1.2.1] Lack of Evidence for Cheating and Conspiracy

 Absence of Deceptive Intent: The FIR lacks concrete evidence demonstrating that
Ramesh Mehta and his associates intended to defraud the homebuyers. The
allegations of non-completion of projects and financial mismanagement do not
inherently constitute cheating under Section 420 IPC, as there is no evidence of a
false representation made to induce buyers to part with their money and apply for the
allotment of the apartments.
 Fishing Inquiry: The investigation initiated by the Internal Bureau has been
characterized as a "fishing inquiry," lacking substantive evidence. The Supreme Court
in State of Haryana v. Bhajan Lal 4 (1992) emphasized that FIRs based on vague
allegations without specific evidence should not be allowed to proceed, as they
infringe upon the rights of the accused.

[1.2.2] No Established Predicate Offense

The true meaning of the definition under Section 3 of the PMLA was proposed to be divided
into three components of predicate offence, proceeds of crime and projecting/claiming as
untainted.
The argument that to qualify for the offence of money- laundering, the essential ingredient of
‘projection’ or ‘claiming’ it as ‘untainted property’ is imperative, has also been pressed into
service. It is urged that proceeds of crime can only be generated from the commission of a
predicate offence and the commencement of investigation arises only if a predicate offence
has generated such proceeds of crime only subsequent to the inclusion of the predicate
offence to the Schedule of the PMLA.
For a charge under the PMLA to stand, a predicate offense must be established. The
allegations against Tinna Group regarding financial mismanagement do not automatically
4
1992 INSC 357

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translate to money laundering. The Supreme Court in Mohan Lal v. State of Punjab5 (2018)
clarified that mere suspicion or assumption of money laundering is insufficient without a
clear link to a predicate offense.
In the instant case, there is no predicate offense and thus the charge under section 3 of PMLA
is baseless.

[1.2.3] Constitutional Concerns Regarding Investigation Powers

 Arbitrariness of Investigation Powers: The provisions under the PMLA and the IPC
must not be exercised arbitrarily. The Supreme Court in Maneka Gandhi v. Union of
India6 (1978) asserted that any law that permits arbitrary action by authorities is
unconstitutional.
 Violation of Fundamental Rights: The attachment of properties and the denial of
bail based on allegations of economic offenses could infringe upon the accused's
fundamental rights under Article 21 of the Constitution, which guarantees the right to
life and personal liberty. The Supreme Court in K.S. Puttaswamy v. Union of
India7 (2017) recognized the right to privacy as a fundamental right, which could
extend to the protection against arbitrary state action in economic matters.

In Vijay Madanlal Choudhary vs. Union of India8, it has been submitted that Section 2(1)
(u) and Section 3 of the PMLA have been given a very expansive meaning, whereby people
who do not have knowledge or have not participated are also being roped in to the
investigations. The culpability has to be maintained.
In light of the above arguments, it is posited that Ramesh Mehta and his associates have not
committed the offenses under Section 420 and 120B of the IPC, nor have they violated the
provisions of the PMLA. The lack of concrete evidence, the absence of a predicate offense,
and the potential arbitrariness of the investigative powers raise substantial doubts about the
legitimacy of the charges against them. Furthermore, Explanation added by Finance Bill,
2019 - 2019 amendment to Section 3 of PMLA is only clarificatory in nature - whether
brought in by way of a Finance Bill or not would not affect the original main provision -
relevant date under the Statute is not linked to the date on which the scheduled offence was
committed, but the one on which the person indulged in the “process or activity” connect

5
AIR 2018 SC 3853
6
1978 SCR (2) 621
7
(2017) 10 SCC 1
8
(2022) SCC Online SC 929

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with proceeds of crime - authorised officers can prosecute for money laundering only when
there exists proceeds of crime - authorised officers cannot proceed to attach and confiscate
property on the basis of assumption but on the basis of credible evidence indicating
involvement in “process or activity” with proceeds of crime.
Moving further, The Forensic audit was conducted by a private company named M/S Sid
&co.9 and not by the State investigation agencies like SFIO or IBA, this raises significant
questions on the integrity and admissibility of the audit report.
To begin with, it is submitted that the audit done by the private audit group is a fabricated
document to deliberately frame TGC under false case. To support the argument the attention
is needed on the paragraph 4 of the Moot proposition which clearly says “the application for
allotment was “oversubscribed by 50 times” and the demands for such flats was the most
sought-after flats in New Arrakis”. However, it is to be noted that the paragraph 13 of the
Moot Proposition says that methods such as – undervaluing of flats and ‘brokage was paid
against the flats which were not sold.’ This is a contradiction and a question mark on the
investigation and the forensic audit done, for how can there be 50 times oversubscription for
the most-sought after flats and then yet there can be flats left unsold.
This poses a big question on the integrity of Private audit groups, having given the
responsibility of conducting Forensic Audits in the legal matters can undermine the reliability
of the audit reports due to variety of reasons like:
A. Conflicts of Interest
Forensic audits conducted by private firms may be influenced by conflicts of interest
if they are part of a larger racket or have connections with state agencies like the
Activity General, Internal Bureau or ED and CBI. If the auditing firm has existing
relationships with state agencies or is involved in other business dealings with the
audited company, this can compromise the integrity of the audit. The potential for
collusion between auditors and state agencies raises serious concerns about the
impartiality of the findings.
B. Lack of Regulatory Oversight
Private forensic audits often operate with minimal regulatory oversight. This absence
of stringent guidelines can lead to inconsistencies in audit practices and
methodologies, making it difficult to ensure that the findings are reliable and
admissible in court. The lack of a standardized framework can result in legal
challenges regarding the validity of the audit process. Unlike statutory audits, forensic
9
Moot Proposition, Para 13

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

audits conducted by private firms are not subject to the same level scrutiny. This lack
of accountability increases the risk of abuse and misuse of the audit process, which
can be challenged on grounds of procedural impropriety and violation of principles of
natural justice.10
C. Lack of Independence and Objectivity:
Privately owned forensic auditing firms may lack the necessary independence and
objectivity required for a fair investigation. They may be influenced by commercial
considerations or pressure from the company that hired them, undermining the
reliability and admissibility of the audit findings in court11
D. Misuse of Confidential Information:
During a forensic audit, the auditing firm may gain access to sensitive and
confidential information about the company being investigated. There is a risk that
this information could be misused or leaked, causing financial and reputational harm
to the company. This violates the company's right to privacy and confidentiality,
which is a fundamental right under Article 21 of the Constitution of India.12

In legal proceedings, the admissibility of evidence gathered during a forensic audit can be
contested. The above given points undermine the legal standing of the audit findings and
complicate the prosecution of fraud cases. The court shall question the reliability and
authenticity of the evidence, especially if there are concerns about the auditing firm's
independence and objectivity, as per the Indian Evidence Act, 1872.
Forensic audits, particularly those conducted by private companies, have been subject to
scrutiny and legal challenges.
In M/S. Satyam Computer Services Limited, vs Directorate of Enforcement 13 (2018) the
infamous Satyam scandal, the forensic audit conducted by PricewaterhouseCoopers (PwC)
was pivotal in uncovering a massive accounting fraud. However, the reliance on the findings
of a private firm raised questions about the independence and objectivity of the audit process.

10
Vasani,Bharat; Kannan, Varun; Seal, Rajashri; (31 January, 2022), SC’s decision in the Devas Antrix Case:
Does it dilute evidentiary value of the Auditor’s Report under the Companies Act?, India Corporate Law Blog,
Cyril Amarchand Mangaldas
11
Naz, Iram; Khan, Saleh Nawaz, (03 June 2024), Impact of forensic accounting on fraud detection and
prevention: a case of firms in Pakistan, Journal of financial crime, Emerald Group Publishing Limited
ISSN: 1359-0790
12
Sharma, Harshvardhan, (02 March, 2024), What is Forensic Audit: Know India's Legal Framework for
Combating Financial Crimes, Law Street Journal, retrieved from https://lawstreet.co/know-the-law/what-is-
forensic-audit-know-indias-legal-framework-for-combating-financial-crimes retrieved at 11:20 AM
13
Writ Petition No.: 37487 of 2012 and WAMP.No. 155 of 2016 in W.A.No.133 of 2013

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The subsequent legal battles revealed that the audit firm faced allegations of complicity and
negligence, leading to a significant legal precedent regarding the accountability of private
auditors in cases of corporate fraud. The Supreme Court of India eventually held PwC liable
for its role in the fraud, emphasizing the need for independent audits free from conflicts of
interest.
In the Ketan V. Parekh v. Special Director, Directorate of Enforcement 14 (2011), commonly
known as the Ketan Parekh scam involved stock market manipulation and fraudulent
activities that led to significant financial losses. The investigation included forensic audits
conducted by private firms. Legal challenges arose concerning the admissibility of evidence
obtained through these audits. The courts scrutinized the methodologies employed by the
auditors and questioned whether the findings were reliable and unbiased. This case
highlighted the potential for legal disputes over the credibility of forensic audit reports and
the necessity for robust standards governing their conduct.
In the Subrata Chattoraj v. Union of India and Others 15, (2014) commonly known as The
Saradha Chit Fund scam was another high-profile case involving extensive financial fraud.
The West Bengal government ordered a forensic audit to investigate the financial
irregularities. However, the audit's findings were contested in court, with allegations that the
audit process was influenced by political motives. The case raised concerns about the
impartiality of forensic audits conducted under governmental direction and the potential for
misuse of audit findings in politically charged environments.
In the Bikram Chatterji v Union of India 16 (2019) commonly known as Amrapali Group
Case, the Supreme Court of India ordered a forensic audit of the company's financial dealings
due to allegations of misappropriation of funds. The audit findings were challenged by the
company, which argued that the auditors lacked objectivity and were biased. The court
ultimately ruled in favour of the forensic audit's findings, but the case underscored the
contentious nature of forensic audits and the potential for legal disputes regarding their
execution and findings.
Above case laws from India demonstrate that forensic audits conducted by private companies
can lead to significant legal challenges and disputes. The issues surrounding conflicts of

14
(2011) 15 SCC 30; This Supreme Court judgment pertains to the proceedings under the Foreign Exchange
Regulation Act (FERA), where Ketan Parekh was found guilty of violations related to stock market
manipulation.
15
(2014) 8 SCC 768; The Saradha Group, a consortium of over 200 private companies, ran Ponzi schemes
disguised as chit funds, where thousands of investors were defrauded of their savings. The scheme collapsed,
causing huge financial losses, primarily to small investors.
16
2019 19 SCC 161

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interest, regulatory oversight, admissibility of evidence, reputational damage, and limited

recourse for companies underscore the complexities and potential pitfalls associated with
forensic audits. As the landscape of corporate governance and financial regulation evolves,
there is a pressing need for clearer guidelines and standards to ensure the integrity and
reliability of forensic audits in India.
[1.3] Blanket Investigation and Inquiry Powers under Section 120B and 420 IPC
The provisions under Sections 120B (criminal conspiracy) and 420 (cheating) of the Indian
Penal Code (IPC) suffer from arbitrariness and violate the Constitution of India due to the
blanket investigation and inquiry powers granted to the state. These provisions, when
misused, can lead to fishing inquiries, harassment, and violation of individual rights.

Violation of Article 1417

The arbitrary application of Sections 120B and 420 can result in unequal treatment before the
law. The Supreme Court has held in Anwar v. P.K. Bajwa (2010) that the mere fact that an
FIR has been lodged does not automatically lead to the conclusion that the accused has
committed the offense, emphasizing that the investigation should be fair and impartial,
ensuring that the rights of the accused are not violated. 18 The arbitrary application of Sections
120B and 420 can result in unequal treatment before the law. In the case of TGC and GTL,
the mere fact that an FIR has been lodged does not automatically lead to the conclusion that
the accused has committed the offense, emphasizing that the investigation should be fair and
impartial, ensuring that the rights of the accused are not violated

Violation of Article 2119

The broad powers granted under Sections 120B and 420 can lead to the deprivation of
personal liberty without due process. The Supreme Court in Joginder Kumar v. State of
U.P.20 (1994) has stated that the police cannot arrest an individual merely on suspicion of
involvement in a crime, stressing the need for reasonable grounds and adherence to
procedural safeguards. In the case of TGC and GTL, the police cannot arrest individuals
merely on suspicion of involvement in a crime, stressing the need for reasonable grounds and
adherence to procedural safeguards

Potential for Misuse and Harassment

17
Equality before the law
18
19
Right to Life and Personal Liberty
20
(1994) 3 SC 423 (430)

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The vague language used in Sections 120B and 420, such as "agreement" and "dishonestly
inducing delivery of property," can lead to their misuse by law enforcement agencies. The
Supreme Court has acknowledged the potential for harassment through the abuse of criminal
process in Rajesh Ranjan Yadav v. CBI21 (2007) and emphasized the need for courts to
exercise their power to prevent such misuse. In the case of TGC and GTL, the potential for
harassment through the abuse of criminal process is acknowledged, and the need for courts to
exercise their power to prevent such misuse is emphasized.

Violation of Presumption of Innocence

The broad powers granted under Sections 120B and 420 can shift the burden of proof onto
the accused, violating the presumption of innocence. The Supreme Court in Noor Aga v.
State of Punjab22 (2008) has held that the presumption of innocence is a fundamental right
and that the burden of proof lies on the prosecution to establish the guilt of the accused
beyond a reasonable doubt. In the case of TGC and GTL, the presumption of innocence is a
fundamental right, and the burden of proof lies on the prosecution to establish the guilt of the
accused beyond a reasonable doubt

It is submitted that while sections 120B and 420 IPC serve important purposes in combating
criminal conspiracies and cheating, their broad language and lack of sufficient safeguards can
lead to arbitrariness and violation of individual rights. The Supreme Court has consistently
emphasized the need for procedural fairness, adherence to due process, and prevention of
misuse of criminal process. To ensure the constitutionality of these provisions, it is essential
to incorporate adequate safeguards and guidelines to prevent their arbitrary application. The
case of TGC and GTL exemplifies the potential for misuse of Sections 120B and 420 IPC,
leading to arbitrary charges, undue harassment, and violation of individual rights.

21
2007) 1 SCC 70
22
2008 AIR SCW 5964

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ISSUE 2 - WHETHER THE PROVISIONAL ATTACHMENT OF PROPERTIES

AND BANK ACCOUNTS BY THE ACTIVITY GENERAL IS JUSTIFIED UNDER
THE PROVISIONS OF THE MONEY LAUNDERING ACT?

The Appellant most humbly submits that the Provisional Attachment of properties and
the bank accounts by the Activity General is not justified under the provisions of the PMLA,
2002. The Appellant stands aggrieved by the Provisional Order of Attachment dated 28-09-
2023 and also challenging the order by Ld. Special Court dated 12-12- 2023 restraining the
bank accounts and alienation of properties by the Company.
Section 5(1) of the Act, states ‘(1) Where the Director or any other officer not below the rank
of Deputy Director authorised by the Director for the purposes of this section, has reason to
believe (the reason for such belief to be recorded in writing), on the basis of material in his
possession, that—
(a) any person is in possession of any proceeds of crime; and
(b) such proceeds of crime are likely to be concealed, transferred or dealt with in
any manner which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under this Chapter,
he may, by order in writing, provisionally attach such property for a period not exceeding
one hundred and eighty days from the date of the order, in such manner as may be
prescribed:
Provided that no such order of attachment shall be made unless, in relation to the scheduled
offence, a report has been forwarded to a Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised
to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking
cognizance of the scheduled offence, as the case may be, or a similar report or complaint has
been made or filed under the corresponding law of any other country:
Provided further that, notwithstanding anything contained in 1[first proviso], any property of
any person may be attached under this section if the Director or any other officer not below
the rank of Deputy Director authorised by him for the purposes of this section has reason to
believe (the reasons for such belief to be recorded in writing), on the basis of material in his
possession, that if such property involved in money-laundering is not attached immediately
under this Chapter, the non-attachment of the property is likely to frustrate any proceeding
under this Act.]

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Section 5(1) of PMLA allows for the provisional attachment of properties if the Director or
an authorized officer has ‘reason to believe’ that the property is involved in money
laundering, pending the conclusion of investigations. Attachment under Section 5 is
‘provisional for a period of 180 days,’ during which the authorities must gather substantial
evidence linking the property to money laundering. The attachment requires prior ‘approval
from a higher authority’, i.e., the Adjudicating Authority under PMLA, which ensures that
the attachment is not arbitrary or without reasonable cause. This issue will be dealt in two
sub-sections: Loop holes in the section 5 of PMLA, 2002 [2.1]; and Arbitrariness and
disruption in legitimate business due the Provisional Attachment
[2.1] Loop holes in Provisional Attachment under Section 5 of PMLA, 2002
1. Subjective "Reason to Believe" Standard: The standard of "reason to believe" under
Section 5 of PMLA is subjective and can often lead to arbitrary decisions. In the
absence of clear evidence, provisional attachment id requested to be challenged as a
fishing inquiry. In Anand Kumar Jain v. Directorate of Enforcement 23 (2020), the
Delhi High Court quashed an attachment order, emphasizing that mere suspicion does
not warrant attachment without concrete proof linking the property to the proceeds of
crime. This case held that provisional attachment under Section 5 of PMLA should
not be used as a fishing expedition. The court quashed the attachment order where the
investigating authority failed to demonstrate clear links between the property and the
alleged offense.
2. The Hon’ble Supreme Court in B. Rama Raju v. Union of India24 (2011), held that
provisional attachment cannot be done solely on suspicion. There must be sufficient
evidence to link the properties to money laundering, which is often lacking in
arbitrary attachments. the Supreme Court ruled that attachment under the PMLA must
be based on substantial evidence of money laundering. The provisional attachment
was quashed due to a lack of evidence directly connecting the property to money
laundering. It is submitted that the Tinna Group’s diversion of funds is unproven or
based on speculation coming out of fabricated audit report as stated in issue 1, the
attachment is requested to be deemed disproportionate.
3. Failure to Demonstrate Urgency: Section 5 requires a ‘demonstration of urgency’ to
prevent the dissipation of assets. In Rohit Tandon v. Directorate of Enforcement25,

23
2020 SCC OnLine Del 849
24
(2011) 10 SCC 1
25
(2018) 11 SCC 46

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

(2018), the court emphasized that attachment cannot be maintained without proving
that assets are at immediate risk of being concealed or transferred. The court ruled
that urgency must be proven for any attachment order. If assets are not at risk of being
transferred or concealed, attachment is unwarranted. In Mr. Mehta's case, the cash
flow for completing the towers comes from these attached assets, which can
undermine the urgency argument.
4. Non-Compliance with Procedural Safeguards: The PMLA’s procedural safeguards
require proper notice and adherence to due process. In Radha Krishna Industries v.
State of Himachal Pradesh26 (2021), the Supreme Court emphasized that the
attachment of property without proper notice or providing sufficient opportunity to
defend violates Article 14 (Right to Equality). In the present case, If the attachment
order issued by the Activity General shall be scrutinized and if its found out that the
order was passed without following procedural due diligence, it is requested to be
struck down as unconstitutional.
5. Disproportionate Attachment: The principle of proportionality is crucial in attachment
cases. In Maneka Gandhi v. Union of India27 (1978), the Supreme Court ruled that
any state action must be proportional to the object sought to be achieved. Further in
Seema Garg v. Directorate of Enforcement28(2021), the Supreme Court quashed an
attachment order as disproportionate, ruling that not all assets can be attached merely
based on suspicion. The authorities must attach only properties directly linked to the
proceeds of the crime. In Mr. Mehta's case, attaching all properties, including those
essential for completing the real estate projects, shall be deemed ‘disproportionate’ as
there is no strong connection to money laundering because there is no predicate
offence in the first place. This prevents homebuyers from receiving their flats, which
is contrary to the public interest.
It is further submitted that the second proviso of section 5 allows for attachment independent
of the existence of a predicate offence, given that such property might not even be proceeds
of crime. Though an emergency procedure, no threshold had to be met and the first proviso
has no application. It is also submitted that the proviso cannot travel beyond the scope of the
main provision. Attention shall be drawn to the legislative history; it is stated that the PMLA
did not originally contain the second provisio. Attachment was only to be done after filing of
chargesheet in the predicate offence. For the first time, in 2009, this proviso was added, to
26
2021 SCC OnLine SC 334
27
(1978) 1 SCC 248
28
(2021) 2 SCC 279

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

avoid frustration of the proceedings. It is submitted that this proviso has no anchor to either
the scheduled offence or the proceeds of crime. It is at the mere satisfaction of the officer. In
this way, it is submitted, attachment of property of any person can be made, with no fetters.
Attention is also drawn to the use of word ‘any’ for person and property and its distinction
from the term ‘proceeds of crime’, having a direct nexus with the ambit of the main Section.
It is argued that it is not to be mixed with any offence but only scheduled offences. The ED is
alleged to employ this language in attaching property purchased much before the commission
of scheduled offences, to the extent not having any nexus. It is submitted that there has to be
a link between the second proviso to the proceeds of crime and scheduled offence being
investigated under a specific ECIR.29
In the Satyam scandal (supra), the attachment of assets was similarly challenged as being
overbroad and arbitrary. The Satyam Computers case (In Re: B. Ramalinga Raju and Others),
where diversion of funds and falsification of accounts were uncovered, the courts initially
ordered attachment but later released the assets necessary for the revival of the company. The
revival plan under the Companies Act was seen as beneficial for the stakeholders, especially to
ensure the protection of jobs and investment.
Similarly, in Mr. Mehta's case, the attachment of properties essential for the completion of
housing projects should be reconsidered. A holistic approach, balancing law enforcement with
the need to safeguard homebuyers and restore normalcy in the real estate sector, as was done in
the Satyam case, is requested to be preferred.
Furthermore, The Activity General's attachment order under Section 5 of the PMLA should be
scrutinized for procedural compliance, urgency, and proportionality. Given the preliminary
nature of the evidence in Mr. Mehta’s case, the attachment of essential properties needed for
generating cash flow and completing housing projects violates the principle of proportionality.
Moreover, no clear evidence has emerged that directly links the attached properties to money
laundering. The provisional attachment is based on allegations of fraud and misappropriation,
not proven money laundering, thus weakening the case for attachment under PMLA.

[2.2] Arbitrariness and disruption in legitimate business due the Provisional

Attachment
In the present case involving Mr. Ramesh Mehta, the provisional attachment of his properties
and business assets, including the towers under construction, raises significant concerns about
the arbitrary application of Section 5 of the Prevention of Money Laundering Act (PMLA),
29
Vijay Madanlal v Union Of India, 2022 SCC ONLINE SC 929

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2002. The attachment not only hinders the completion of vital real estate projects but also
disrupts the normal business operations of the Tinna Group, adversely affecting homebuyers
who are already distressed by the delays.
[2.2.1] Arbitrary Attachment: No Clear Nexus Between Proceeds of Crime and Properties
In Radha Mohan Lakhotia v. Deputy Director, Directorate of Enforcement30 (2020), the
Bombay High Court quashed the provisional attachment, holding that the attachment was
arbitrary and did not properly evaluate the business necessity of the attached properties. The
Court emphasized that provisional attachment orders must not interfere with legitimate
business operations unless there is strong evidence that the properties constitute proceeds of
crime.
On the same line, the attachment of Mr. Mehta’s towers and business accounts directly hinders
the completion of the real estate projects, adversely affecting both homebuyers and the
company’s ability to generate revenue. Since the towers in question are essential for the
completion of the flats, this attachment disrupts a legitimate business activity. The proceeds of
crime have not been sufficiently linked to the attached properties, making the attachment
disproportionate and arbitrary.
[2.2.2] Disruption of Legitimate Business Operations and Projects
In M/S Aasia Industrial v. Deputy Director, Directorate of Enforcement 31 (2018), the Delhi
High Court criticized the provisional attachment of business assets, stating that Section 5 of
PMLA is meant to prevent the dissipation of proceeds of crime, not to cripple legitimate
business operations. The court stressed that properties attached under Section 5 should be
directly linked to the proceeds of crime.
In Mr. Mehta’s case, the provisional attachment of the towers and accounts impedes the
company's ability to complete the ongoing real estate projects. The failure to complete these
projects harms homebuyers and creates significant economic loss. The attachment affects vital
business properties, which are essential for the continuation of business operations, and should
be reconsidered. As in Aasia Industrial, the attachment was quashed to prevent unnecessary
harm to the business.
In Dalmia Cement (Bharat) Ltd. v. Directorate of Enforcement32 (2021), the Supreme Court
ruled that Section 5 of PMLA should be used with caution and there should be a clear nexus
between the proceeds of crime and the attached properties. The court emphasized that
provisional attachment orders should not be used to disrupt economic activity or hamper
30
2020 SCC OnLine Bom 3821
31
2018 SCC OnLine Del 1033
32
2021 SCC OnLine SC 149

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

business continuity, especially when there is no concrete evidence of wrongdoing.

It is submitted that the provisional attachment of essential business properties, such as the
towers, which are crucial for generating revenue and completing homebuyers’ projects, is a
misuse of Section 5 of PMLA. The properties being used for legitimate business purposes
should not be attached without clear evidence that they are proceeds of crime. As in Dalmia
Cement, Mr. Mehta’s attachment order should be quashed as it hinders business operations and
indirectly harms homebuyers, making the attachment excessive and unjustified.

[2.2.3] Blanket Attachment Without Specific Link to Proceeds of Crime

In J Sekar v. Union of India33 (2018), the Madras High Court ruled that provisional attachment
under Section 5 of PMLA should not be done in a blanket manner without evaluating the
specific link between the property and the alleged proceeds of crime.
The blanket attachment of Mr. Ramesh Mehta’s properties, including those required for the
completion of the towers, is excessive and disproportionate. These properties are critical to the
normal functioning of his business and the ongoing real estate projects.
It is requested to be ensured that attachment does not hamper lawful operations unless there is
clear evidence linking these properties directly to money laundering. The lack of specific
evidence linking the towers to proceeds of crime makes the attachment arbitrary, as in J Sekar’s
case.
In Babulal Verma v. Directorate of Enforcement34 (2021), the Bombay High Court held that
provisional attachment under Section 5 of PMLA should not be done in a mechanical manner.
The court quashed the attachment order because there was no substantial evidence linking the
attached property to the alleged proceeds of crime.
In Mr. Mehta’s case, the attachment of his business properties is not based on strong evidence
linking them to money laundering. Therefore, the attachment should be quashed, as it prevents
him from completing the project and generating revenue, which will further harm homebuyers.
The attachment order harms legitimate business activity, and as per the Babulal Verma
precedent, it should be reconsidered and revoked.

[2.2.4] Attachment as a Pre-emptive Measure Without Substantial Evidence

In Rohit Tandon v. Directorate of Enforcement35 (2018), the Supreme Court in this case held
that provisional attachment should not be used as a pre-emptive measure unless there is
33
2018 SCC OnLine Mad 2210
34
2021 SCC OnLine Bom 330
35
2018 SCC OnLine SC 46

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concrete evidence linking the property to the proceeds of crime. The court quashed the
attachment of certain properties as there was no prima facie evidence that the properties were
involved in laundering proceeds of crime.
It is submitted that the provisional attachment of Mr. Mehta’s properties, including the towers,
was a pre-emptive measure without substantial evidence. There is no clear prima facie evidence
linking these properties directly to money laundering.
Moreover, the attachment disrupts normal business operations, including the construction and
completion of real estate projects, which not only affects the company's reputation but also
harms innocent homebuyers. This reasoning aligns with Rohit Tandon, where the attachment
was quashed for similar reasons.

7. Proportionality of Attachment and Completion of Ongoing Projects

In Usha Martin Ltd. v. Directorate of Enforcement36 (2018), the Delhi High Court ruled that
provisional attachment should not be disproportionate and must be supported by clear evidence
showing that the property constitutes proceeds of crime. The court further noted that if the
attachment hinders ongoing projects or legitimate business operations, it may be unjust and
arbitrary.
Mr. Mehta can argue that the provisional attachment of his properties is disproportionate given
that the funds used for the towers might not be directly linked to proceeds of crime. The
attachment should be revoked to allow for the completion of the ongoing projects, which would
serve the interests of the homebuyers. As in Usha Martin, the attachment that disrupts normal
business operations without clear evidence is unjust and arbitrary.
The above points establishes that provisional attachment under Section 5 of PMLA should not
be used arbitrarily, particularly when it hinders legitimate business operations like the
completion of real estate projects as they are doing in this present case. The courts have
consistently emphasized the need for prima facie evidence directly linking the properties to
proceeds of crime. In the present case, the blanket attachment of his business properties,
including those crucial for the completion of flats, is disproportionate and unjustified. Mr.
Mehta seeks relief from the court, emphasizing that the attachment disrupts legitimate
economic activity and harms innocent parties such as homebuyers, which aligns with the
judicial principles in these cases.

36
2018 SCC OnLine Del 1072

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ISSUE – 3 WHETHER TINNA GROUP OF COMPANIES AND GTL VIOLATE THE

PROVISIONS OF THE TELECOM ACT, 2023, AND THE DATA PROTECTION
AND PRIVACY ACT, 2023 BY COLLECTING AND SHARING PERSONAL DATA
WITHOUT CONSENT?

The Appellant humbly submits that Tinna Group of Companies (hereinafter referred to as
TGC) and Global Telecom Limited (hereinafter referred to as GTL) has not violated the
provisions of The Telecommunications Act, 202337 and the Digital Personal Data
Protection Act, 2023 (hereinafter referred to as DPDP Act).

The primary contention is whether TGC and GTL violated the provisions of
the Telecommunications Act, 2023 and the DPDP Act, 2023 by collecting and sharing
personal data without explicit consent. It is submitted that there is no prima facie violation
of the Data Privacy Laws in DPDP Act, 2023 [3.1]; and the Telecommunications Act,
2023[3.2].

[3.1] No violations within the provisions within the Digital Personal Data Protection,
2023
It is submitted that explicit consent was obtained from the homebuyers for the collection
and sharing of personal data as stipulated in the Allotment-cum-Flat Buyers Agreements. 38
The relevant paragraph in the proposition indicates that buyers consented to share their
information with GTL for communication purposes regarding their flats as well as research
and analysis. This aligns with the requirements under the DPDP Act, which emphasizes the
necessity of informed consent for data processing activities. Section 4 of DPDP Act gives
the provision for determining the legality of data processing and consent.

Section 4 of the DPDP Act, states: (1) A person may process the personal data of a Data
Principal only in accordance with the provisions of this Act and for a lawful purpose,

a) for which the Data Principal has given her consent; or

b) for certain legitimate uses.

(2) For the purposes of this section, the expression “lawful purpose” means any purpose
which is not expressly forbidden by law.

37
Act no. 44 of 2023
38
Moot proposition, para 4

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TGC and GTL collected personal data of prospective buyers and shared it for promotional
purposes. The data was also used for research and analytics, as buyers signed an agreement
consenting to this data-sharing practice.

It is submitted that the processing of personal data was done lawfully under Section 4 of
the DPDP Act. According to this section, data may be processed for a "lawful purpose,"
and the buyers had given their consent to the data-sharing arrangement as part of the
Allotment-cum-Flat Buyers Agreement. Since the buyers agreed to share personal
information with GTL for communication and research purposes, TGC and GTL acted
within the scope of the law.

In KS Puttaswamy v. Union of India39 (2017), the Supreme Court held that privacy,
including data privacy, is a fundamental right, but consent can serve as the basis for lawful
data processing when it is given freely and informed. The consent given in the present case
here meets those requirements, making the processing lawful.

Sections 5 and 6 of the Act provides for the Informed Consent and Notice.

Section 5 of the DPDP Act states: (1) Every request made to a Data Principal under
section 6 for consent shall be accompanied or preceded by a notice given by the Data
Fiduciary to the Data Principal, informing her, -

(i) the personal data and the purpose for which the same is proposed to be
processed;
(ii) the manner in which she may exercise her rights under sub-section (4) of
section 6 and section 13; and
(iii) the manner in which the Data Principal may make a complaint to the
Board, in such manner and as may be prescribed
Section 6 of the Act states: (1) The consent given by the Data Principal shall be free,
specific, informed, unconditional and unambiguous with a clear affirmative action, and
shall signify an agreement to the processing of her personal data for the specified purpose
and be limited to such personal data as is necessary for such specified purpose.

The agreement signed by the buyers included clauses on sharing personal data for
promotional purposes and updates on project progress. The buyers consented to this as part
of the Allotment Agreement.

It is submitted that TGC and GTL fulfilled their obligations under Section 5 by notifying
39
2017 10 SCC 1

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

the buyers about the purpose of data collection and the data-sharing practices. Furthermore,
the consent obtained was specific, informed, and unambiguous, meeting the criteria under
Section 6(1). The buyers were well-aware that their data would be shared with GTL for
legitimate purposes of analytics and research and the homebuyers had consented for this
explicitly.40

The decision in Aadhar Judgment (Justice KS Puttaswamy v. Union of India,41 (2019)

highlighted the necessity of specific and informed consent. TGC and GTL can use this case
to support that the buyers gave their consent freely and were informed of the data-sharing
terms.

Under Section 5 of the DPDP Act, data fiduciaries must ensure that data is processed only
with the consent of the data principal, which was obtained in this case. The argument can
be fortified by referring to the case of Tata Communications Ltd vs. Telecom Regulatory
Authority of India42, where the court emphasized the importance of consent in data
handling.

Section 7 of the Act states: A Data Fiduciary may process personal data of a Data
Principal for any of following uses, namely: —

(a) for the specified purpose for which the Data Principal has voluntarily provided
her personal data to the Data Fiduciary, and in respect of which she has not
indicated to the Data Fiduciary that she does not consent to the use of her
personal data.

The Appellant submits that explicit consent was obtained from the homebuyers for the
collection and sharing of personal data as stipulated in the Allotment-cum-Flat Buyers
Agreements.43 The relevant clause indicates that buyers consented to share their
information with GTL for communication purposes regarding their flats as well as sharing
information for research and analysis. This aligns with the requirements under the DPDP
Act, which emphasizes the necessity of informed consent for data processing activities.
The fact is that the TGC and GTL used and shared the data only for research and project
updates, which aligns with the buyers’ consent, this mitigates mitigates the buyer’s claim.

40
Moot Proposition, para 4
41
2019 1 SCC 1
42
W.A.Nos.283 and 285 of 2017 and C.M.P.Nos.4479 and 4483 of 2017
43
Moot proposition, para 4

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

Section 8 of the Act states: (3) Where personal data processed by a Data Fiduciary
is likely to be—

(a) used to make a decision that affects the Data Principal; or

(b) disclosed to another Data Fiduciary,
the Data Fiduciary processing such personal data shall ensure its completeness, accuracy
and consistency.

Additionally, it is submitted that the data shared for decision-making purposes, like project
updates, was accurate and served legitimate interests under Section 8(3).

Section 13 of the Act states: (1) A Data Principal shall have the right to have readily
available means of grievance redressal provided by a Data Fiduciary or Consent Manager
in respect of any act or omission of such Data Fiduciary or Consent Manager regarding
the performance of its obligations in relation to the personal data of such Data Principal
or the exercise of her rights under the provisions of this Act and the rules made
thereunder.

(2) The Data Fiduciary or Consent Manager shall respond to any grievances referred to in
sub-section (1) within such period as may be prescribed from the date of its receipt for all
or any class of Data Fiduciaries.

(3) The Data Principal shall exhaust the opportunity of redressing her grievance under
this section before approaching the Board.

It is therefore submitted that the buyers later alleged unauthorized use of their data and
sought legal intervention, claiming a violation of data privacy, while the sharing of the data
was consented. Moreover, GTL has provided grievance redressal mechanisms in
compliance with Section 13. While the buyers petitioned the court, the DPDP Act section
13(3) requires that they exhaust the grievance redressal mechanisms with the Data
Fiduciary (in this case, TGC and GTL) before approaching the Data Protection Board. It is
asserted that the buyers did not fully utilize these redressal avenues, thus prematurely
escalating the issue to the Supreme Court. It must be acknowledged that the buyers violated
procedural requirements under the Act, thus weakening their claims.

Section 17(2)(b) states: The provisions of this Act shall not apply in respect of the
processing of personal data—

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

(b) necessary for research, archiving or statistical purposes if the personal data

is not to be used to take any decision specific to a Data Principal and such
processing

is carried on in accordance with such standards as may be prescribed.

The data collected was used for analytical and research purposes, as per the agreement
between TGC and GTL. The buyers alleged that their personal data was sold to third
parties without explicit consent.

Under Section 17(2)(b), data processing for research, archiving, or statistical purposes is
exempt from some of the DPDP Act’s provisions if no decisions specific to the Data
Principal (buyer) are made using that data. TGC and GTL asserts that the data was used for
research and analytics, which is a legitimate purpose exempted under the law.

In Google India Pvt. Ltd. v. Visakha Industries 44 (2017), the court held that data
processing for legitimate business interests, like research, does not automatically infringe
privacy if it adheres to statutory safeguards. TGC and GTL’s data usage for analytical
purposes falls under this protected category.

Furthermore, GTL was accused of selling personal data to third-party companies, including
advertisers, without explicit consent. It is submitted that GTL that any data sharing with
third-party companies was done under the belief that it was for legitimate purposes such as
improving services or marketing strategies, which aligns with the buyers’ consent for data-
sharing as per the Allotment Agreement. However, if some sharing extended beyond
agreed terms, the Grievance Redressals were open as prescribed by this Act under section
13(1) and it was buyers’ obligation to exploit it before approaching the Board or any
adjudicating body as given in Section 13(3) of this Act.

On the basis of above points its asserted that the actions of TGC and GTL complied with
the DPDP Act's provisions, as they obtained informed consent for data processing and in
case of grievance provided grievance mechanisms. Any alleged breaches were either
inadvertent or within the permissible exemptions under Section 17. It is requested that the
buyers’ claims shall be positioned as premature and unsupported by substantive evidence
of wilful wrongdoing.

44
2017 SCC OnLine Hyd 455

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

[3.2] Compliance with the Telecommunications Act, 2023

The Telecommunications Act, 2023, provides a framework for the operation of telecom
services and the handling of subscriber data. It recognizes the role of telecom operators as
data fiduciaries. GTL, in its capacity as a telecom service provider, is obligated to protect
subscriber data and ensure compliance with the law. The Act mandates that telecom
operators must adhere to privacy standards while processing data. It is asserted that GTL's
practices were in line with the regulatory requirements and that any data sharing was
conducted within the legal framework established by the Act.

Section 3 of the Telecommunications act states: (1) Any person intending to—

(a) provide telecommunication services;

(b) establish, operate, maintain or expand telecommunication network; or

(c) possess radio equipment,

shall obtain an authorisation from the Central Government, subject to such terms
and conditions, including fees or charges, as may be prescribed.

It is a fact that GTL operates extensive telecom networks in New Arrakis, providing
services to over 100 million subscribers, including data collection and message
dissemination on behalf of TGC.45 GTL holds valid authorization under Section 3 of the
Telecommunications Act, 2023, to provide telecommunication services. Since GTL is an
authorized entity under the Act, its operations, including message dissemination and
telecom services to support TGC’s real estate operations, are lawful. Additionally, Section
3(5)46 states that authorized entities can restructure, merge, or demerge, which supports
GTL’s compliance even if it engaged in business collaborations like the one with TGC.

The importance of holding valid authorization was reinforced in Telecom Regulatory

Authority of India v. Bharat Sanchar Nigam Ltd. 47 (2019), where the court emphasized
that compliance with authorization standards ensures that the telecommunication services
provided are lawful.

45
Moot proposition, para 4
46
Section 3(5) of the telecommunications Act, 2023 states: (5) Any authorised entity may undertake any merger,
demerger or acquisition, or other forms of restructuring, subject to any law for the time being in force and any
authorised entity that emerges pursuant to such process, shall comply with the terms and conditions, including
fees and charges, applicable to the original authorised entity, and such other terms and conditions, as may be
prescribed.
47
Civil Appeal No. 5253 Of 2010

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

Section 4 of the Act states: (1) The Central Government, being the owner of the spectrum
on behalf of the people, shall assign the spectrum in accordance with this Act, and may
notify a National Frequency Allocation Plan from time to time.

(2) Any person intending to use spectrum shall require an assignment from the Central
Government.

GTL used telecommunication networks and services to send updates to homebuyers.

GTL’s utilization of spectrum falls within the framework of Section 4, which mandates that
any entity intending to use spectrum must obtain the required assignment from the Central
Government. As a duly authorized telecom provider, GTL has complied with the spectrum
assignment process. Furthermore, the lawful use of the spectrum for commercial
communications, including updates on real estate projects, is well within the prescribed
limits of the Telecommunications Act. It is asserted that it operated within the spectrum
allocation guidelines set forth by the Central Government, and there is no indication of
spectrum misuse in the communication processes involved with TGC.

Section 28 of the Act protecting the users states: (1) For the purposes of this section,
"specified message" means any message offering, advertising or promoting goods,
services, interest in property, business opportunity, employment opportunity or investment
opportunity, whether or not—

(a) the goods, services, interest, or opportunity are real; or

(b) it is lawful to acquire such goods, services, property, interest or take up the
opportunity.

(2) The Central Government may by rules provide for measures for protection of users, in
consonance with any regulations notified by the Telecom Regulatory Authority of India
from time to time, including measures such as—

(a) the prior consent of users for receiving certain specified messages or class of
specified messages;

(b) the preparation and maintenance of one or more registers, to be called as "Do
Not Disturb" register, to ensure that users do not receive specified messages or
class of specified messages without prior consent; or

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

(c) the mechanism to enable users to report any malware or specified messages
received in contravention of this section.

(3) An authorised entity providing telecommunication services shall establish an online

mechanism to enable users to register any grievance pertaining to the telecommunication
service, and redressal of such grievances, in such manner as may be prescribed.

The homebuyers filed petitions regarding unauthorized collection, storage, and

dissemination of personal data without explicit consent by GTL and TGC. It is argued that
GTL adhered to the user protection provisions under Section 28 of the Act, which requires
prior consent for receiving specified messages. In the present case, homebuyers consented
to data sharing and communication by signing agreements with both GTL and TGC for
project updates and promotional offers. Furthermore, GTL provided users with a grievance
redressal mechanism as required under Section 28(3).

The Supreme Court’s ruling in KS Puttaswamy v. Union of India (2017), where privacy
was deemed a fundamental right, emphasized the importance of informed consent for data
collection. In this case, the buyers had provided explicit consent, shielding GTL and TGC
from claims of unauthorized data use.

Section 22 of the Act states: (1) The Central Government may by rules provide for the
measures to protect and ensure cyber security of telecommunication networks and
telecommunication services.

(2) The measures may include collection, analysis and dissemination of traffic data that is
generated, transmitted, received or stored in telecommunication networks.

Explanation. —For the purposes of this sub-section, the expression "traffic data" means
any data generated, transmitted, received or stored in telecommunication networks
including data relating to the type, routing, duration or time of a telecommunication.

GTL was accused of collecting and monetizing detailed personal data of its subscribers,
including browsing history and location data. GTL has adhered to the cyber security
measures prescribed under Section 22 of the Act. It is assured that GTL implemented
reasonable security safeguards to prevent unauthorized access or misuse of personal data
and the data was shared to the parties involved in research and analysis only. This
argument can be ascertained by the fact that GTL has a record of no security breach thus,

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

giving its customers the best and most secure services and GTL enjoys popularity among
over a 100 million subscribers.

It is, thus, asserted that GTL’s focus was and is on the authorization of telecommunication
services, lawful spectrum usage, informed consent, compliance with cyber security, and the
duty of users under the Telecommunications Act, 2023. GTL’s operations as an authorized
entity, including the dissemination of messages, data sharing for legitimate research
purposes, and ensuring user protection mechanisms, fall within the boundaries of the Act.

Memorandum on Behalf of Appellant

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

ISSUE – 4 WHETHER MR RAMESH MEHTA SHOULD BE RELEASED ON

BAIL?

The Respondent most humbly submits that Mr. Mehta shall be released on bail. To establish it
the following argument shall be focused upon.

Section 45 of the PMLA provides: (1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be
released on bail or on his own bond unless -
(i) the Public Prosecutor has been given an opportunity to oppose the application for such
release; and
(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty of such offence and that he is not likely to
commit any offence while on bail

The section was struck down as a whole by the Hon'ble Supreme Court in its decision in the
case cited as Nikesh Tarachand Shah vs Union of India48, on the basis of being arbitrary and
violative of Articles 14 and 21 of the Constitution of India. The primary reason given by the
Hon'ble Supreme Court for striking down the section was that it sought to impose strict
conditions for grant of bail in respect of offences listed in Part A of the Schedule to the PMLA,
rather than the offences related to money laundering itself. On this basis, the Hon'ble Supreme
Court concluded that the conditions imposed for grant bail under Section 45 would lead to
anomalies and therefore are arbitrary and discriminatory.
Subsequent to the amendment49 in the section 45 of PMLA, various High Courts have held that
the conditions imposed under section 45 would not be applicable even after the amendment
48
(2018) 11 SCC 1
49
Amendment to section 45 vide Finance Act, 2018:
The section was subsequently amended vide Finance Act, 2018, w.e.f. 19.04.2018, wherein the reference to
offences under Part A of the Schedule was substituted by the expression "under this Act". Post this amendment,
the language of Section 45 was brought on par with other special laws like TADA/MCOCA/Companies Act
which provided for twin conditions for grant of bail. A comparison of the pre-amendment and the amended
provision is as follows:
Pre-amendment provision under section 45:
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person
accused of an offence punishable for a term of imprisonment of more than three years under Part-A of the
Schedule shall be released on bail or on his own bond unless -
(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable
grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while
on bail

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

because merely substituting certain words in the section, which has been struck down as a
whole by the Hon'ble Supreme Court, will not have the effect of reviving the twin conditions
laid down for the grant of bail50. These decisions are listed as follows:
o Bombay HC: Sameer Bhujbal vs Assistant Director51
o Delhi HC: Upendra Rai vs Directorate of Enforcement52
o Patna HC: Ahilya Devi vs State of Bihar53
o MP HC: Dr. Vinod Bhandari vs Asst. Director54
There are later decisions also following the same interpretation. For instance, in Shivinder
Mohan Singh vs Directorate of Enforcement 55, the Hon'ble Delhi High Court granted bail to
the accused without considering the rigors of section 45. The Court held that although there
has been an amendment to section 45 after the above judgment, there is no subsequent
decision of the Supreme Court holding the said two conditions to be constitutionally valid,
even when brought back by way of the amendment. The Court accordingly treated the said
conditions as invalid and struck down.
In several judicial opinions, striking down a law means that rendering a law void under
Article 13 would mean that such law is unenforceable and inexistent for all purposes,
including amendment, on the statute book and the only way to revive the said law is by way
of re-enactment. A mere amendment involving substitution of certain words or adding an
Explanation to the struck-down law would be meaningless.56

In Raj Kumar Modi v SFIO,57 the Punjab &Haryana High Court, having correctly
considered the 'scope and effect' of the twin conditions as directed by the Hon'ble Supreme
Court in its decision in SFIO v Nittin Johari (2019)58, held that twin conditions u/s 212(6) of
the Companies Act, 201359 are not mandatory. The court held that if the conditions are treated
50
Mondaq Editorial Team and Metalegal Adovates, (7 June 2023), Twin Conditions For Bail Under The PMLA,
retrieved from https://www.mondaq.com/india/money-laundering/1326818/twin-conditions-for-bail-under-the-
pmla on 3 September 2024, 9:10 AM
51
BA No. 286 of 2018
52
2019 SCC Online Del 9086
53
Criminal Miscellaneous No. 41413 of 2019
54
2018 SCC Online MP 1559
55
2020 SCC Online Del 766
56
Supra note 50
57
2019 SCC Online P&H 4987
58
2019 9 SCC 165 - Hon'ble Supreme Court held that the Court should decide on the 'scope and effect' of such
twin conditions before granting bail. Earlier, the Hon'ble Delhi High Court had granted bail to the accused
without considering the applicability of the twin conditions to the case.
59
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), [offence covered
under section 447] of this Act shall be cognizable and no person accused of any offence under those sections
shall be released on bail or on his own bond unless—
(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

as mandatory, it would be violative of Articles 14 and 21, and would be inconsistent with the
established procedure of criminal trial laid down under CrPC.
The above decisions clearly lay down that the twin conditions cannot be treated as mandatory
and hence the Court should not venture into an analysis of the evidence and merits while
considering bail.

A perusal of decisions granting bail bring out the following principles as laid down by the
higher courts:
a) That the twin conditions cannot take away the right of the accused to be
granted bail.
b) That the requirement of finding reasonable grounds for holding the accused
not guilty, the appreciation of the evidence at the bail stage cannot and
should not be exhaustive, though a more than prima facie determination of
merits ought to be done.
c) That further the conclusion drawn in bail proceedings cannot impact the
trial and upon the conclusion of the trial, an opposite finding may be
reached by the Court.
d) That regarding the requirement of finding that the accused is not likely to
commit any offence while on bail, such an offence in future must be an
offence under the same Act and not any other offence. For this, antecedents
of the accused should weigh critically with the court.60

In Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra 61, the Hon'ble Supreme

Court, while interpreting Section 21 of MCOCA, which is similar to section 45 of PMLA,
held as under:

"44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the
court must arrive at a positive finding that the applicant for bail has not committed an
offence under the Act. If such a construction is placed, the court intending to grant bail must
arrive at a finding that the applicant has not committed such an offence. In such an event, it
will be impossible for the prosecution to obtain a judgment of conviction of the applicant.

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable
grounds for believing that he is not guilty of such offence and that he is not likely to commit any
offence while on bail
60
supra note 50
61
(2005) 5 SCC 294

Memorandum on Behalf of Appellant

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

Such cannot be the intention of the legislature. Section 21(4) of MCOCA, therefore, must be
construed reasonably. It must be so construed that the court is able to maintain a delicate
balance between a judgment of acquittal and conviction and an order granting bail much
before commencement of trial."

The above decision of the Hon'ble Supreme Court was followed in the case of State of
Uttaranchal vs Rajesh Kumar Gupta 62 (2007), which was concerned with grant of bail under
Section 37 of the Narcotic Drugs and Psychotropic Substances, Act, 1985 and the Court held
as under:

"28. Section 37 of the 1965 Act must be construed in a pragmatic manner. It cannot be
construed in such a way so as to negate the right of party to obtain bail which is otherwise a
valuable right for all practical purposes.

The scope and effect of such twin conditions which were already struck down by the Hon’ble
63
Supreme Court in Nikesh Tarachand Shah vs Union of India cannot be construed as
calling for a mandatory applicability, since this would be violative of Articles 14 and 21 and
would be inconsistent with the established procedure of criminal trial laid down under CrPC.

It is urged that for the purposes of bail, it is settled law that offences punishable for less than
seven years allows a person to be set free on bail. As such, the liberty as enunciated
by Article 21 of the Constitution cannot be defeated by such an Act. Thus, Section 45(2) of
the PMLA is contrary to general principles of bail and the Constitution of India. It is also
pointed out that Section 437 of the CrPC imposing similar conditions as Section
45(2) restricts it to offences punishable with either life imprisonment or death. Under no
condition can it be said that the bail conditions under the PMLA, imposing maximum seven
years, are reasonable. Without prejudice to the aforementioned argument, it was stated
that Section 45(2) could only be applicable to bail applications before the Special Court. It
was submitted that in light of the same, special powers be given to the Special Court under
the PMLA, as these provisions, draconian in nature, were contemplated only in Acts, such as
TADA Act, POTA, MCOCA & NDPS Act, since securing the presence was difficult in all of
the above. Further, unless Section 3 was to be restricted to organised crime syndicate, which
was in fact the real intent, the bail provisions are liable to be struck down.64

62
2007 1 SCC 355
63
2018 11 SCC 1
64
Vijay Madanlal Choudhary vs. Union of India, (2022) SCC Online SC 929

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

In Tarsem Lal v Directorate of Enforcement, 2024 65, Justices Oka and Ujjal Bhuyan have
clarified that the ED has no power to arrest an individual after a Special Court dedicated to
hearing PMLA cases has taken cognisance of the case. This judgement underlines that in
criminal proceedings, custody is primarily meant to facilitate effective investigation—it is not
meant to function as punishment for an undertrial.

The Court can always seek a bond securing appearance of the accused under Section 88 of
the CrPC. If the ED wants remand of such a person, after the court has taken cognizance, ED
must apply under Section 309(2) of the CrPC.

On the basis of above-mentioned grounds and the provisions duly presented, it is humbly
submitted before the Hon’ble Court to kindly grant bail to Mr. Mehta.

65
2024 INSC 434

Memorandum on Behalf of Appellant

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 3rd P.N. Mathur Memorial National Moot Court Competition 2024

PRAYER

Wherefore, in light of the grounds raised and authorities cited, it is hereby

most respectfully prayed before this Hon’ble Court to:

1. Declare that Mr. Ramesh Mehta and his associates have not committed the
offense under Sections 420 and 120B of IPC read with 3 Money Laundering
Act, 2002
2. Revoke the provisional attachment of properties and bank accounts by the
Activity General are not justified under section 5 of PMLA, 2002 and
recognize that the Activity General has gone beyond power provided under the
section;
3. Acknowledging that TGC and GTL have not violated the provisions of the
Telecom Act, 2023, and the Data Protection and Privacy Act, 2023 and have
compilied by the regulations laid down;
4. Grant bail to Mr. Ramesh Mehta, Promoter of TGC.

The Court may pass any other order as the hon’ble Supreme Court may
please deems fit and proper in the interest of justice, equity & good
conscience and the respondent faction undertakes to be duty-bound
forever.

Memorandum on Behalf of Appellant

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