Turning a Blind Eye to Obvious Criminality Can Still Amount to ‘Knowledge’ under PMLA: Delhi High Court Refuses to Quash ECIR Against Jacqueline Fernandez

“This Court Cannot be Invited to Conduct a Pre-Trial Trial Based on Select Statements”, Delhi High Court delivered a crucial ruling in Jacqueline Fernandez v. Directorate of Enforcement, refusing to quash the Enforcement Case Information Report (ECIR) and supplementary complaints filed under the Prevention of Money Laundering Act, 2002 (PMLA). Justice Anish Dayal emphatically held that there exists prima facie material suggesting the petitioner’s involvement in the laundering of proceeds derived from a ₹200 crore extortion racket led by Sukesh Chandrashekhar.

The Court held that Jacqueline’s alleged receipt of luxury gifts and money from Sukesh—even if she was misled—“raises issues of ‘knowledge’ under PMLA, which are not amenable to resolution at the stage of quashing.” The Court rejected her plea that being a witness in the predicate offence precluded prosecution under PMLA, observing: “The offence under PMLA is independent and can subsist without the person being named in the predicate offence.”

The case traces its origin to a complaint by Aditi Singh, wife of Fortis promoter Shivinder Singh, alleging extortion of nearly ₹200 crores by individuals impersonating government officials. A trap laid by Delhi Police in August 2021 led to the arrest of operatives linked to Sukesh Chandrashekhar, who was directing the scheme from Rohini Jail.

Sukesh’s modus operandi included transferring the extorted money through shell entities and associates, and using it to purchase luxury items as gifts for celebrities—including the petitioner. The ED alleged that Jacqueline Fernandez received valuables worth over ₹5.71 crores, including luxury cars, branded jewellery, designer bags, and foreign remittances sent to her family.

Fernandez, initially listed as a prosecution witness, was later named as Accused No. 10 in the 2nd supplementary complaint filed by ED on August 17, 2022. She approached the High Court to quash the ECIR and proceedings, asserting that she had been “deceived, misled and hoodwinked by Sukesh.”

“Whether the Petitioner Had Knowledge of the Criminal Source of Gifts Is Not a Conclusion This Court Can Reach Pre-Trial”

The petitioner’s central claim was that she lacked any knowledge of the predicate offence and was unaware that the items she received were tainted. However, the Court noted that she had been shown a news article in February 2021 detailing Sukesh’s criminal antecedents and incarceration.

The Court observed: “Whether the petitioner was disabused of the notion [that Sukesh was a criminal] requires assessment through cross-examination. This is a nuanced issue not amenable to judicial resolution at this stage.”

Relying on her own statements and those of Pinky Irani and Shaan Muttathil, the Court emphasized:

“It could very well be that the prosecution is able to establish in its favour that petitioner ignored the article, or took Irani’s assertions at face value while retaining suspicion.”

“The Nuance Between ‘Knowledge of Criminality’ and ‘Knowledge of Proceeds of Crime’ Is Not Disjunctive”

Fernandez argued that even if she became aware of Sukesh’s background, she had no idea the specific gifts were proceeds of crime. The Court, however, observed:

“Attribution of knowledge for the purposes of PMLA may bring within its fold the full range, spectrum, and degrees of ‘knowing’.”

It further stated: “Whether turning a blind eye to disturbing news or disclosures amounts to ‘knowledge’ must be determined post-trial, when all strands of evidence are available for appreciation.”

“Merely Being a Witness in the Predicate Offence Does Not Preclude PMLA Prosecution”

The petitioner contended that since she was not an accused in the extortion FIR, and had been made a witness in the charge sheet filed by the Economic Offences Wing, she could not be prosecuted under PMLA.

Rejecting this argument, the Court relied on the Supreme Court’s ruling in Pavana Dibbur v. ED, noting:

“An accused in a PMLA case who comes into the picture after the scheduled offence is committed, by assisting in concealment or use of proceeds of crime, need not be an accused in the scheduled offence.”

“Disparate Treatment by ED Is Not a Ground for Quashing”

Fernandez argued that other celebrities—such as Nora Fatehi and Nikita Tamboli—had also received gifts from Sukesh but were not prosecuted. The Court declined to interfere, stating:

“Parity in investigation may be considered in bail jurisprudence, but it is irrelevant to quashing proceedings.”

“Petitioner’s Shifting Versions and Deletion of Evidence Reinforce the Need for Trial”

The Court noted that Fernandez:

· Initially denied Sukesh’s real identity;

· Withheld information about gifts and money sent to her relatives abroad;

· Deleted data from her phone after Sukesh’s arrest;

· Only admitted facts when confronted with material by the ED.

On this, the Court remarked:

“Petitioner gave staggered disclosures... These are not trivial improvements but bear upon the core issue of ‘knowledge’ under Section 3 of PMLA.”

“Quashing at This Stage Would Amount to Conducting a Pre-Trial Trial”

Justice Dayal emphasized that whether Fernandez acted knowingly, or merely failed to exercise diligence, was a matter of evidence:

“The Court is being effectively asked to accept that the petitioner was innocent, devoid of knowledge, and conclusively misled. This amounts to conducting a pre-trial trial.”

He quoted the Supreme Court’s caution in Bhajan Lal and Anoop Bartaria:

“The inherent power of quashing should be exercised sparingly, and only in the rarest of rare cases. This case does not meet that threshold.”

Justice Anish Dayal concluded:

“All aspects pleaded by the petitioner—being conned, misled, unaware—are subjective matters that can only be tested at trial.”

He declined to quash the ECIR and the supplementary complaint, stating:

“The petition is dismissed. The Court finds no ground to short-circuit the criminal process at this stage.”

The judgment clarifies a critical position in PMLA jurisprudence: mere absence of formal charge in the predicate offence does not immunize a person from prosecution under the money laundering statute, particularly when “enjoyment of proceeds of crime” is alleged and knowledge is in dispute.

Date of Decision: July 3, 2025