Foreign Conviction Does Not Shield Accused from Indian Prosecution: Uttarakhand High Court Denies Bail in Bitcoin Money Laundering Case

Prosecution in India is Independent Even After a Foreign Conviction – Uttrakhand High Court Rejects Double Jeopardy Argument. In a significant ruling Uttarakhand High Court dismissed the bail application of Banmeet Singh, accused of laundering proceeds from an international drug trafficking operation. Singh had previously been convicted in the United States for drug trafficking and money laundering, where he entered into a plea agreement, surrendered over 8,131 Bitcoins (BTC), and served a reduced sentence of 60 months.

On his return to India, the Enforcement Directorate (ED) arrested him under the Prevention of Money Laundering Act, 2002 (PMLA), alleging that 4,250 BTC remained unaccounted for and that he continued to launder illicit funds. Singh argued that his conviction in the US barred further prosecution in India under the principle of double jeopardy.

Rejecting this contention, Justice Ravindra Maithani held: "Foreign conviction does not create an absolute bar on domestic prosecution. If the offences are distinct, Indian courts have full jurisdiction to try an accused, irrespective of prior conviction abroad."

Emphasizing the gravity of the charges and the need for a thorough investigation into untraced cryptocurrency assets, the court ruled that there were reasonable grounds to believe in Singh’s involvement in money laundering and denied bail.

Singh was arrested in the United Kingdom in April 2019 at the request of US authorities. He was later extradited to the United States, where he was prosecuted for conspiracy to distribute and import controlled substances and for laundering the proceeds of drug sales through cryptocurrency.

Following a plea agreement with the US authorities, he surrendered his Bitcoin holdings and was sentenced to 60 months in prison. He was released on April 19, 2024. Upon his return to India, the ED arrested him under PMLA, asserting that while Singh had turned over a portion of his Bitcoin in the US, a significant amount—4,250 BTC—remained unaccounted for and potentially in his possession.

The ED argued that Singh and his brother, Parvinder Singh, operated an international drug trafficking syndicate, "Singh DTO," which used dark web marketplaces to sell narcotics and launder the proceeds through Bitcoin transactions. The agency alleged that Singh had transferred large sums of money from foreign accounts into Indian bank accounts linked to his family members, raising suspicions of continued money laundering.

Court’s Observations: Foreign Conviction Does Not Bar Indian Prosecution
Dismissing Singh’s reliance on double jeopardy protections under Article 14(7) of the International Covenant on Civil and Political Rights (ICCPR), 1966, and Section 2(d) of the Protection of Human Rights Act, 1993, the court ruled that his prior conviction in the US did not prevent his prosecution in India.

Referring to the Supreme Court's decision in Jitendra Panchal v. NCB (2009) 3 SCC 57, the court stated: "A foreign conviction does not automatically bar domestic prosecution. The effect of such a conviction must be assessed based on case-specific factors. If the offences are distinct or have domestic ramifications, Indian authorities have full jurisdiction to prosecute."

It cited the Bombay High Court’s decision in Prabodh K. Mehta v. Charuben Mehta, which held that while Indian courts may recognize foreign convictions, they are not bound by them and must independently determine their relevance.

Bitcoin Transactions and Burden of Proof Under PMLA

The ED maintained that Singh’s conviction in the US covered only part of his illicit Bitcoin holdings and that he had yet to account for 4,250 BTC. The agency invoked Section 23 of PMLA, which presumes that unexplained foreign transactions related to illicit activities are proceeds of crime unless the accused proves otherwise.

Rejecting Singh’s argument that he had no knowledge of the missing Bitcoins, the court held: "The PMLA presumes that unexplained foreign transactions linked to illicit activities are proceeds of crime. The burden is on the accused to prove otherwise. Singh has failed to provide any evidence disproving his possession of the unaccounted Bitcoins."

The court found that Singh had transferred cryptocurrency and foreign remittances to multiple accounts in India, which were allegedly used to disguise illicit proceeds.

Confessional Statements Under PMLA: Coercion Argument Rejected

Singh retracted his statement recorded under Section 50 of PMLA, claiming that it was obtained under coercion and had no evidentiary value. He relied on A. Tajudeen v. Union of India (2015) 4 SCC 435, arguing that statements under Section 50 are not substantive evidence unless corroborated.

The court dismissed this contention, holding that while a statement under Section 50 is not a standalone piece of evidence, it can be used to support other materials on record.

"Mere retraction of a statement does not invalidate it. Its evidentiary value is to be determined at trial. At the bail stage, the court must assess whether there is reasonable ground to believe in the accused’s involvement in money laundering."

Jurisdiction of Indian Authorities Over Cryptocurrency Transactions

Addressing the issue of whether India had jurisdiction over Bitcoin transactions conducted abroad, the court relied on Ion Science Ltd. v. Persons Unknown (UK HC), which established that cryptocurrency transactions fall under the jurisdiction where the owner is domiciled.

"Cryptocurrency transactions fall under territorial jurisdiction where the owner is domiciled. Since the accused is domiciled in India, Indian courts have jurisdiction over his Bitcoin holdings."

Rejecting Singh’s argument that he had no assets in India, the court found that his Indian bank accounts received foreign remittances linked to illicit activities, reinforcing the prosecution’s case.

The court emphasized the severity of the charges, the risk of tampering with digital evidence, and the potential difficulty in tracing illicit cryptocurrency holdings as factors necessitating the denial of bail.

"The accused is linked to an international drug trade and has access to unaccounted cryptocurrency holdings. Given the gravity of the allegations and potential risk of tampering with evidence, bail is denied."

The court ruled that Singh’s prosecution in India was independent of his US conviction and that the unaccounted 4,250 BTC remained a subject of ongoing investigation.

"There are reasonable grounds to believe that the accused is guilty of money laundering under PMLA. His prior conviction in the US does not preclude prosecution in India. Given the severity of the charges and the ongoing investigation into untraced Bitcoin holdings, bail is denied."

The court directed the ED to continue its probe into the missing cryptocurrency assets and ordered a deeper scrutiny of foreign remittances linked to the accused’s Indian bank accounts.

This ruling reaffirms that foreign convictions do not automatically shield individuals from prosecution in India if the offences are distinct or have domestic implications. The burden of proof in money laundering cases under PMLA lies on the accused, and mere denial or retraction of statements is insufficient to secure bail.

Banmeet Singh will now face trial in India, with authorities continuing their investigation into the unaccounted Bitcoin linked to his international drug trade operations.

Date of Decision: January 7, 2025