[Cites 36, Cited by 0]
Delhi High Court
Sanjay Bhandari vs Directorate Of Enforcement on 9 April, 2026
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 21st August, 2025
Pronounced on: 9th April, 2026
+ CRL.A. 1071/2025 & CRL.M.A. 22223/2025 (stay)
SANJAY BHANDARI
S/o Late Shri Rajinder Kumar Bhandari,
B-217, Greater Kailash-1, New Delhi,
Presently residing at Flat 18, 17 Great
Cumberland Place, London, W1H7AS,
United Kingdom
.....Appellant
Through: Mr. Kapil Sibal, Sr. Advocate with Mr.
Avneesh Arputham, Ms. Aparajita Jamwal
and Mr. Ankit Sharma, Advocates.
versus
DIRECTORATE OF ENFORCEMENT
Represented through its Deputy Director,
10-A, Jamnagar House,
Akbar Road, New Delhi - 110001
.....Respondent
Through: Mr. S.V. Raju, ASG with Mr. Zoheb
Hossain, Spl. Counsel, Mr. Vivek Gurnani,
Panel Counsel, Mr. Kartik Sabharwal, Mr.
Pranjal Tripathi and Mr. Satyam, Advocates
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
NEENA BANSAL KRISHNA, J.
1. The Statutory Appeal under Section 17 of the Fugitive Economic
Offenders Act, 2018 (hereinafter referred to as ―FEO Act‖) has been filed
on behalf of the Appellant, Sanjay Bhandari to challenge the Impugned
Judgment dated 05.07.2025 of learned Special Judge (CBI) PC Act-10, New
Delhi declaring the Appellant a Fugitive Economic Offender (FEO).
2. The Respondent/ED filed a Misc. Application No. 249/2019 on
13.12.2019, before the learned Special Judge under the Fugitive Economic
Offenders Act, seeking a declaration of the Appellant as a Fugitive
Economic Offender.
3. The brief facts as stated in the Misc. Application, was that ED is a
statutory Agency under Fugitive Economic Offender‟s Act (FEO Act),
entrusted with the authority to implement the provisions of the Act. It is
also a Competent Agency to investigate into offences under Prevention of
Money Laundering Act, 2002.
4. It was stated that a Prosecution Complaint bearing CC No.2121/2019
dated 22.12.2018 under the Black Money (Undisclosed Foreign Income and
Assets) and Imposition of Tax Act (Black Money Act), 2015 was initiated
against the Appellant Sanjay Bhandari, by the Income Tax Authorities,
which is pending adjudication before the learned ACMM. It disclosed that
the Accused/Petitioner had wilfully not disclosed various mandatory
information in his Returns of Income, relating to foreign assets (including
financial interest in any entity) acquired by him, outside India.
5. Further, by acquisition of Al-Rahma Trust in Dubai and a change in
its structure as a part of the pre-meditated scheme to dissociate himself from
all his offshore entities/foreign assets and by fabricating and back dating the
documents, he made another attempt to wilfully cause such circumstances to
exist, which will have the effect of enabling him to evade tax, penalty or
interest chargeable or imposable under the Black Money Act, as envisaged
in Section 51(3) of the Black Money Act.
6. It was further stated in the Misc. Application that since Section 51 of
the Black Money Act is a Scheduled Offence under the Fugitive Economic
Offenders Act, 2018 and the proceeds of crime involved were in excess of
Rs.100 crores, NBW was issued against the Petitioner by the ACMM, Tis
Hazari, Delhi in the complaint, which is still pending.
7. Simultaneously, the Enforcement Directorate is also conducting
investigation against the Petitioner in ECIR/HQ/03/2017, for the offence of
Money Laundering.
8. Another criminal case under Official Secrets Act vide FIR
No.173/2016 has been registered by Delhi Police, wherein he has been
declared a Proclaimed Offender.
9. The ED had reasons to believe that the Accused/Petitioner is a
Fugitive Economic Offender, which are :
(a) The Income Tax Authorities have filed a
Prosecution Complaint bearing CC No.2121/2019 dated
22.12.2018 under Section 51 Black Money Act;
(b) An open ended NBW was issued against the
Accused on 31.10.2019. In this Complaint on the
reasonable believe that he was deliberately evading the
process of law;
(c) The proceeds of crime in the Scheduled
offence under the FEO Act, is in excess of Rs.100 Crores,
which has been confirmed by the Income Tax Authorities
vide communication dated 09.07.2019.
(d) The material on record and the reason to
believe show the complicity of the Accused regarding the
commission of the scheduled offence, have been duly
provided in the Prosecution Complaint filed by the Income
Tax Department;
(e) The Accused had left the country under
suspicious circumstances evading the process of law in
India, by staying outside the jurisdiction of Indian Court, so
as to not face criminal prosecution. A Look Out Circular
dated 14.02.2017 has been issued at the instance of ED.
Further, a Red Corner Notice dated 16.10.2017 has also
been issued against him, in another FIR No.173/2016
investigated by Crime Branch, New Delhi in which he has
been declared as Proclaimed Offender and his Passport had
been impounded by the Regional Passport Office; and
(f) The Accused is still evaded the process of law
despite being aware and having knowledge of the
aforementioned developments and has deliberately chosen
not to return to India.
10. The undisclosed Bank Accounts and Properties held by Mr. Sanjay
Bhandari outside India, are tabulated in the Prosecution Complaint filed by
the Income Tax Authorities, as under:
Details of Foreign Assets of Sh. Sanjay Bhandari
Sr Nature of Details Location/ Relation with Time Value/ Exhc in INR
No Asset of asset Country Sh. Sanjay period Amou ange
s. Bhandari nt Rates
1. Share holding Offset UAE Shareholder of 23.02. 1.35 13.74 1854900
in Company India 90% shares 2009 Lakh
Solution Dirha
s, FZC, m
UAE
2. Bank A/c of P Emirates Authorised Feb-14 1878 16.85 31644.3
Offset India Internatio Signatory
AED
Solutions nal Bank,
FZC, UAE Dubai
3. Bank A/c of 1021507 Emirates Authorised 18 19057 64.7 1233040
Offset India 575303 Internatio Signatory Sept 82 95.4
Solutions nal Bank, 2010 Euro
FZC, UAE Dubai to 04
Jun
4. Bank A/c of 1021507 Emirates Authorised 28 98610 56 5522180
Offset India 575304 Internatio Signatory July
Solutions nal Bank, 2011
FZC, UAE Dubai to 28 CHF
July
5. Share holding SANTE UAE Director and 21.02. 11700 12.5 1462500
INTERN holder Dirha
ATION m
AL FZC
6. Bank Account 1021497 Emirates Authorised 7TH 15600 46 7176018
INTERNATI nal Bank, 2009 USD
ONAL FZC Dubai to 26th
Nov
7. Bank Account 1011497 Emirates Authorised 7TH 13151 12.5 1643884
INTERNATI nal Bank, 2009 AED
ONAL FZC Dubai to 25
May
8. Bank Account 3217664 Sharjah Co-signatory 19 Feb 150,50 12.5 1881250
of SANTECH 001 Islamic 2006 0 AED
INTERNATI Bank, to 08
ONAL FZC Dubai Nov
9. Share holding Serra Dubai Beneficial 23.07. 1000 12.7 12700
in Company Dues Owner 2009 AED
Technol
ogies
Ltd
10. Bank Account 1200120 Standard Authorised 09.02. 50,000 12.68 634000
of Serra Dues 701 Chartered Signatory 2010 AED
Tech Ltd. Bank,
Dubai
11. Immovable Flats Grosvener Sanjay 2013 22.47 83.88 188478
by Court, bought all pounds
Shamian Bourdon shares of (curren
Gros-1 Street, Shamlam Gros- t value
INC London, 1 INC for Rs.10 of
UK Cr in 2013 pro83.
88pert
y)
12. Share holding Petro UAE Sanjay 06.04. 49,990 12.7 634873
in Company Global Bhandari is 2009 Dirha
Technol 1/3rd owner m
ogies
Ltd.
13. Immovable Property London, Sanjay 14.12. 19 75.92 1442641
Ellerton purchased pound
House, shares of
Bryansto Vertex
n Management
Square, Holding
London, Limied, MHL,
Owned BVI to acquire
by property on
Vertex 14.12.2009.
14. Bank 1014302 Emirates Owner of the 04.03. 46558 15 6983752
by Sanjay Bank, to AED
Bhandari Dubai 22.06.
15. Bank 1014301 Emirates Owner of the 04.03. 19312 58.03 1120722
Accounts held 546602 NBD accounts 2011 81 US
36.4
by Sanjay Bank, to Dollar
Bhandari Dubai 22.06.
16. Immovable C-303, Dubai Sanjay 13.10. 54783 16.64 9115974
Grandeu purchased this AED
r, Palms property on
Jumeirh, 13.10.2014
Dubai
17. Immovable 2414, UAE Sanjay 09.11. 23500 16.75 3936250
Khalifa, purchased this Dirha
UAE property on m
09.11.2014
Total 22091,9
8,865.13
11. During the investigations, it was found that the Accused was having
various properties not only in the foreign countries, but also in India as well.
These assets were found either in the name of the Accused or held by
Benamidar of the Accused, as the properties were acquired from the funds of
the Accused. The names of various Companies/ benami holders were
mentioned in the Application filed, before the learned ACMM.
12. The information available about the whereabouts of the Accused, is
that he is presently residing in United Kingdom where he has substantial
pecuniary interest. All the efforts made by ED to bring back the fugitive to
India to face criminal proceedings, have not been successful till date. The
list of properties/value of the properties connected to proceed of crime for
which confiscation is sought, has also been filed.
13. It was thus, submitted that since the proceeds of crime were more
than Rs.100 Crore and Non Bailable Warrants have already been issued, the
Accused fell within the scope of Section 2(1)(f) of the FEO.
14. Hence, a prayer was made that that the Notice under Section 10 of the
FEO requiring the Accused to appear in person before the Court and to the
individuals/entities mentioned in the Application who have interest in the
properties which are sought to be confiscated, may be issued and the
Accused may be declared Fugitive.
15. The Appellant/Respondent, Mr. Sanjay Bhandari had filed his Reply
before the learned Special Judge in this MISC. APPL. 249/2019 wherein the
Appellant/Respondent denied and disputed each and every contention made
by ED. A preliminary objection was taken that no case was made out against
the Appellant and the ingredients of the offence sought to be invoked, would
not even prima facie meet out. The chronology of the events, was explained
in the Reply wherein it was stated that the First Provisional Attachment
Order No. 03/17 under PMLA in relation to ECIR/HQ/03/2017 was issued,
indiscriminately attaching various properties totalling to over Rs.21 Crores
of the Accused, his wife and certain Companies in which he was a
shareholder. In relation to ECIR/HQ/03/17. It was asserted that the said
ECIR was in relation to the scheduled offence under 51 of the Black Money
Act. The Appellant asserted that though, the Provisional Attachment Order
had been issued to attach various properties and allegedly owned by the
Appellant but it was much prior to the date of alleged offence and even prior
to coming into force of the Black Money Act. Pursuant to this Provisional
Attachment Order, the Complaint No. 784/2017 dated 28.06.2017 was filed
before the Adjudicating Authority under PMLA, seeking confirmation of the
Provisional Attachment Order.
16. The Appellant further asserted that Writ Petition (Criminal)
No.2456/2017 was filed by Petitioner Sanjay Bhandari seeking quashing of
ECIR/HQ/03/2017. This Court on 29.08.2017, directed the ED to file its
Status Report and the Writ Petition is pending adjudication. It was claimed
that the said Writ Petition is pending adjudication before this Court.
17. The Appellant further asserted that the Adjudicating Authority
under PMLA, rejected and dismissed the Complaint No.784/2017 vide
Judgment dated 17.11.2017 and consequently did not confirm the
Provisional Attachment Order dated 01.06.2017. The reason for rejection
was that no scheduled offence under Part C of PMLA and specifically no
offence of cross border implications including Section 51 Black Money Act,
was made out. It was held that "the case was out of the purview of the
scheduled offence and hence the PMLA Act was not applicable".
18. It is further submitted that the Appeal is still pending adjudication
before PMLA Appellate Tribunal and no stay has been granted against the
Judgment dated 17.11.2017.
19. It is further submitted that the assets attached vide Order dated
26.12.2017 by ED under FEMA, was challenged in WP(C) No.4000/2018,
whereby this Court vide Order dated 12.07.2018 permitted the Companies to
operate the bank accounts, subject to the balance being maintained as on the
said date.
20. The Appellant submitted that on the very next date i.e. 13.07.2018,
the Directorate of Enforcement issued Provisional Attachment Order
No.5/2018 dated 13.07.2018 under PMLA, even though this Order failed to
meet even the basic requirements under PMLA.
21. It is further submitted that the Provisional Attachment Order
No.5/2018 dated 13.07.2018 and the subsequent proceedings before the
Adjudicating Authority, was challenged in WP(C) No.10106/2018. This
Court had stayed the proceedings before the Adjudicating Authority, vide
Order dated 04.10.2018.
22. Thereafter, the Income Tax Department filed Criminal Complaint
No.2121/2019 dated 22.12.2018 under Section 51 Black Money Act against
the Accused before Tis Hazari Court, Delhi. NBW dated 02.07.2019 have
been issued against him which have been challenged in Criminal Revision
Petition No.444/2019, which ultimately was dismissed on 23.10.2019.
23. The Appellant further submitted that the Directorate of Enforcement
thereafter had filed the present Misc. Application No. 249/2019 dated
13.12.2019 in which the Summons were issued against the Respondent. The
Accused then filed Crl. MC No. 805/2020 for quashing of Complaint No.
2121/2019 under Section 51 of the Black Money Act, which was pending
consideration before this Court.
24. The Appellant further asserted that the Income-Tax Department had
filed its Status Report/Counter-Affidavit in Crl. MC No. 805/2020 wherein
it had admitted that the assessment under the Black Money Act, has still not
been carried out.
25. The Appellant had also sought quashing of the present Misc.
Application No. 249/2019 vide Crl. MC No. 1002/2020, which is also
pending consideration before this Court. The Appellant further asserted that
the foreign properties/assets in question, were not owned by the Accused
and were in fact owned by others. The Directorate of Enforcement had failed
to meet its evidentiary requirements under Section 16 FEO Act. The
Appellant/Accused had obtained information from his own efforts and due
diligence to show the ownership of the foreign assets being in the name of
other persons. It was claimed that ED, Income Tax Department and CBI,
have been making undue harassment and false prosecution has been initiated
against the Appellant, who has been constrained to leave the country.
26. It was further submitted that the essential ingredient for applicability
of FEO Act, were not made out in the Misc. Application, which was liable to
be dismissed. The FEO Act can apply only in cases where NBWs are issued
against the accused persons where the proceeds of crime of Scheduled
Offence is Rs.100 Crores or more aside from the bold averment of the
amount of Scheduled Offence being more than Rs.100 Crores. There is not a
shred of evidence whatsoever to show the value of the proceeds of crime as
asserted. It was further claimed that there was only one communication
dated 09.07.2019 from Income-Tax Department, which was the basis for the
Miscellaneous Application. However, in the absence of any conclusive
assessment against the Accused under Black Money Act, no proceedings
under FEO Act, could have been initiated, which are premature and
politically motivated. A mere Letter from IT Department to ED, cannot form
the basis for proving that the Accused had committed the Scheduled
Offence.
27. The Miscellaneous Application under FEO Act, entails very serious
consequences including confiscation of his property and barring him from
defending civil claims and effectively amounting to economic death penalty.
It was further asserted that the Directorate of Enforcement had failed to
appreciate that the mandatory time period for Section 11of Black Money
Act, for carrying out the assessment, has expired and assessment has
admittedly yet not been completed, therefore, the entire commercial
proceedings are without jurisdiction.
28. Enforcement also had to satisfy themselves for "reasons to believe on
the basis of the material in their possession but there is no application of
mind but only mechanical reproduction of the words used in the statute."
The requirement of reason to believe had not been met in the Miscellaneous
Applications.
29. The entirety of the Complaint No. 212/2019 under Section 51 of the
Black Money Act, failed to reveal any wilful attempt to evade the tax and,
therefore, which has not been appreciated by filing this Miscellaneous
Application. As one of the example, the Appellant had explained that one of
the properties alleged to be owned by him is Property No. 2414, Floor No.
24, Building No. 1, AI Noujoum Tower, Burj Khalifa, UAE, which is
claimed to be owned by one Mr. Sanjay Bhandari having Passport No.
Z2042109 but born in Calcutta. However, he is a different person, who has
no link with the Accused.
30. In the Miscellaneous Complaint itself, ED had admitted that one of
the alleged properties i.e. Property No. E-12, Ellerton House, Bryanston
Square, London, was allotted bought in 2009 and sold in June, 2010 by the
Accused. Therefore, assuming the claim of the ED to be correct, the alleged
property cannot come within the purview of Black Money Act, which was
enacted and commenced on 01.07.2015. The present arbitrariness and non-
application of mind of ED is, therefore, evident on the record.
31. The Appellant further asserted that under Section 16(1) of FEO Act,
the burden of proving that the Accused is FEO and that his Property is
proceeds of crime, lies on the ED. However, ED has miserably failed to
satisfy these averments. All the assets alleged to be proceeds of crime were
in existence. Even prior to coming into effect of the Black Money Act in
July, 2015 and cannot be termed as proceeds of crime.
32. Moreover, essential requirement is that the proceeds of crime must be
derived or obtained as a result of criminal activity relating to Scheduled
Offence. There cannot be any inverted proceeds of crime independent of the
Scheduled Offence and more importantly the proceeds of crime must come
into existence only after the commission of the Scheduled Offence. In the
present case, the proceeds of crime were in existence, much prior to
commencement of Black Money Act, therefore, on this ground itself, the
Miscellaneous Application ought to be rejected.
33. Reliance is placed on M/s Himachal Emta Power Ltd. vs. Union of
India and Ors., decided on 23.08.2018 by the Co-ordinate Bench of this
Court. It is further asserted that the first Provisional Order No. 03/2017
dated 01.06.2017 had been challenged before the adjudicating authority
under PMLA, who vide Order dated 01.06.2017 categorically held that they
cannot be any prosecution under Section 51 of the Black Money Act,
without first completely making an assessment and that the Scheduled
Offence under PMLA, was not made out. It was held that the alleged
properties were in existence prior to enactment of the Black Money Act and
therefore, cannot be termed as proceeds of crime.
34. Furthermore, Adjudicating Authority vide Judgment dated 17.11.2017
had observed that no Scheduled Offence had been made out.
35. It was further asserted that the Directorate of Enforcement had also
attached the assets of certain Companies under Foreign Exchange
Management Act in which the Accused is a shareholder vide Order dated
26.12.2017. The first Provisional Order No. 03/2017 dated 01.06.2017 and
thereafter, vide Judgement dated 17.11.2017 such attachment, has been
rejected. The Order was challenged by the Appellant in W.P.(C) 4000/2018
before this Court wherein vide Order dated 12.07.2018, it has Permitted the
Companies to operate the Bank Account subject to the balance being
maintained on the said date.
36. The Directorate of Enforcement then issued Provisional Attachment
Order No. 5/2018 dated 13.07.2018, which got challenged before the
Adjudicating Authority and before this Court in W.P.(C) 10106/2018 and
this Court on 04.10.2018, has stayed the proceedings before the
Adjudicating Authority with the observations that "Prima facie, it would not
be for the concerned authority to once again pass a provisional order of
attachment, when the issue at hand has been substantially adjudicated by the
Adjudicating Authority." It is submitted that the acts of the ED, are in
passing attachment Orders one after the other against the Appellant, has
caused immense trauma and unnecessary harassment especially when this
Court has repeatedly stayed the actions of Directorate Enforcement, who is
acting solely on the basis of the political consideration. It was claimed that
this Miscellaneous Application was mala fide and liable to be dismissed.
37. Thereafter, Criminal Complaint No.2121/2019 was again listed and
Non Bailable Warrants were issued against the Accused on 31.10.2019.
38. The learned ACMM in the impugned Judgment dated 05.07.2025
considered the rival contentions of the parties and concluded that ED had
been able to make out a case under Section 2(1)(m) of FEO Act and Warrant
of Arrest i.e. NBW had been issued against Sanjay Bhandari by the Court of
ACMM, Delhi, in the Complaint under Section 51 of the Black Money. The
NBW was pending against him when that he had left India and is presently
residing in UK as evident on the material referred, in order to avoid criminal
prosecution under the Complaint under Section 51 Black Money Act. The
Court also found that the total value of the schedule offence is Rs.100 crores
or more, which is the requisite condition under Section 2(m) of the FEO Act.
Therefore, on being satisfied, Sanjay Bhandari was declared as a fugitive
economic offender under Section 12(1) of Fugitive Economic Offenders
Act, 2018.
39. Aggrieved by the said Declaration, the present statutory Appeal
under Section 17 FEO Act has been filed, against the Judgment dated
05.07.2025.
40. It is asserted that the Scheduled Offence for seeking declaration of the
Appellant as fugitive, was Section 51 of the Black Money (Undisclosed
Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter
referred to as ―Black Money Act‖), which deals with wilful attempt to evade
tax.
41. The FEO Act gives a detailed procedure to be followed to declare a
person as Fugitive. As per Sections 2(1)(f) read with Section 2(1)(m) of the
FEO Act, the necessary ingredients for declaring an individual as a Fugitive
Economic Offender, are as follows:
(i) There must be a warrant of arrest against a person
in a Schedule Offence;
(ii) The said person must have left India to avoid
prosecution or being abroad, refuses to return to India to
face criminal prosecution;
(iii) The value involved in the Schedule Offence is
Rs.100 Crores or more.
42. Section 4 of FEO sets out the procedure to be followed to declare a
person Fugitive Economic Offender. Section 4(1) specifically requires a
Director to have "reasons to believe", to be recorded in writing based on
material in his possession. Section 4(2) (a) and (c) requires that the Officer
must be satisfied that a person fulfils the definition of Section 2(1)(f) read
with Section 2(1)(m), in every respect.
43. Furthermore, Section 10 stipulates that where an Application under
Section 4 is filed, the learned Special Judge shall issue a Notice to the
person named therein. The use of the words "duly filed" indicates that the
learned Special Court must apply its mind to examine whether the
Application satisfies the requirements under Section 4, FEO Act.
44. Section 12 provides for the declaration of FEO, after giving an
opportunity of being heard to each side. Where the learned Special Court is
satisfied that no case is made out for declaring an individual as a FEO, he
will be discharged as per Section 12(9) and the property so attached, would
be released. Therefore, the declaration of an individual as a FEO is not
automatic and the Court has to consider whether the requirements for
declaring a person as a FEO, are made out.
45. It is submitted that the learned Trial Court vide Order dated
24.12.2019 took cognizance and issued summons against the Appellant.
46. On 12.02.2020, the Appellant filed Crl.MC No. 805/2020 before this
Court seeking quashing of the Criminal Complaint No.2121/2019 dealing
with Section 51 of the Black Money Act, 2015 (which was the Scheduled
Offence for the proceedings under the Fugitive Economic Offender Act) on
the ground that the essential ingredients of the offence under Section 51 of
the Black Money Act, 2015, was not made out. This Court vide Order dated
24.02.2020 directed the Income Tax Department to produce the evidence on
the basis of which it had sent the Letter dated 09.07.2019 to the Directorate
of Enforcement wherein it was stated that the value of the Scheduled
Offence is Rs.100 Crores or more. This Crl. MC No. 805/2020 was
dismissed, vide the Judgment dated 08.11.2024.
47. The Appellant filed SLP (Crl) No. 18321/2024 in relation to the
proceedings under the Fugitive Economic Offenders Act. The Apex Court
has disposed of the SLP vide Order dated 21.01.2025 with the direction that
the accused can raise all legal and factual issues before the concerned
authority, which shall be decided without being influenced by the
observations of this Court.
48. The Apex Court also condoned the delay in filing of statutory Appeal
under Black Money Act, against the Assessment Order. Consequently, the
Appellant filed Appeal under Section 15 of Black Money Act on 30.01.2025
challenging the Assessment Order dated 23.03.2020, which is pending
adjudication before the Commissioner (Appeals).
49. Further, the Appellant vide Crl. MC No. 1002/2020 dated 19.02.2020
before this Court, sought quashing of present Misc. Application No.
249/2019 under the Fugitive Economic Offender Act and all proceedings
emanating therefrom. However, this Petition was dismissed by this Court
vide Judgment dated 08.11.2024.
50. The impugned Judgment dated 05.07.2025 was passed declaring the
Appellant as a Fugitive Economic Offender, without taking into
consideration that the essential ingredients required under the Act, are not
made out. The matter is now listed for further proceedings under Section 12
of the Fugitive Economic Offenders Act, for confiscation of the assets, on
02.08.2025. Without, the Accused being declared as a Fugitive Economic
Offender, the Civil Appeals filed by the Accused, are being deferred.
51. PMLA Appeal No.12/2023 filed by the Appellant in this Court, has
been adjourned on the ground that further proceedings under the FEOA, is
pending.
52. The grounds of challenge are that the Government of India, had sent
Extradition requests for two proceedings/trials i.e. Section 51 of the Black
Money Act and Section 3/4 of PMLA, to the United Kingdom.
53. The Extradition request was initially allowed by the Westminster
Magistrate Court, but was subsequently reversed in Appeal by the High
Court vide Judgment dated 28.02.2025, whereby denying the Government of
India‟s Extradition request, for these two offences.
54. Subsequently, a Petition for Leave to Appeal to the UK Supreme
Court, was filed by the Government of India, which was rejected by the
High Court vide Order dated 08.04.2025. Consequently, the Appellant now
has a legal right to reside in the United Kingdom and the Government of
India, is bound by this Judgment of the UK Court.
55. The next ground of challenge is that there is no subsisting NBW,
which is a pre-requisite for declaring a person as fugitive. It is stated that
under the India UK Extradition Treaty, it is mandatory that there should be
non-bailable warrants against an Accused person, who is sought to be
extradited. In the Extradition request for the offence under Section 51 of the
Black Money Act, sent to the United Kingdom, the Government of India had
relied upon and filed the Non-Bailable Warrants dated 31.10.2019, issued by
the Tis Hazari Court, in the trial of the offence under Section 51 of the Black
Money Act. The very same warrant is also relied upon by the Respondent,
for the proceedings under the Fugitive Economic Offenders Act.
56. The warrant for the proceedings under Section 51 of the Black Money
Act, was executed in the UK on 08.07.2021. The procedure followed was
that pursuant to the warrant issued by the Indian Court under Section 51 of
the Black Money Act, the Appellant was arrested in the UK and thereafter,
granted Bail. The Warrant formed the basis for the Extradition proceedings
for the offence under Section 51 of the Black Money Act, in which the
Appellant has been ultimately discharged.
57. The very same warrant is also relied upon by the Respondent, for the
proceedings under the Fugitive Economic Offenders Act, which already
stands exhausted.
58. It is further submitted that the Government of India, had sent
Extradition request for proceedings/trials under Section 51 of the Black
Money Act and Section 3/4 of PMLA, which has been finally denied by this
Court vide Judgment dated 28.02.2025, wherein the Leave to Appeal to UK
Supreme Court, has been denied by the High Court, vide Order dated
08.04.2025. It is further submitted that the Appellant has succeeded in his
right not to return to India, to face criminal prosecution as it would violate
his human rights.
59. The Complaint under Section 51 of the Black Money Act, was filed
on 22.12.2018, when the Appellant was in the UK. The Appellant cannot be
said to come in the definition of Section 2(1)(f) (ii) of the FEO Act,
especially when he has succeeded in the proceedings and the request of
Government of India, has been rejected.
60. Therefore, the requirement under Section 2(1)(f) is not made out and
on this ground alone, the Application is ought to be dismissed.
61. The next ground of challenge of the Impugned Order, is that the
Respondent did not have any reason to believe on the basis of material in its
possession, that the Appellant is a Fugitive Economic Offender. In
Paragraph 8(C) of the Appeal, it is stated that "the proceeds of crime in the
Scheduled Offence, are in excess of Rs.100 Crores, which is confirmed by
the Income Tax Authorities, vide communication dated 09.07.2019‖. There
is not a shred of evidence whatsoever to show that the Scheduled Offence
involves a total value of Rs.100 Crores or more.
62. The Respondent has relied on the communication dated 09.07.2019 of
the Income-Tax Department, to state that the scheduled offence is in excess
of Rs.100 Crores. Notably, in this communication itself, the assessment
against the Appellant under the Black Money Act, has not been finalised. In
any kind of tax, the quantum of tax evaded can be determined only after the
assessment is completed. Before the assessment is complete, any guess
about the tax evaded, can only be a guess and nothing more
63. In the absence of any conclusive assessment against the Appellant,
there is no determination of the tax allegedly evaded and therefore, there is
no basis to state that the alleged offence under Section 51, is in excess of
Rs.100 Crores. It is evident from the Complaint that the only material with
the Complainant was a Letter dated 09.07.2019 of the Income Tax
Department, which contained only a bald assertion of the alleged value of
the offence being more than Rs.100 Crores, even though the assessment had
not yet been completed.
64. The Income Tax Department filed a chart before this Court showing
the alleged value of foreign assets owned by the Appellant, to be around
Rs.220.91 Crores. As per this asset valuation, the alleged tax evaded under
Section 51 of the Black Money Act at 30%, would be Rs.66 Crores, which is
significantly short of the threshold requirement of the value of the offence
being Rs.100 Crores.
65. The Respondent before the learned Trial Court during the
arguments on 03.05.2025, filed a chart showing the value of the assets in
question to be Rs.191.97 Crores and 30% of the same would be around
Rs.57.6 Crores, which is also below the threshold of Rs.100 Crores. There is
no credible material to prove that the scheduled offence was of a value of
Rs.100 Crores or more, which is the pre-requisite for declaring a person a
Fugitive Economic Offender.
66. This requirement of total value of Rs.100 Crores or more, is a
jurisdictional fact and has to be mandatorily met, failing which the
Respondent cannot sustain its proceedings under FEO Act.
67. Further, the basis of any Application under Section 4, must be of
Director or Deputy Director, and on the basis of "reasons to believe" to be
recorded in writing; on the basis of material in his possession. The
Application filed by the Respondent, before the learned Trial Court, merely
makes a bald averment in Paragraph 3 that ―the accused is covered under
the definition of Fugitive Economic Offender as defined under Section 2(f) of
the Act. The amount involved in the Scheduled Offence, is more than Rs.100
crores.‖
68. Aside from this Letter filed along with the Prosecution Complaint,
there is no document whatsoever to disclose the monetary value of the
alleged Scheduled Offence under Section 51 of the Black Money Act. The
Impugned Judgment also fails to consider that a mere Letter from the
Income-Tax Department to the Directorate of Enforcement, cannot form the
basis for reasons to believe that the Appellant has committed a Scheduled
Offence involving a total value of Rs.100 Crores or more.
69. The deficiency in the „reasons to believe' cannot be supplemented by
additional reasoning or material in a counter/rejoinder affidavit, as has been
sought to be done in the present case.
70. The "reasons to believe‖ must have a direct nexus and a live link with
the formation of an opinion by the Respondent, to initiate the proceeding
against the Appellant. The Respondent has referred to the Appellant‟s
alleged foreign assets, but no monetary valuation has been given of the said
properties. It is only in the Rejoinder Affidavit filed before this Court,
that for the first time, the Respondent has given the monetary valuation of
the foreign assets of the Appellant and that too, without any material or
documents to support the same.
71. Further, the alleged offence under Section 51 of the Black Money
Act, is also the scheduled offence under the Prevention of Money
Laundering Act, being investigated by the Respondent against the Appellant
herein. In the PMLA proceedings, the ED had issued a Provisional
Attachment Order No.03/2017 dated 01.06.2017 wherein the Appellant‟s
alleged foreign assets, have been valued at around Rs.153 Crores. The
Respondent has nowhere, asserted that the Appellant has created any new
foreign assets, after 01.06.2017. It is evident that varying and arbitrary
valuations are being given to the purported foreign assets of the Appellant.
72. The Appellant had filed SLP (Crl.) No. 18348/2024 against the
Judgment dated 08.11.2024 of this Court dismissing the quashing Petition
for the criminal proceedings under Section 51 of the Black Money Act. The
SLP was disposed of by the Hon‟ble Supreme Court of India vide the final
Order dated 21.01.2025 wherein direction was given to the Appellant, to
raise all the contentions, legal and factual, before the concerned authority, to
be decided without being influenced by the Impugned Order. The Apex
Court had condoned the delay in filing of the statutory Appeal under the
Black Money Act against the Assessment Order. Consequently, the
Appellant had filed an Appeal under Section 15 of the Black Money Act on
30.01.2025, challenging the Assessment Order dated 23.03.2020, which is
pending adjudication, before the Commissioner (Appeals).
73. The bare perusal of the varying valuations given in different
proceedings, in itself shows the fallacy in the Respondent‟s case. This aspect
has been admitted in Paragraph Nos. 46 and 47 of the Impugned Judgment,
wherein it is held that the valuation of the scheduled offence has changed
many times in the course of the present proceedings.
74. It is submitted that the Impugned Judgment has wrongly held that the
NBWs dated 31.10.2019 for the proceedings under Section 51 of the Black
Money Act, continues to survive. Once a person is arrested pursuant to a
Warrant, it stands executed and ceases to exist.
75. It has been wrongly held in the Impugned Judgment that the Non-
Bailable Warrants dated 31.10.2019 was not issued for the purposes of the
extradition proceedings, even though the said warrant was a mandatory
requirement for initiating the Extradition proceedings and the Appellant was
even arrested in London, based on the Warrant.
76. The Appellant Sanjay Bhandari has contended that there is no valid
subsisting NBW which was the prerequisite for initiating any proceeding
under FEO Act. There was one NBW issued by the learned ACMM, but
they got executed on the basis of which the extradition proceedings were
initiated in UK. Consequent to such NBW, he was arrested in extradition
proceedings in UK but was admitted to bail. The Extradition Petition has
been denied. Therefore, the warrants issued against the Appellant got
exhausted and there was no subsisting NBWs, which are subsisting against
the Appellant, and therefore, the impugned Order is liable to be set aside.
77. Sections 2(1)(f) read with Section 2(1)(m) of the FEO Act provide
that the necessary ingredients for making that have to be proved for
declaring an individual as a Fugitive Economic Offender are as follows:
a. There must be a warrant of arrest against a person in a
Schedule Offence; [S. 2(1)(f), FEO Act]; AND
b. The said person must have left India to avoid criminal
prosecution or being abroad, refuses to return to India to
face criminal prosecution; [S. 2(1)(f), FEO Act]; AND
c. The value involved in the Schedule Offence is Rs. 100
Crores or more [S. 2(1)(m), FEO Act].
78. In the present case, scheduled offence is under Section 51 of the
Black Money Act, which deals with wilful attempt to evade tax, penalty or
interest. It is not denied that NBW had been issued by the learned ACMM in
the complaint filed under Black Money Act, which never got executed as the
Appellant had gone to UK and they remain subsistence.
79. In fact, these non-bailable warrants were challenged in Criminal
Revision Petition No. 444/2019, which got dismissed vide Order dated
23.10.2019.
80. Notably, the ED‟s Counter-Affidavit mentions one of the properties
alleged to be owned by the Appellant, as Property No. 2414, Floor No. 24,
Building No. 1, A1 Noujoum Tower, Burj Khalifa, UAE. On enquiry, it has
been found that the said property is owned by one Sanjay Bhandari having
Passport No. Z2042109, who was born in Kolkata and has no link with the
Appellant herein. Further, the exchange rate for Dirham to Rupee, has been
wrongly taken as 78.06 for calculating the value of the Bank Account
mentioned in the Rejoinder Affidavit of the Respondent, as the correct
exchange rate is 18.06.
81. The Black Money Act cannot be given a retrospective effect, as it is
both a criminal and taxation statute. The Respondent has admitted in its
allegations that one of the alleged properties being Property No. 12, Ellerton
House, Bryanston Square, London, was allegedly bought in 2009 and
thereafter, sold in June, 2010, by the Appellant.
82. Therefore, as per the Respondent‟s own claims, the alleged property
cannot come within the purview of the Black Money Act, as the Appellant
was not an owner of this alleged property from 2010 onwards and the Black
Money Act, which came into force on 01.07.2025, cannot be made
applicable. The other properties and bank accounts, are similarly placed.
83. It is further contended that the declaration of the Appellant as a
Fugitive Economic Offender, entails grave consequences including
confiscation of this property and barring him from defending any civil claim
as provided under Section 14 of the FEO Act, effectively amounting to a
civil death. Such a declaration must strictly comply with the requirements of
Section 4, in the absence of which, any Notice under Section 10 of the FEO,
is bad in law as the Application is not ‗duly filed'.
84. It is, therefore, submitted that the Impugned Judgment dated
05.07.2025, be set-aside.
85. The Appellant has filed Written Submissions, which are on the same
lines as the Petition.
86. Written Submissions have been filed on behalf of the Directorate
of Enforcement wherein it is submitted that the FEO Act was enacted to
address the specific mischief, namely, the growing trend of economic
offenders committing large-scale financial frauds and fleeing the country, to
evade prosecution. The FEO is intended to ensure that such offenders are
deprived of the benefits of their crimes and are compelled to submit the
jurisdiction of Indian Courts. The Court must be guided by the Mischief Rule
of interpretation, as laid down in Heydon's Case (1584). This Rule requires
the Court to identify the mischief the statute intends to suppress and to adopt
an interpretation that advances the legislative remedy.
87. Where two interpretations are possible, the one that furthers the
objective of the law and suppress the mischief, must prevail. Any
interpretation that frustrates the purpose of the FEOA or permits offenders to
escape accountability, must be rejected. The FEO Act is not a law that
punishes a person for a scheduled offence; it is not punitive law in that
sense. Its object is to bring back individuals to face trial/prosecution in
India.
88. If a person appears in response to a Notice under Section 10(1) of the
Act, the proceeding under the FEOA, are immediately terminated. This alone
demonstrates that the Act is not meant to punish, but to ensure that the
person returns and facts the judicial process in India. Only when a person
refuses to appear, does the process of declaration as a Fugitive Economic
Offender and consequential confiscation, begins.
89. The present law is not punitive or retributive; rather corrective and
preventive. From the conjoint reading of Section 2(f) of the Act, which
defines „fugitive economic offender‟ and S. 2(m) which defines „Scheduled
Offence‟, it is evident that the Act is applicable to those individuals, who are
accused of having committed an offence specified in the schedule,
amounting to one hundred crore rupees or more and can be invoked only qua
an individual against whom a warrant of arrest in relation to a scheduled
offence, has been issued by any Court in India, and who-(i) has left India to
avoid criminal prosecution; or (ii) being abroad, refuses to return to India to
face criminal prosecution.
90. Section 12(1) of the FEO Act, lays down the two-step process if the
Court is satisfied that:
―A warrant for arrest in relation to a scheduled offence
has been issued and either the individual has left India or
is refusing to return.‖
91. The facts of the case are detailed and thereafter, it is explained that the
Warrant of Arrest, had been issued against the Accused, on 31.10.2019 in
CC No. 2121/2019, on the reasonable belief that the Accused is deliberately
evaded the process of law.
92. The contention of the learned Counsel for the Appellant that the
warrants got exhausted is not tenable for the simple reason that the warrants
issued in the Extradition Act were pertaining to the proceedings under the
said Act. The arrest of the Appellant under the extradition proceedings, was
pursuant to the warrants issued thereunder. In fact, the NBWs dated
31.10.2019 issued by learned ACMM are still subsisting and have not been
exhausted. As per Section 17(2) Cr.P.C., every warrant of arrest remains
enforced until it is cancelled by the Court, which issued it or until it is
executed. Neither has the NBW been executed for admittedly, the Appellant
has not been arrested to face the trial under the Black Money Act not have
they been recalled. It is in fact an open ended NBW which is very much live.
93. The contention of the Appellant that there is no live NBW, which is
required as per Sections 2(1)(f) read with Section 2(1)(m) of the FEO Act, is
therefore, misplaced. The learned Special Judge, CBI, has therefore, rightly
rejected this contention.
94. It is further asserted that the total value of the scheduled offence is
more than Rs.100 Crores. The Communication dated 09.07.2019 from the
Income Tax Department, confirms that the value of undisclosed foreign
assets exceeds Rs.100 Crore. The undisclosed foreign income and assets
mentioned in the Income-Tax prosecution Complaint, is the same income
and assets, which ultimately gets quantified in the final Assessment Order,
which is also on record and the final tax liability is computed at
Rs.196,68,64,700/-. There is no cavil in the Respondent‟s argument that the
monetary threshold for the scheduled offence under this Act, is not fulfilled.
95. It is further stated that the argument that without quantification or
assessment, there can be no prosecution is completely flawed, in terms of
Section 48(2) of the Act. Section 48(2) of BMA, provides that the provisions
for offences and prosecutions provided under Chapter V of the BMA, are
not in derogation of any other law or any other provision of BMA. Hence, it
means that even if the Assessment Order has not been made under the BMA,
prosecution can still be initiated and it would not be a valid defence to assert
that the assessment has not been completed, or was barred by limitation, or
stayed due to some other reason.
96. Section 10 (3) BMA, provides that the Assessing Officer may, after
considering all materials and giving the assessee an opportunity to respond,
pass an order in writing, assessing or reassessing undisclosed foreign income
or assets. Even if this Order under Section 10(3) is not passed, Section 48(2)
makes it clear that prosecution can still be maintained. Therefore, the lack of
quantification or absence of an Assessment Order, is no bar to initiating
proceedings, including those under the FEO Act.
97. The language of Section 51 of the BMA, which provides punishment
for wilful attempt to evade tax, is explicit; even an attempt to evade tax and
not just the actual evasion, is punishable. The statute itself addresses the
wilful attempts to evade taxes, which is significant in the present case.
98. Reliance is placed on Jayappan vs. S.K. Perumal, (1984) SC 1693;
Radheshyam Kejriwal vs. State of W.B., (2011) 3 SCC 581 and Sasi
Enterprises vs. ACIT, (2014) 5 SCC 139. Reliance is also placed on Koppula
Venkat Rao vs. State of A.P., (2004) 3 SCC 602 to assert that even an
„attempt‟ to wilfully evade tax is an offence under section 51 of the BMA.
Reliance is also placed on Chaitu Lal vs. State of Uttrakhand, (2019) 20
SCC 272.
99. Without prejudice to the aforesaid, it is submitted that even though the
evasion of tax, may not have been completed, the wilful attempt to evade tax
under Section 51 of the BMA, is sufficient to constitute an offence. Reliance
is placed on Radhika Agarwal vs. Union of India, 2025 SCC OnLine SC 449
wherein Apex Court rejected the contention that the power of arrest under
Section 132(5) of the GST, cannot be exercised unless proceedings under
Section 73 are concluded and as Assessment Order quantifying the alleged
tax evasion, is passed.
100. The expression „reason to believe' in Section 4 of the FEO Act, also
means ‗prima facie' belief and does not imply that such satisfaction has to
be conclusively proved. Reliance is placed on CIT vs. Rajesh Jhaveri Stock
Brokers (P) Ltd., (2008) 14 SCC 208. The Courts have consistently held that
„reason to believe‟ refers to a cause or justification based on tangible
material; it does not require conclusive proof. Section 4 of the FEOA, uses
the phrase „reason to believe' making it evident that the competent authority
need not await a final assessment or adjudication. The belief may be
founded on the information, evidence, or material already in possession.
101. A finalised Assessment Order is not a precondition for initiating
proceedings under the FEOA. Reliance is placed on Rajendra Singh Verma
vs. Lt. Governor, (2011) 10 SCC 1.
102. Furthermore, Section 54 of the BMA provides that in any prosecution
requiring proof of a culpable mental state, the Court shall presume its
existence and the burden lies on the accused to prove the contrary beyond
reasonable doubt.
103. Reliance is placed on Satyendar Kumar Jain vs. Enforcement
Directorate, (2023) 5 HCC (Del) 461 wherein it has been held that the
Court, while deciding the case under the PMLA, cannot adjudicate upon or
doubt the veracity of the scheduled/predicate offence, once cognizance
thereof has been taken by the competent court. Thus, reducing the asset
value to 30% to compute tax, is misplaced. Section 2(1)(m) refers to the
total value of the offence and not merely the tax payable. Section 41 allows a
penalty of up to three times the tax amount, which is imposable as required
under Section 51 of the Black Money Act.
104. It is further asserted that Section 51 of the Black Money Act is not
dependent upon assessment of the tax liability; rather it depends upon the
existence of the tax liability. Reliance is placed on CIT vs. Jagan Nath
Maheshwary, (1957) 32 ITR 418.
Submissions Heard and Record Perused.
I. Validity and Existence of the Non-Bailable Warrant
105. The challenge to NBWs is two-fold, firstly „whether the requirement
of a pending warrant under Section 2(1)(f) is satisfied if the NBW dated
31.10.2019 was already executed when the Appellant was arrested in
London on 08.07.2021‟; secondly, „whether a warrant ceases to exist for the
purposes of the FEO Act once an arrest has been made and bail granted in a
foreign jurisdiction.‟
106. The existence of the Non-Bailable Warrant (NBW) is a jurisdictional
prerequisite under the Fugitive Economic Offenders Act, 2018 ("FEO Act").
107. The Appellant argues that the requirement under Section 2(1)(f) -
which defines a Fugitive Economic Offender as an individual against whom
a "warrant for arrest... has been issued" - is no longer satisfied. The
provision is extracted as under:
―2. Definitions --
(1) In this Act, unless the context otherwise requires,--
...
(f) ―fugitive economic offender‖ means any individual
against whom a warrant for arrest in relation to a
Scheduled Offence has been issued by any Court in India,
who--
(i) has left India so as to avoid criminal prosecution;
or
(ii) being abroad, refuses to return to India to face
criminal prosecution;‖
108. The Appellant points out that an NBW was issued by the Special
Court on 31.10.2019. However, he was subsequently arrested by the
authorities in London on 08.07.2021, pursuant to that very warrant via the
extradition request.
109. The Appellant posits that once a warrant is executed and the person is
taken into custody (even in a foreign jurisdiction) and subsequently granted
Bail by a foreign court, the warrant ceases to exist in the eyes of the law. He
contends that an "executed" warrant cannot serve as the basis for a
declaration under the FEO Act.
110. The ED, on the other hand, argues that the Appellant‟s interpretation
is pedantic and defeats the purposive object of the Act. The ED asserts that
Section 2(1)(f) only requires that a warrant "has been issued." It does not
require the warrant to be "pending" in a state of perpetual non-execution.
111. The purpose of an NBW is to secure the presence of the accused
before the issuing Court in India. As long as the Appellant remains on
foreign soil and hasn‟t been produced before the Special Court, the
warrant‟s primary objective remains unfulfilled.
112. The ED argues that FEO proceedings are "corrective" and aimed at
compelling the person to return. Arrest in a foreign jurisdiction for
extradition does not equate to "surrender" to the Indian judicial process.
113. To decide this issue, we must look at the interplay between criminal
procedure and the special objectives of the FEO Act.
114. The FEO Act was enacted to address the stalemate in criminal
proceedings caused by the absence of the accused. The NBW serves as the
formal judicial recognition that the person‟s presence is required for trial and
that they have failed to appear through ordinary summons.
115. There is a vital legal distinction between an arrest made by foreign
police (like Scotland Yard) for the purpose of extradition and the execution
of a warrant that culminates in the accused being produced before the Indian
Magistrate.
116. In this case, the Appellant was arrested in the UK, but he successfully
resisted being brought to India. If the Appellant‟s logic were accepted, any
offender who is arrested abroad but manages to secure bail or tie up
extradition in litigation for years would automatically be immune from the
FEO Act. This would create a legal loophole where the more a person resists
returning to India, the less likely they are to be classified as a "fugitive."
117. Legally, a warrant of arrest remains in force until it is cancelled by the
court which issued it, or until it is fully executed. "Full execution" in the
context of a person abroad involves the actual handover of the person to the
Indian judicial system. Since the Appellant remains in the UK and continues
to resist his physical production before the Special Court, the warrant
remains legally "unsatisfied."
118. The issue is decided against the Appellant as Section 2(1)(f) uses the
phrase "has been issued." The issuance of the warrant is a historical
jurisdictional fact. The Act does not stipulate that the warrant must be
"unexecuted" or "live" in the sense of the person being a "proclaimed
offender" under the Cr.P.C.
119. The Appellant‟s arrest in London did not result in his appearance
before the Special Court in India. Therefore, the "warrant for arrest" has not
met its legal finality.
120. The very fact that the Appellant is using his Bail and legal status in
the UK to avoid appearing in India, confirms that he is "refusing to return to
India to face criminal prosecution" within the meaning of S. 2(1)(f).
121. If the "Spent Warrant" theory is accepted it would render the FEO Act
toothless against individuals who are wealthy and influential enough to
secure Bail in foreign jurisdictions.
122. Thus, the NBW dated 31.10.2019, remains a valid and existing basis
for the FEO proceedings. The Appellant‟s arrest in the UK and subsequent
release on Bail there does not extinguish the warrant for the purposes of the
FEO Act, as he has not yet been produced before the Court that issued the
warrant.
123. The challenge to the validity of the warrant is hereby rejected
II. Determining the threshold of Rs. 100 crore or more
124. Now the second bone of contention is whether the mandatory
monetary threshold of Rs.100 crores, as prescribed under Section 2(1)(f)
read with Section 2(1)(m) FEO Act was lawfully and sufficiently
established to sustain the declaration of the Petitioner as a Fugitive
Economic Offender?
125. At the outset, it is essential to understand what the FEO Act demands
before any person can be declared a Fugitive Economic Offender.
126. Section 2(1)(f) defines a "Fugitive Economic Offender" as a person
against whom a warrant has been issued in relation to a Scheduled Offence
and who has left India, so as to avoid criminal prosecution or is a person
who being abroad, refuses to return to India to face criminal prosecution.
Section 2(1)(m) defines the "Scheduled Offence" as an offence specified in
the Schedule, if the total value involved in such offence or offences is Rs.
100 crores or more. Unless this threshold is crossed, the Court cannot
entertain an Application under Section 4 of the Act, let alone issue notice
under Section 10 or make a declaration under Section 12.
127. In the present case, the Scheduled Offence is under Section 51 of the
Black Money (Undisclosed Foreign Income and Assets) and Imposition of
Tax Act, 2015, which provides for punishment for wilful attempt to evade
tax. It is reproduced as under:
"51. Punishment for wilful attempt to evade tax.--
(1) If a person, being a resident other than not ordinarily
resident in India within the meaning of clause (6) of Section 6 of
the Income Tax Act, wilfully attempts in any manner whatsoever
to evade any tax, penalty or interest chargeable or imposable
under this Act, he shall be punishable with rigorous
imprisonment for a term which shall not be less than three years
but which may extend to ten years and with fine.
(2) If a person wilfully attempts in any manner whatsoever to
evade the payment of any tax, penalty or interest under this Act,
he shall, without prejudice to any penalty that may be imposable
on him under any other provision of this Act, be punishable with
rigorous imprisonment for a term which shall not be less than
three months but which may extend to three years and shall, in the
discretion of the court, also be liable to fine.
(3) For the purposes of this section, a wilful attempt to evade
any tax, penalty or interest chargeable or imposable under this
Act or the payment thereof shall include a case where any
person--
(i) has in his possession or control any books of account or
other documents (being books of account or other
documents relevant to any proceeding under this Act)
containing a false entry or statement; or
(ii) makes or causes to be made any false entry or
statement in such books of account or other documents; or
(ii) wilfully omits or causes to be omitted any relevant
entry or statement in such books of account or other
documents; or
(iv) causes any other circumstance to exist which will have
the effect of enabling such person to evade any tax,
penalty or interest chargeable or imposable under this Act
or the payment thereof.‖
128. Thus, the foundational requirement is that the accused must be alleged
to have committed a Scheduled Offence as defined under Section 2(1)(m) of
the FEO Act, and the value of that scheduled offence must be Rs.100
crores or more.
129. In the present case, this Scheduled Offence stands on the Income Tax
Authorities‟ Prosecution Complaint under Section 51 of the Black Money
Act.
130. From the Assessment Year 2001-02 through 2017-18, the Petitioner
consistently filed Income Tax Returns (―ITR‖) declaring NIL foreign assets
in Schedule FA of the ITR 2012-13. This declaration stood in complete
contradiction to what was discovered during the search and seizure
operation conducted by the Income Tax Authorities on 27.04.2016, when
multiple undisclosed foreign assets were detected, including foreign bank
accounts, a property in London that had allegedly been sold without
disclosure, and interests in offshore entities including the Al-Rahma Trust in
Dubai.
131. Subsequently, the Petitioner's statements were recorded under
Section 132(4) of the Income Tax Act on 29/30.04.2016, wherein he was
confronted with the evidence of his foreign assets. A Show Cause Notice
dated 08.03.2018 was issued to him for Prosecution under Section 51 of the
Black Money Act, specifying the foreign bank accounts and properties in
detail alongside the year-wise ITR data from 2001-02 till 2017-18.
132. On 22.12.2018, the Income Tax Department filed Prosecution
Complaint No. CC 2121/2019 before the Ld. ACMM, Tis Hazari Courts,
Delhi under Section 51 of the Black Money Act. However, the said
Complaint did not assign any specific monetary valuation to the foreign
assets.
133. Additionally, a communication vide Letter dated 09.07.2019 by the
Income Tax Authorities, tabulated the undisclosed foreign bank accounts
and properties in Para 2. In this letter, the Income Tax Department stated
that the evasion of tax, penalty and interest as contemplated under Section
51 of the Black Money Act was prima facie more than Rs. 100 crores.
However, the assessment under the Black Money Act had not yet been
finalized.
134. The Petitioner argued that a mere letter from the Income Tax
Department, expressly acknowledging that formal assessment was pending,
could not constitute sufficient proof of the threshold of Rs. 100 crore being
met. Thus, the main argument on behalf of the Appellant is that to constitute
an offence under Black Money Act, the assessment of tax has to be more
than Rs.100 crores. However, in the present case, the assessments have been
made in different amounts, and therefore, the complaint under Section 51
Black Money Act was not maintainable. Consequently, the proceedings
under FEO Act, are not maintainable.
135. In order to appreciate this contention, it is significant to refer to
Sections 50 and 51 of the Black Money Act. The learned District Judge has
in detail, considered the distinction between the two Sections. Section 50
Black Money Act provides that if a person who has furnished the return of
income tax, does not furnish any information relating to an asset (including
financial interest in any entity) located outside India, then he can be
prosecuted under Section 50 of the Money Black Money Act. It is a mere
omission to disclose the income in the income tax returns, the foreign asset
or income, which is punishable with a term which may extend up to 07 years
and with fine. On the other hand, Section 51 deals with willful attempt to
evade any tax, penalty or interest which is punishable with a sentence up to
10 years.
136. It is clearly demonstrable from the two Sections, that the scope of the
offence under these two sections, is essentially different. Under Section 51
mens rea is an important ingredient. It has to be demonstrated that though
the assessee was having the capacity to pay the tax, penalty or interest, he
evaded the payment of tax by dishonesty, disabling himself from paying
such tax or fraudulently dealt with his assets or property with the intention to
evade the payment of tax, penalty or interest. It would be a case where
assessee practices a sort of deception by manipulating the books of account
or other documents, either by making false entries or by making or omitting
to make entries or such other act. The mens rea required under Section 51
is an intentional act on part of the assessee in willful evasion of tax and
not mere failure to pay the tax.
137. Section 48 of the Black Money Act provides that the assessment and
the prosecution proceedings, can both proceed simultaneously and it is not
necessary that before launching of the prosecution under Section 51 Black
Money Act, the assessment must be completed under Section 10 Black
Money Act.
138. Therefore, when both can continue simultaneously, the concerned
authorities have two options; either to wait for the assessment to be
completed for instituting the prosecution under Section 51 Black Money Act
or straight away file the Complaint for prosecution under Section 51 Black
Money Act in appropriate cases, where the evasion is huge or the person is
absconding and is not submitting himself to the jurisdiction of Indian court
or is acting in a manner prejudicial to the national interest. In all these
cases, because the assessment is taking time, the prosecuting agency may go
for prosecution or else, it may defeat the very purpose of Black Money Act.
139. In this context, it is also pertinent to observe that the main objective of
Fugitive Offenders Act is to deter economic offenders from evading the
process of Indian law by remaining outside the jurisdiction of Indian Court.
The purpose of this Act is to make the fugitive offenders return to India, to
face the action in accordance with law. It is not intended for any
punishment, but only to compel the fugitive to abide by the law of the land.
140. The learned Counsel for the Appellant has vehemently contended that
in the Complaint under Section 51 Black Money Act, the amount involved
for the scheduled offence, is claimed to be more than Rs.100 crores.
However, to claim that there was such evasion of tax, reliance is placed
merely on a Communication dated 09.07.2019 from the Income Tax
Department to state that the alleged scheduled offence is more than of
Rs.100 crores. This communication itself stated that assessment, is yet to be
finalized. Therefore, in any kind of tax assessment, quantum of tax evasion
can be determined only after the assessment is done and prior to that, it is
only a presumption or a guess and nothing more.
141. It is further asserted that in paragraph 8C of the complaint, it was
stated that the proceeds of crime in the scheduled offence are in excess of
Rs.100 crores and has been confirmed by the Income Tax Authority vide
Confirmation dated 09.07.2019 which is annexed along with the
complaint.The Ld. Special court, however, examined this letter holistically
and held that, the letter read as a whole clearly communicated the Income
Tax Department‟s prima facie view that the evasion exceeded Rs. 100
crores.
142. The ED filed an Application under Section 4 read with Sections 10
and 12 of the FEO Act, on 13.12.2019, before the Ld. Special Court. In the
Statement of Reasons to Believe appended to this Application, the ED did
not rely solely on the IT Department‟s letter of 09.07.2019. The material
supporting the Rs.100 crore threshold was, in fact, a composite of several
independent strands of evidence:
a. First, the Prosecution Complaint itself, which tabulated
the undisclosed foreign bank accounts and properties.
The same was confirmed by said Letter of 09.07.2019.
b. Second, Annexure A-2 to the FEO Application, which
listed foreign properties including the London property
allegedly sold without disclosure, along with foreign
bank accounts.
c. Third, Annexure A-3, which catalogued properties in
India held in Petitioner‟s name, properties held through
companies under his substantial control, properties held
through shell companies at his behest, and properties
held through benami holders.
d. Fourth, the statement of his Chartered Accountant,
Sandeep Kapoor recorded on 08.02.2017 under Section
132(4) of the Income Tax Act, wherein he elaborated on
the backdating of the Al-Rahma Trust structure, which
was done after receipt of the Black Money Act notice
dated 22.09.2016.
e. Fifth, the Petitioner‟s own statements recorded on
29/30.04.2016.
143. The Rs.100 crore figure stated in the IT Department‟s letter was not
the sole basis for the ED‟s reasons to believe, but rather just one component
of the investigation, which is still in progress. Thus, at the time of filing the
Application, sufficient material was in possession of the Respondent, upon
which any reasonable person could form a prima facie belief that the value
of the scheduled offence exceeded Rs.100 crores.
144. However, it is pertinent to acknowledge that the Petitioner pointed out
that the valuation of the Scheduled Offence had been in a constant state of
flux throughout the proceedings, and that the evaluation of the tax evasion at
different stages, had been given differently as is evident from hereunder:
―a. On 27th February 2020, the Income Tax
Department had filed a tabular chart vide Diary
No.313531 in Crl. MC No. 805/2020 wherein the value
of the Accused's alleged foreign assets was Rs. 220.91
crores. The tax on the same at 30% would be around
Rs. 66 crores.
b. On 23rd March 2020, the Income Tax Department
passed the assessment order against the accused under
the Black Money Act wherein the value of the
Accused's alleged foreign assets was Rs. 655 crores.
The tax on the same at 30% would be around Rs. 196
сrores.
c. On 15th July 2020, the ED filed its Rejoinder
Affidavit in the present proceedings where in Para 8
(Pages 9-10) it has given the value of the Accused's
alleged foreign assets as Rs. 487.13 crores. The tax on
the same at 30% would be around Rs. 146 crores.
d. In the course of the hearing before the Hon'ble
Court, the ED produced a chart showing the value of
the Accused's alleged foreign assets as Rs. 191 crores.
The tax on the same at 30% would be around Rs. 57.3
crores.‖
145. Though, there have been different assessments given at different times
in different proceedings, the learned District Judge rightly observed that
these changed valuations merely reflected the tentative nature of the figures
in the mind of Income Tax Authority qua the total value of scheduled
offence being more than Rs.100 crores, it kept on twisting and turning in a
constant state of flux.
146. Learned Special Judge had rightly observed that Section 51 of the
Black Money Act deals with the aggregate value of total tax evaded or
attempted to be evaded including penalty and interest which has to be
calculated from the total undisclosed foreign assets and income concealed
by such person. The value can only be determined on total undisclosed
income and assets and therefore, an attempted evasion would be the sum
total of evaded tax or sought to be evaded. Therefore, it cannot said to be the
total asset value of undisclosed foreign income and assets of an individual
which he has concealed from the revenue authority but also takes into
account the tax sought to be evaded on the said undisclosed foreign amount
since Section 51 Black Money Act even covers an attempt to willfully evade
taxes then even though the evasion of tax has not been completed, even a
willful attempt to evade, would be sufficient to constitute an offence under
Section 51 Black Money Act.
147. Therefore, even if there were tentative figures being calculated for tax
evasion, the schedule of the properties and the assets of the Appellant was
the same and there was nothing or deleted. The assessment may have varied
but the assets remain the same on which the final assessment was done in
2019/2020.
148. It may thus, be concluded that at the time when the Application under
Section 4 read with section 10 and 12 Fugitive Offenders Act was filed,
there was sufficient material available with the director concerned to form a
prima facie view that the total value of scheduled offense was Rs.100 crores
or more which attracted Section 51 of Black Money Act. The tentative
figures though kept on varying, but were finally determined in the final
assessment done under Section 104 Black Money Act on 23.03.2020,
wherein the total undisclosed foreign income and assets were assessed at
Rs.655 crores approximately and the tax evasion was approximately
assessed as Rs.196 crores amongst which met the threshold for the offense
under the Section 51 Black Money Act. This final assessment was annexed
along with the Rejoinder Affidavit by the Respondent.
149. In this context, it is also pertinent to refer to the final Assessment
Order dated 23.03.2020 which established that the value of the scheduled
offence was far in excess of Rs.100 crores. This Order validated and
fortified the prima facie belief that the Respondent already held at the time
of filing. This Order assessed the total undisclosed foreign income and
assets at Rs.655,62,15,670/- i.e. approximately Rs. 655 crores; imposed tax
thereon @ 30% under Section 3 of the Black Money Act, quantifying the tax
liability at Rs. 196,68,64,700 i.e. approximately Rs.196 crores. To this must
be added the penalty and interest imposable under the Act, which would
only enhance the figure. The aggregate of tax, penalty and interest, therefore
crossed the statutory threshold of Rs.100 crores.
150. The fact that the figures were variable during the course of
proceedings does not detract from this conclusion that the law here does not
demand that an arithmetic consistency be maintained at every stage; it
merely requires that the final authoritative determination cross the threshold
of Rs. 100 crores. And that determination of a figure of Rs.196 crores in tax
alone, is done as per this standard.
151. Moreover, what the accused‟s remedy against this Assessment Order
may be is a separate, the question that does not fall for determination in
these proceedings. For the purposes of declaration of FEO, the Order stands
and places the threshold beyond dispute.
152. In light of the discussion above, the Rs.100 crore threshold is
established through an evolutionary process. The Ld. Special court correctly
held that the threshold was met, both at the prima facie stage when the
Application was filed, and at the stage of final adjudication (Order dated
05.07.2025 wherein Assessment Order dated 23.03.2020 was also referred)
thereby, conclusively establishing the foundation of the declaration of
accused as a Fugitive Economic Offender.
153. An objection was taken that there was a mention of the property
situated at London, UK which had allegedly been sold. However, the
allegation of the Respondent/prosecuting agency was that this property
never got disclosed to the Income Tax Authorities, which also became a
basis for calculating the undisclosed assets of the Appellant. He apparently
owned properties in India and Companies, in which shell Companies were
shareholders on behalf of the Appellant. There were benami properties held
by him and other umpteen number of foreign assets and bank accounts
which were rightly considered by ED to form a prima facie view of
initiating proceedings under Section 4 Black Money Act. Therefore, the
learned Special Judge was right in observing that the requirement of
evasion of tax being more than Rs.100 crores was amply satisfied in the
present case.
154. The Petitioner further contended that the FEO proceedings, carry
drastic civil consequences including confiscation of property and the bar on
defending civil claims under Section 14 and an "economic death penalty"
which requires a high standard of certainty in establishing this threshold.
155. The Ld. Special Court applied the standard of ―reasons to believe"
rather than conclusive proof, as per Section 4(1) FEO Act. The same cannot
be said to be incorrect. The authority filing the Application (in the present
case, ED) is not required to conduct a final adjudication or assessment at the
threshold stage. What is required is that the belief must be rational, based on
tangible material, and bear a direct nexus to the evidence.
156. In the case of Oriental Insurance Co. vs. CIT, 2015 SCC OnLine Del
12010 it was held as under:
"12. The assumption that the assessee had not credited the
profits in question to the profit and loss account is also,
admittedly, factually incorrect. Thus, the reasons which led the
Assessing Officer to form a belief that income of the assessee had
escaped assessment are admittedly based on palpably incorrect
assumptions. It is well established that reasons to believe that
income had escaped assessment is a necessary pre-condition for
the Assessing Officer to assume jurisdiction. Clearly, it would be
difficult to sustain that this pre-condition is met if such reasons to
believe that income of an assessee has escaped assessment are
based on palpably erroneous assumptions. The reason to believe
must be predicated on tangible material or information. A
reason to suspect cannot be a reason to believe; the belief must
be rational and bear a direct nexus to the material on which
such a belief is based. In the present case, the very assumption on
the basis of which the Assessing Officer is stated to have formed
his belief that the assessee's income had escaped assessment has
been found to be erroneous. There was no basis for the Assessing
Officer to assume that the assessee had not credited the profits
from the sale of investments, which are alleged to have escaped
assessment in its profit and loss account.‖
157. Applying the same to the facts of the present case, the Ld. Special
Court held that at the time of filing on 13.12.2019, the Respondent had
sufficient material (the IT letter, the Prosecution Complaint, the Annexures
listing foreign and domestic properties, the CA‟s statement regarding
backdating, and Petitioner‟s own statements) to prima facie believe that the
value of the Scheduled Offence exceeded Rs.100 crores.
Conclusion:
158. In light of aforesaid discussion, it is concluded that there is no
merit in the present Appeal, which is hereby dismissed.
159. The Appeal is accordingly disposed of along with pending
Application(s), if any.
(NEENA BANSAL KRISHNA)
JUDGE
APRIL 09, 2026/RS
