Mr. Zoheb Hossain, Special Counsel along with Mr. Vivek Gurnani, Panel Counsel for ED v. POONAM MALIK

Judgment

1. The Directorate of Enforcement1 has filed the present appeals under Section 42 of the Prevention of Money Laundering Act, 20022, challenging the common order dated 10.06.2019 and the subsequent review order dated 20.09.2019 (collectively referred to as the „Impugned Orders‟), passed by the learned Appellate Tribunal (PMLA), New Delhi3, in FPA-PMLA-2968/DLI/2018 and FPA- PMLA-2969/DLI/2018. 2. By the Impugned Orders, the learned Appellate Tribunal allowed the appeals filed by the Respondent under Section 26 of the PMLA and subsequently dismissed the review application filed by the ED. 3. MISC. APPEAL (PMLA) 4/2021 challenges the order in FPA- PMLA-2969/DLI/2018, wherein the learned Appellate Tribunal set aside the learned Adjudicating Authority‟s order dated 26.02.2019 passed in O.A. No. 254/2018, which had confirmed the freezing of 1ED 2 PMLA 3Appellate Tribunal Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:14.11.2025 17:05:28 MISC. APPEAL (PMLA) 4/2021 and 5/2021 Page 2 of 31 Account No. 006005004192 held by the Respondent with Delhi State Co-operative Bank, Hauz Khas, under Section 17(1A) of the PMLA. 4. MISC. APPEAL (PMLA) 5/2021 challenges the order in FPA- PMLA-2968/DLI/2018, wherein the learned Appellate Tribunal set aside the learned Adjudicating Authority‟s order dated 08.02.2019 passed in O.A. No. 253/2018, which had confirmed the freezing of Account No. 007101549766 held by the Respondent with ICICI Bank, Green Park, under Section 17(1A) of the PMLA. BRIEF FACTS:

5. The facts of the case reveal that the Respondent‟s husband, Mr. Ranjit Malik, was employed as a driver with Delhi Nagrik Sahkari Bank Limited until his service officially ended in May 2017. He drew a monthly salary of Rs. 30,352/- there. Concurrently, from 2015 to

August 2017, Mr. Ranjit Malik also worked under Mr. Gagan Dhawan, an accused in ECIR/HQ/17/2017, where apparently his role involved the transport and delivery of printing materials. 6. On 30.08.2017, the Central Bureau of Investigation4 registered FIR No. RC 08(A)/2017-AC-III under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 19885, and Section 120B of the Indian Penal Code, 18606 against M/s Sterling Biotech Limited7, certain Income Tax Officers and other individuals. Based on this FIR, the ED registered ECIR/ HQRS/15/2017 on 31.08.2017 for offences under Sections 3 and 4 of the PMLA. Neither the Respondent nor her husband was named in the said FIR or ECIR. 4CBI 5PC Act 6IPC 7SBL Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:14.11.2025 17:05:28 MISC. APPEAL (PMLA) 4/2021 and 5/2021 Page 3 of 31

7. Subsequently, on 25.10.2017, the CBI lodged another FIR bearing No. RC BD1/2017/E/0007 under Sections 13(2) read with 13(1)(d) of the PC Act and Sections 120B, 420, 467, 468 and 471 of the IPC. This was in relation to an alleged massive bank fraud of over Rs. 5,000 crores by M/s Sterling Biotech Limited and its directors, along with a former Andhra Bank Director, Mr. Anup Garg. Following this, the ED registered ECIR/HQ/17/2017 on 27.10.2017. Again, neither the Respondent nor her husband was named in the FIR or the ECIR. The ED has claimed that certain material from ECIR/HQRS/15/2017 was utilized during investigation of ECIR/HQ/17/2017, thereby rendering both ECIRs interlinked and complementary. 8. According to the ED, the investigation revealed that Mr. Ranjit Malik alias Johny assisted Mr. Gagan Dhawan in managing the cash operations of the SBL group. Despite repeated summons, Mr. Ranjit Malik failed to appear and evaded ED officials during a search at 213, Shahpur Jat Village, New Delhi. Although he appeared on 31.10.2017 and undertook to submit relevant documents, he neither complied nor responded to subsequent summons, showing a lack of cooperation. 9. Later, Mr. Ranjit Malik was arrested. Regarding this arrest, the Respondent alleged that on 01.08.2018, the ED officials entered her residence at G-1, 706, Ganga Apartment, D6, Vasant Kunj, New Delhi at 4:00 PM without a search warrant and took her husband into custody without an arrest warrant. The ED, however, contends that the arrest was effected on 02.08.2018. 10. In the investigation, it was further discovered that the Respondent maintained two bank accounts: Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:14.11.2025 17:05:28 MISC. APPEAL (PMLA) 4/2021 and 5/2021 Page 4 of 31 (a). Account No. 0060005004192 with Delhi State Co-operative Bank, Hauz Khas, with cash deposits of Rs. 2,60,000/- between 21.01.2015 and 12.11.2016; and (b). Account No. 007101549766 with ICICI Bank, Green Park, with cash deposits of Rs. 3,85,000/- between 29.06.2013 and

05.01.2016.

11. According to the ED, in his statement, Mr. Ranjit Malik admitted that neither he nor his wife had filed Income Tax Returns. He was also unable to provide any credible explanation for the payment of Rs. 20 lakhs to Mr. Gagan Dhawan or the source of substantial cash deposits in the Respondent‟s bank accounts. His answers were vague, inconsistent, and failed to address the financial irregularities. During investigation, the ED, suspecting involvement in money laundering, issued freezing orders dated

05.09.2018 under Section 17(1A) of the PMLA for the Respondent‟s aforementioned bank accounts. Besides, several other bank accounts were provisionally frozen, which included the Respondent‟s husband‟s accounts and their jointly held accounts. 12. After the investigation, on 29.09.2018, the ED filed a prosecution complaint against the Respondent‟s husband, and on

23.10.2018, it filed a separate complaint notifying the learned Special Court (PMLA) about the freezing orders dated 05.09.2018, of which cognizance was taken by the learned Special Court. 13. Pursuant to the freezing orders, the ED also filed two Original Applications, O.A. No. 253/2018 and O.A. No. 254/2018, under Section 17(4) of the PMLA before the learned Adjudicating Authority, seeking confirmation of the freezing of two bank accounts held by the Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:14.11.2025 17:05:28 MISC. APPEAL (PMLA) 4/2021 and 5/2021 Page 5 of 31 Respondent. The learned Adjudicating Authority, vide orders dated

08.02.2019 and 26.02.2019, confirmed the freezing under Section 8(3) of the PMLA. 14. Aggrieved by these confirmation orders, the Respondent filed appeals under Section 26 of the PMLA before the learned Appellate Tribunal. By a common order dated 10.06.2019, the learned Appellate Tribunal allowed the appeals, set aside the learned Adjudicating Authority‟s orders dated 08.02.2019 and 26.02.2019 and ordered reactivation/unfreezing of the Respondent‟s both bank accounts. 15. The ED then filed review application challenging the learned Appellate Tribunal‟s common order dated 10.06.2019, which was dismissed by the learned Appellate Tribunal vide order dated

20.09.2019. 16. Aggrieved by the learned Appellate Tribunal‟s common order dated 10.06.2019 and the review dismissal order dated 20.09.2019, the ED has approached this Court by way of the present appeals. ED/ APPELLANT’S SUBMISSIONS:

17. Learned Special Counsel for the ED would submit that the freezing order under Section 17 of the PMLA and its confirmation under Section 8 are legally valid, supported by sufficient “reasons to believe”, and that the learned Appellate Tribunal‟s contrary finding is based on a misapplication of law. 18. While supporting the confirmation order passed under Section 8, he would then submit that the learned Adjudicating Authority had rightly relied on credible material showing that Mr. Ranjit Malik acted as a cash manager for Mr. Gagan Dhawan, evaded multiple summons, and absconded during search, before and Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:14.11.2025 17:05:28 MISC. APPEAL (PMLA) 4/2021 and 5/2021 Page 6 of 31 after appearing on 31.10.2017, following which he was arrested under Section 19(1) of the PMLA on 02.08.2018. 19. Learned Counsel appearing for the ED would further submit the Respondent maintained two bank accounts reflecting unexplained cash deposits, and that Mr. Ranjit Malik, in statements recorded under Sections 50(2) and (3) of the PMLA, admitted to non- filing of income tax returns by him and his wife, i.e., the Respondent herein, and further failed to explain the Rs. 20 lakh transfer to Mr. Gagan Dhawan from the joint account of Mr. Ranjit Malik and Respondent (Account No. 50100016189014) or the source of deposits, offering only evasive responses. 20. Learned Counsel appearing for the ED would contend that the Respondent‟s claim of absence of “reason to believe” is meritless, as the Hon‟ble Supreme Court has held in CIT v. Rajesh Jhaveri8 and Radhika Agarwal v. Union of India9 that such belief requires only prima facie satisfaction, not conclusive proof, and its adequacy cannot be judicially reviewed at the investigative stage, especially in cases involving freezing under Section 17 of the PMLA. 21. Learned Counsel appearing for the ED would also submit that proceedings before the learned Adjudicating Authority are civil in nature, governed by the standard of preponderance of probabilities rather than proof beyond reasonable doubt, as clarified by the Hon‟ble Supreme Court in Vijay Madanlal Choudhary v. Union of India10. 22. On another issue, learned Counsel appearing for the ED would submit that the learned Appellate Tribunal erred in setting aside the freezing order solely due to the absence of a prosecution complaint