4 min readBengaluruUpdated: Jul 21, 2026 02:28 PM IST
The Karnataka High Court has refused to cancel an Enforcement Directorate (ED) case registered against 10 people who were convicted in a cheating case after they reneged on a promise to exchange demonetised Rs 1,000 notes with new Rs 2,000 notes at a premium in 2016.
In his order dated July 9, Justice M Nagaprasanna said, “The prosecution under the PMLA (Prevention of Money Laundering Act) is neither the second trial for the same offence nor a constitutional transgression. It is a prosecution of an independent statutory offence, in which the petitioners have to come out clean in full-blown proceedings before the special court.”
On November 8, 2016, the central government announced the demonetisation of old Rs 500 and Rs 1,000 notes and set a December 31 deadline for people to get the banned notes exchanged with new notes.
As per the cheating case, Dilip, alias JCB Dilipa, and 15 others promised 20 per cent extra in the form of demonitised Rs 1,000 notes in return for new Rs 2,000 notes. On December 12, 2016, one of them took the complainant and others on a motorcycle to a place in Bengaluru where another accused was waiting on the pretext of giving Rs 1,000 notes to them. However, the other accused fled after snatching away a bag containing Rs 2,000 notes worth Rs 67 lakh that the complainants and others had with them.
The police later arrested the accused. In August 2024, a court sentenced them to imprisonment for six years on cheating and criminal conspiracy charges—a judgment they have challenged in the high court.
‘Double jeopardy wholly misconceived’
In 2017, ED registered a case against the cheating convicts and a special Court took cognisance of the case in 2018.
The convicts moved the high court arguing that the ED case would amount to double jeopardy of being tried or punished twice for the same offence under Section 300 of the Code of Criminal Procedure.
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Additional Solicitor-General Aravind Kamath, appearing for ED, opposed the petition saying that there cannot be an interim order interdicting proceedings under the PMLA once the petitioners got convicted in the predicate offence.
The high court said that CrPC section 300 applies only where a person is sought to be tried twice for the same offence arising out of the same set of facts. “To transplant that doctrine into the proceedings under the PMLA, which creates a distinction of the statutory offence, is to stretch the provision far beyond the contours delineated by the legislature,” the court said.
“Once the petitioners stand convicted in the predicate offence, there exists no legal impediment for continuation of the proceedings under the PMLA,” the court added.
‘PMLA not dependent on prosecution for predicate offence’
The high court also referred to Hari Shankar Gurjar v Directorate of Enforcement (2023), wherein the Madhya Pradesh High Court held that PMLA is neither dependent upon nor eclipsed by the prosecution for the scheduled offence.
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“The offence under the PMLA derives its existence from the laundering of proceeds of crime. Though emanating from the commission of a predicate offence when an accused is convicted for the scheduled offence/predicate offence, the subsequent prosecution under PMLA does not amount to a second trial for the same offence,” Justice Nagaprasanna said.
“Whether the assets or money in question ultimately answer the description of “proceeds of crime” is a matter that lies squarely within the province of the special court. It is an issue to be tested upon evidence in full-blown proceedings and not the one that can prematurely be foreclosed,” the judge added in his order.
