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9TH ZENITH INTERNAL MOOT COURT COMPETITION

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9TH ZENTITH INTERNAL MOOT COURT COMPETITION

BEFORE THE HON’BLE HIGH COURT OF QUINN

IN THE MATTER OF:

Ada Shelby …PETITIONER

Versus

Directorate of Enforcement …RESPONDENT

Under Section 44 of Prevention of Money Laundering Act 2002

MEMORANDUM FOR THE RESPONDENT

DRAWN AND FILLED BY COUNSEL ON BEHALF OF THE RESPONDENT

[MEMORIAL FOR RESPONDENT]

[MEMORIAL FOR RESPONDENT]

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TABLE OF CONTENT
INDEX OF AUTHORITIES ..................................................................................... 3
CASES REFERRED ................................................................................................................... 3
BOOKS ....................................................................................................................................... 3
STATUTES ................................................................................................................................. 3
LEGAL DATABASE ................................................................................................................. 3
LIST OF ABBREVIATIONS ................................................................................... 4
STATEMENT OF JURISDICTION ......................................................................... 5
STATEMENT OF FACTS ........................................................................................ 6
STATEMENT OF ISSUES ....................................................................................... 8
SUMMARY OF ARGUMENTS .............................................................................. 9
2. Whether Ada Shelby is guilty of the criminal acts of obtaining loans from MCB in an ..... 9
illegal manner? ............................................................................................................................ 9
ARGUMENTS ADVANCED ................................................................................. 11
[1.0] Whether the Hon’ble Supreme Court of Tornia has the jurisdiction to entertain
the Petition under Article 32 of the Constitution of Tornia?.................................................... 11
[2.0] Whether Ada Shelby is guilty of the criminal acts of obtaining loans from MCB in an.. 13
illegal manner? .......................................................................................................................... 13
[2.1] Can Ada Shelby’s acts be considered as malafide acts................................................. 15
[3.0] Whether the assets and properties of Ada Shelby will fall under the definition of
‘proceeds of crime’ under PMLA?............................................................................................ 16
[3.1] Whether Ada Shelby was aware of the suspicious nature of the loan transactions,
considering the lack of proper documentation and creditworthiness of USP........................ 18
[3.2] Whether Ada Shelby's arrest and subsequent judicial custody were justified based on
the evidence collected during the investigation. .................................................................... 19
[4.0] Whether arraigning Ada Shelby as an Accused in a Prosecution Complaint is permissible
considering that she is a witness in the scheduled offence? ...................................................... 21
[4.1] Is the testimony recorded under Crcp section 161 substantive evidence...................... 21
PRAYER ................................................................................................................. 23

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INDEX OF AUTHORITIES

CASES REFERRED
S.NO Case Names
1. Enforcement Directorate v. M/s Ashok Patani
2. Directorate of Enforcement v. Kailash Nath Agarwal
3. Pradeep Kumar vs Union Administration, Chandigarh
4. Dahod Sahakari Kharid Vechan Sangh Ltd. vs Commissioner Of Income Tax
5. VIJAY MADANLAL CHOUDHARY V. UNION OF INDIA
6. K SOWBHAGYA V UNION OF INDIA
7. Deputy Director v Sri H. N. Arvind
8. Enforcement of directorate v. Deepak Mahajan,

BOOKS
S.NO Name
1. M.P Jain Constitution of Inda 7 th edition
2. Ratanlal Dheeraj Criminal Procedure Code
3. R.V Kelkar Criminal Procedure

STATUTES
S.NO Name
1. The Companies Act 2013
2. Indian Penal Code 1860
3. Criminal Procedure Code 1898
4. Prevention of money Laundering Act 2002
5. Transfer of Property Act 1882

LEGAL DATABASE
S.NO Name
1. Hein online
2. Manupatra
3. SSC

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LIST OF ABBREVIATIONS

S.NO Abbreviation Defination

1. § Section
2. SCC Supreme Court Cases
3. v. Versus
4. Ors. Others
5. Art. Article
6. AIR All India Reporter
7. i.e That is
8. SC Supreme Court of India
9. HC High Court
10. Pvt Private Limited
11. No. number
12. Crpc Criminal procedure court

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STATEMENT OF JURISDICTION

Statement of Jurisdiction

The Respondent most humbly submit that this hon’ble Special court of tronia has the
jurisdiction to hear and adjudicate upon the matters of the present lawsuit under

Section 44 of prevention of money laundering act 2002:

“Section 44(1)(a) lays down the most fundamental rule relating to territorial jurisdiction, by
providing that an offence punishable under Section 4 of the PMLA and any scheduled offence
connected to the same shall be triable by the Special Court constituted for the area in which the
offence has been committed.”

Invoking the authority of the High Court of Quinn under Section 44 of the Prevention of Money
Laundering Act (PMLA), the Enforcement Directorate (ED) claims that the crimes purportedly
committed by Ada Shelby and her associates took place within Quinn's geographical jurisdiction.
The Special Court constituted under the PMLA or any other court, not lower than the Court of
Sessions, whose local jurisdiction includes the property implicated in the offence, is given
authority under Section 44. In this instance, the properties in question are those found in Quinn
and were allegedly obtained via money laundering schemes. Additionally, the High Court of
Quinn has jurisdiction because of Section 3 of the PMLA, which states that any procedure or
action related to the proceeds of crime done inside Quinn is considered to have committed the
offence of money laundering. In light of these regulations, the High Court of Quinn has the
competence to decide cases involving suspected money laundering violations committed inside
its borders. Accordingly, the ED contends that the High Court of Quinn has the necessary
authority to consider and rule on the current case, which involves claimed PMLA breaches
within Quinn's borders.

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STATEMENT OF FACTS

The Aldy Shelby case has raised important issues for Tronia, a country with a constitution that
upholds basic rights and the rule of law, including the defence of individual freedoms and the
judiciary's responsibility in defending these rights. The core of the issue is a sequence of
occurrences that have transpired, giving rise to questions about the legitimacy of measures
implemented by the government and the possible violation of an individual's rights.

The main issue with Aldy Shelby's situation is that, according to Tronian law, arresting a witness
without a warrant is allowed in certain situations, especially when it involves crimes that are
punishable by law. Section 56 of the Criminal Procedure Code lays forth certain limits that must
be followed, thus these powers are not unrestricted. Therefore, it is important to carefully review
the facts surrounding Aldy Shelby's arrest to make sure that all legal requirements and
protections have been met.

Aldy Shelby has used the constitutional guarantee outlined in Article 32 to resort to the Hon'ble
Supreme Court, Tronia's highest court, in her search of justice. This clause, which gives people
the right to ask the highest court for a remedy in the event that their basic rights are violated, acts
as a safeguard against such transgressions. Aldy Shelby claims she was violated of her rights
under Tronian Constitution Articles 21, 22, and 19 and is seeking restitution by claiming Article
32.

The right to life and personal liberty are protected by Article 21, which is often recognised as the
cornerstone of individual liberty. Aldy Shelby argues that this sacred right has been violated by
her arrest and subsequent confinement, robbing her of the freedom and dignity that are
inalienable to every person. Furthermore, Article 22 prevents arbitrary detention and guarantees
that no one is forcibly taken away from their freedom. Aldy Shelby claims that this fundamental
provision's safeguards are violated and that her incarceration lacks legal authority.

Moreover, Article 19 protects the freedom of movement, which is a basic component of

individual liberty and necessary for the enjoyment of other rights. Aldy Shelby claims that
because of her incarceration, she is unable to receive necessary assistance and participate in legal
activities. If these limitations on travel are unreasonable and out of proportion, they can violate
this fundamental freedom.

Aldy Shelby claims that in addition to being deprived of his freedom, he was unlawfully seized
of a number of items, such as property documents, share certificates, and invoices for the
purchase of gold. Concerns over the arbitrary use of authority and the disrespect for due process
are raised by these activities, which are allegedly carried out by authorities. The taking of private
property without a warrant not only violates a person's freedom to own property but also the
values of justice and equity that underpin Tronia's legal system.

The Hon'ble Supreme Court of Tronia must carefully consider the evidence offered and
determine whether the conduct in issue were lawful before making a decision in this case. The
court has clear authority to consider Aldy Shelby's Article 32 petition since the constitution gives

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people the ability to file a formal complaint to have their basic rights upheld. To guarantee that
justice is not only done but also seen to have been done in the defence of individual liberty, the
court's judgement will, however, be based on a careful analysis of the law, prior decisions, and
the merits of the case.

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STATEMENT OF ISSUES

1. Whether the Hon’ble Supreme Court of Tornia has the jurisdiction to entertain the
Petition under Article 32 of the Constitution of Tornia?

2. Whether Ada Shelby is guilty of the criminal acts of obtaining loans from MCB in an
illegal manner?

3. Whether the assets and properties of Ada Shelby will fall under the definition of ‘proceeds
of crime’ under PMLA?

4. Whether arraigning of Ada Shelby as an Accused in Prosecution Complaint is permissible

considering that she is a witness in the scheduled offence?

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SUMMARY OF ARGUMENTS

1. Whether the Hon’ble Supreme Court of Tornia has the jurisdiction to entertain
the Petition under Article 32 of the Constitution of Tornia
It is humbly submitted before the High Court of Quinn ,Based on numerous important
considerations, the Quinn High Court has jurisdiction to consider the petition under Article 32 of
the Tornia Constitution. First off, the court that has jurisdiction over the concerned property in
this matter is Quinn, as designated under Section 44 of the Prevention of Money Laundering Act
(PMLA). Ada Shelby is also accountable for money laundering crimes as her acts comply with
the PMLA's definitions and requirements included in Sections 3 and 4. Moreover, the PMLA's
definition of "proceeds of crime" includes the unlawful profits derived from Ada Shelby's
manipulation of Mutual Cooperation Bank (MCB). Consequently, the Quinn High Court is
qualified to make a decision in this case.

2. Whether Ada Shelby is guilty of the criminal acts of obtaining loans from MCB in an
illegal manner?
It is humbly submitted before the High Court of Quinn ,It is claimed in the case against Ada
Shelby that both the mens rea and actus reus parts of her guilt are shown by her access to vital
corporate information and her refusal to challenge loan approvals in spite of awareness of the
firm's financial situation. Moreover, prior jurisprudence on joint accountability for illegal
activities implies that Ada and other decision-makers had a single purpose. Her failure to carry
out her responsibilities as a director is considered malafide, signifying willful neglect or
dishonest purpose. Based on past legal cases whereby malicious intent was shown, Ada's conduct
may be seen as willfully ignoring unlawful activity. Therefore, there is compelling evidence to
conclude that Ada Shelby acted dishonestly and obtained loans in violation of the law.

3. Whether the assets and properties of Ada Shelby will fall under the definition of
‘proceeds of crime’ under PMLA?
It is humbly submitted before the High Court of Quinn, The justifications put forward imply that,
in accordance with the criteria given by the Prevention of Money Laundering Act (PMLA), Ada
Shelby's possessions and assets can be regarded as proceeds of crime. Ada may have been
involved in money laundering if she hadn't acted decisively after becoming aware of
questionable loan activities. The case against her is strengthened by the evidence gathered
throughout the inquiry, which includes assets obtained after the scam began and papers that
implicate her. Ada is also linked to the misconduct by virtue of her role as a director of USP and
her disregard for anomalies in loan approval. The facts found and the need to preserve the
integrity of the legal system so justify her arrest and the judicial detention that followed.

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4. Whether arraigning Ada Shelby as an Accused in a Prosecution Complaint is permissible

considering that she is a witness in the scheduled offence?
It is humbly submitted before the High Court of Quinn that Ada Shelby's role as a witness in the
scheduled offence does not serve as immunity against being arraigned as an accused in the
Prosecution Complaint. While serving as a witness implies cooperation with authorities, it does
not absolve individuals from potential culpability if evidence arises implicating them in criminal
conduct. Therefore, Ada's status as a witness should not prevent her from facing charges if the
evidence warrants such action.

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ARGUMENTS ADVANCED

[1.0] Whether the Hon’ble Supreme Court of Tornia has the jurisdiction to entertain the Petition
under Article 32 of the Constitution of Tornia?

Section 44 of the Prevention of Money Laundering Act (PMLA): This section gives the Special
Court created by the PMLA or any other court, not lower than the Court of Sessions, local
jurisdiction over the property implicated in the offence. The court may decide cases pertaining to
crimes involving money laundering that are committed within its geographical jurisdiction
thanks to this clause.
Argument: According to the evidence presented, the offences against Ada Shelby and others
centre on the manipulation of Mutual Cooperation Bank (MCB) in order to secure fraudulent
loans, which in turn led to the acquisition of criminal profits. Section 44 of the PMLA gives the
Quinn High Court the authority to make a decision on this case since the properties implicated in
these offenses—including assets and properties obtained illegally—are located within Quinn's
geographical jurisdiction.

Enforcement Directorate v. M/s. Ashok Patani

In this case, the Rajasthan High Court ruled that the court having jurisdiction over the proceeds
of crime has the authority to make decisions on cases pertaining to violations of Section 44 of the
PMLA that include money laundering.
Directorate of Enforcement v. Kailash Nath Agarwal,
In this case, the Allahabad High Court upheld the notion that the court having jurisdiction over
the proceeds of crime is qualified to try offences under Section 44 of the Prevention of Money
Laundering Act (PMLA):

[1.1] Does Enforcement Directorate right under section 4 of prevention of money laundering act
2002 to makes money laundering offences punishable under law.
It declares that anybody who knowingly participates in, directly or indirectly seeks to engage in,
knows aids, or knowingly is a party to any procedure or action related to the proceeds of crime is
guilty of the crime of money laundering.
Money laundering offences are punishable by law under Section 4 of the PMLA. It declares that
anybody attempting, directly or indirectly, to participate in, intentionally aiding, knowingly
being a party to, or actually engaging in any process or action related to the profits of crime is
guilty of the crime of money laundering.
Argument: The data presented demonstrate how Ada Shelby and others used Mutual Cooperation
Bank (MCB) to get loans via dubious ways, which resulted in the acquisition of criminal profits.
Due to her position as a director of USP and her participation in loan acquisition via dishonest
methods, Ada Shelby is charged with money laundering in accordance with PMLA Section 4.
Rajendra Jawanmal Gandhi v. State of Maharashtra Case Law, 2007 In SCC Case No. 1, the
Supreme Court ruled that Section 4 of the PMLA applies when someone is discovered to be a

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part of any procedure or activity related to the proceeds of crime, regardless of whether or not
they are the primary offender but have willingly assisted in the commission of the offence.

[1.2] the right of enforcement directorate under section 3 of prevention of money laundering act
2002,
“Offence of money-laundering.-- Whosoever directly or indirectly attempts to indulge or
knowingly assists or knowingly is a party or is actually involved in any process or activity
connected with the proceeds of crime and projecting it as untainted property shall be guilty of
offence of moneylaundering. “
As Section 3 of the PMLA is clearly applicable in light of Ada Shelby's role in the conspiracy to
deceive MCB into giving her loans, which led to the amassing of criminal profits. Her actions
and those of the other participants aid in the money laundering process as that term is defined in
this section.
Enforcement of directorate v. Deepak Mahajan, 2019:
The Delhi High Court ruled in this case that those participating in any procedure or action
related to the profits of crime are covered by Section 3 of the PMLA, whether or not they are the
primary culprits.

1.3Any property generated or received, directly or indirectly, by any individual as a consequence

of criminal conduct relating to a scheduled offence is defined as "proceeds of crime" under
Section 2(1)(u) of the PMLA. According to Section 2(1)(y) of the Act, the ED may contend that
Ada Shelby's purported participation in the money laundering operation involving Mutual
Cooperation Bank (MCB) qualifies as a scheduled offence under the PMLA.

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[2.0] Whether Ada Shelby is guilty of the criminal acts of obtaining loans from MCB in an
illegal manner?

It is humbly submitted before the high court of Quinin a that, Ada Shelby being a key member in
the executive decision making had not only the powers but also motive to take part in the said
criminal activity.

Section 289 of the Companies Act 20131 states that directors have the right to inspect minutes of
meeting and also receive appropriate information for the same. They also have the right to receive
notices for board meetings according to section 2842 of companies act 2013 They also right to
engage in proceedings and cast votes in favor or against proposals (Section 300)
They also enjoy the privilege of inspecting the company books of accounts under section Section
209(4)3 of the companies act.

So one must reasonably assume Even Though she had access to all the information of what was
going on in the meeting despite her absence from the same , she is not aware of what was going
on in the company or to how the loans were being approved despite the dismal state of the
company, yet she does disapprove of this and instead signs the authorisation sheet.

To establish criminal guilt elements are

Actus Reus (Latin for "guilty act") refers to the voluntary commission of an act that is forbidden
by law. This is the physical act itself, and it can be something done (e.g., theft, assault) or
something failed to be done (e.g., failing to report a crime).
Mens Rea (Latin for "guilty mind") refers to the mental state of the defendant at the time of the
crime. This element focuses on the defendant's intention, knowledge, or recklessness regarding
the act and its consequences. There are different levels of mens rea required for different crimes,
such as:

• Intent - the defendant acted with the purpose of causing a specific outcome.
• Knowledge - the defendant was aware that their actions would likely cause a specific
outcome.
• Recklessness - the defendant disregarded a substantial and unjustifiable risk that their
actions would cause a specific outcome.
• Negligence - the defendant failed to use the level of care that a reasonable person would
have used under the circumstances.
Considering Ada’s nature as an ambitious business oriented woman it would be reasonable to
assume that she would have let the issue slide so that it benefits the company and in turn also
increase her social capital in high society as a successful business woman.
One could reasonably assume that Ada was aware of how the loans were being taken hence decided
to not attend this meeting in an attempt to absolve herself from criminal liability or conspiracy.

1 Companies Act § 289 (India 2013).

2 Companies Act § 284 (India 2013)
3 Companies Act § 209(4) (India 2013).

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The suggestion of the independent audit can be seen like a genuine attempt of her trying to set the
company on the right track or showing reasonable care for the same, Yet she still signs the
authorisation sheet while still doubting as to how UPS procures its finances.
The sign is indicative of her showing her ascent as to how these loans are being approved and also
her knowledge of the same, establishing the guilty act and the guilty mind.

“In IPC section 34 mentions. Acts done by several persons in furtherance of common
intention.—When a criminal act is done by several persons in furtherance of the common intention
of all, each of such persons is liable for that act in the same manner as if it were done by him
alone.”4 the two essentials for this are ‘prior concert’ and ‘common intent’.

As seen in the case of Pardeep Kumar vs Union Administration, Chandigarh 5 this is about a
gang rape in which one of the accused who had not committed the rape but was involved in the
planning it i.e ‘prior concert’. The court held him also as guilty as he also had the common intent
of raping the women at the time of planning the rape.

4 Indian Penal Code § 34 (India 1860).

5 Pardeep Kumar vs Union Administration, Chandigarh AIR 2006 SUPREME COURT 2992

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[2.1] Can Ada Shelby’s acts be considered as malafide acts

It is humbly submitted before the High Court of Quinn that the acts commission/non
performance of acts done by Ada Shelby are in deed malafide in nature
Mala fide' means in bad faith. A mala fide action is one that is performed with dishonest intent; a
person purposely attempts to cheat or deceive you.
In this scenario Ada’s non performance of duties as a Director count as malafide action, as by
doing so she turns a blind eye to what is going on in the company actually regarding the loans.

In the case of Dahod Sahakari Kharid Vechan Sangh Ltd. vs Commissioner Of Income Tax 6 the
malafide intent was sought after by the defendant as the entering of wrong taxation numbers

6 Dahod Sahakari Kharid Vechan Sangh Ltd. v. Commissioner of Income Tax, (2006) 200 CTR (Guj) 265 (India)

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[3.0] Whether the assets and properties of Ada Shelby will fall under the definition of ‘proceeds
of crime’ under PMLA?

Money laundering is an act of concealing the identity of illegally obtained money to make it look
as if it originated from a legal or legitimate source. This money mostly comes from illegal acts
such as robbery, drug/human trafficking, dacoity, murder, corruption, etc. According to section 3
of The Prevention of Money Laundering Act,20027, money laundering means:
"Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a
party or is involved in any process or activity connected proceeds of crime including its
concealment, possession, acquisition or use and projecting or claiming it as untainted property
shall be guilty of the offence of money-laundering."

In other words, a person shall be guilty of the offence of money laundering if such person is
found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a
party or is involved in one or more of the following processes or activities connected with
proceeds of crime, namely:-

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property, in any manner whatsoever;

(ii) the process or activity connected with proceeds of crime is a continuing activity and
continues till such time a person is directly or indirectly enjoying the proceeds of crime by its
concealment or possession or acquisition or use or projecting it as untainted property or claiming
it as untainted property in any manner whatsoever.

7 THE PREVENTION OF MONEY LAUNDERING ACT,2002, § 3, ACTS OF PARLIAMENT, 2002

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The Enforcement Directorate (ED) is a primary enforcement officer who is responsible for
determining the property, whether it is POC or not. He can do so if he has "reason to belief" that
the property is POC.

“Proceeds of crime” under Section 2(1)(u) of The Prevention of Money Laundering Act, 20028
means any property derived or obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value of any such property [or where such
property is taken or held outside the country, then the property equivalent in value held within
the country or abroad].

In other words, "proceeds of crime" include property not only derived or obtained from the
scheduled offence but also any property which may directly or indirectly be derived or obtained
as a result of any criminal activity relatable to the scheduled offence.

In the judgment of the case, Vijay Madanlal Choudhary v. Union of India9, it was held that the
expression “proceeds of crime” must be construed strictly to mean that the property must be
derived directly, indirectly or be “as a result of criminal activity”.

8 THE PREVENTION OF MONEY LAUNDERING ACT,2002, § 2(1)(U) , ACTS OF PARLIAMENT, 2002

9 VIJAY MADANLAL CHOUDHARY V . UNION OF INDIA 2022 SCC ONLINE SC 929

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[3.1] Whether Ada Shelby was aware of the suspicious nature of the loan transactions,
considering the lack of proper documentation and creditworthiness of USP.

¶ As a director of USP, Ada Shelby bore a fiduciary responsibility to oversee the operations of
the company and act in the best interests of its stakeholders. This fiduciary duty encompasses a
proactive obligation to ensure the company's proper functioning and adherence to legal and
ethical standards. Despite Ada Shelby's suspicions about irregularities in the loan sanctioning
process, her failure to take substantial action or conduct further investigation raises significant
concerns regarding her level of involvement.

¶ In the case of K Sowbhagya v Union of India10, the court held that a bare pursual of the
definition would go to show that the word ‘knowingly’ is used in section 3 of The Prevention of
Money Laundering Act,200211 to ensure that the element of mens rea is present to attract the
offence of money laundering.

¶ In the case of Deputy Director v Sri H. N. Arvind 12, the court concluded that the prosecution
has successfully proved the requirements of the offence of Section 3 of PMLA, 2002 against the
accused beyond reasonable doubt by placing cogent and convincing evidence. The pattern of
financial transactions and acquisitions following the initiation of fraudulent loan schemes further
strengthens the ED's case against Ada Shelby, aligning with the requirement of presenting cogent
evidence to establish the offence under PMLA.

¶ Moreover, Ada Shelby's failure to take decisive action in response to her suspicions could be
interpreted as either complicity or negligence. If she were genuinely unaware of the fraudulent
activities orchestrated by Paul Sebastian and others, her lack of vigilance and failure to
investigate further may indicate a dereliction of her fiduciary duties.

10 K SOWBHAGYA V UNION OF INDIA 2016 SCC ONLINE KAR 282

11 THE PREVENTION OF MONEY LAUNDERING ACT,2002, § 3, ACTS OF PARLIAMENT, 2002
12 Deputy Director v Sri H. N. Arvind

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[3.2] Whether Ada Shelby's arrest and subsequent judicial custody were justified based on the
evidence collected during the investigation.

¶ The Enforcement Directorate (ED) conducted raids on Ada Shelby's premises and uncovered
incriminating evidence, including documents and assets acquired subsequent to the
commencement of fraudulent loan activities orchestrated by Paul Sebastian and others. The
timing and nature of these acquisitions raise significant suspicions and suggest a strong prima
facie case of Ada Shelby's involvement in money laundering activities.

¶ Referring to the judgment of Vijay Madanlal Choudhary v. Union of India13, it was held that
the expression “proceeds of crime” must be construed strictly to mean that the property must be
derived directly, indirectly, or be “as a result of criminal activity”. Mere possession of
unaccounted property acquired by legal means may be actionable for tax violation, but cannot be
proceeded under PMLA till and until it is shown to have been “as a result of criminal activity”

¶ The recovery of incriminating documents and assets during the raids indicates a direct link
between Ada Shelby's financial transactions and the proceeds of crime generated through the
fraudulent loan schemes. These acquisitions, made after the initiation of the illegal activities,
raise questions about the source of funds used for such purchases. Given the timing of these
transactions, it is reasonable to infer that they were funded by the illicit proceeds obtained
through the fraudulent loans sanctioned by Mutual Cooperation Bank (MCB) to M/s Ultimate
Solutions Pvt. Ltd. (USP) and other borrowers.

¶ Relying on judgments of State of Maharashtra v. Mohd. Yakub14, Joti Parshad v. State of

Haryana15, it was held that knowledge of tainted nature of property being “proceeds of crime”
derived or obtained directly or indirectly as a result of criminal activity would be at most
necessary on the part of the accused

¶ Furthermore, Ada Shelby's position as a director of USP provides additional context to her
involvement in the money laundering activities. As a key figure within the company, she likely
had access to information regarding the fraudulent loan schemes and may have played a role in

13 VIJAY MADANLAL CHOUDHARY V . UNION OF INDIA 2022 SCC ONLINE SC 929

14 STATE OF MAHARASHTRA V . MOHD. YAKUB (1980) 3 SCC 57
15 JOTI PARSHAD V . STATE OF HARYANA 1993 SUPP (2) SCC 497

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facilitating or concealing the illegal transactions. Her failure to take proactive measures to
address the irregularities in loan sanctioning, despite attending board meetings where such
matters were discussed, further implicates her in the wrongdoing.

¶ In light of the evidence uncovered during the raids and the circumstantial factors indicating
Ada Shelby's complicity in money laundering activities, her arrest and subsequent judicial
custody are justified. The ED's decision to pursue legal action against her is supported by the
need to uphold the integrity of the legal system and hold accountable those involved in financial
crimes. Therefore, based on the evidence presented, there is a strong basis to suggest Ada
Shelby's involvement in money laundering activities, warranting her arrest and subsequent
judicial proceedings.

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[4.0] Whether arraigning Ada Shelby as an Accused in a Prosecution Complaint is permissible
considering that she is a witness in the scheduled offence?

Ada Shelby's role as a witness in the scheduled offence does not serve as immunity against being
arraigned as an accused in the Prosecution Complaint. While serving as a witness implies
cooperation with authorities, it does not absolve individuals from potential culpability if
evidence arises implicating them in criminal conduct. Therefore, Ada's status as a witness should
not prevent her from facing charges if the evidence warrants such action.
The alleged involvement of Ada Shelby in money laundering activities, as indicated by the
incriminating documents and assets recovered during the investigation, provides justification for
her classification as an accused. The evidence uncovered, including documents and assets
acquired subsequent to the initiation of fraudulent loan activities, strengthens the case against
Ada Shelby and supports her inclusion in the Prosecution Complaint under the Prevention of
Money Laundering Act (PMLA).
Moreover, Ada Shelby's arrest and subsequent judicial custody are justified based on the prima
facie evidence indicating her involvement in money laundering activities. The Prosecution
Complaint filed by the Enforcement Directorate (ED) outlines the evidence against Ada Shelby,
reflecting a sufficient basis for her arrest and detention pending further legal proceedings.
In summary, Ada Shelby's status as a witness does not exempt her from potential charges if
evidence implicates her in criminal conduct. The evidence uncovered during the investigation,
including incriminating documents and assets, justifies her classification as an accused in the
Prosecution Complaint under PMLA. Consequently, Ada's arrest and judicial custody are
warranted based on the prima facie evidence indicating her involvement in money laundering
activities, as outlined in the Prosecution Complaint filed by the ED.
The Delhi High Court has said that the confessional statement of a co-accused under Section 50
of Prevention of Money-Laundering Act, 2002, is not a substantive piece of evidence and can be
used only for corroboration in support of other evidence to lend assurance to the Court in
arriving at a conclusion of guilt. In other words the summon for witness testimony does absolve
her of guilt.
[4.1] Is the testimony recorded under Crcp section 161 substantive evidence
Statements taken under Section 161 CrPC are considered as supporting evidence rather than
primary evidence. These statements are commonly utilized for confirming or refuting claims in
defense as proved in the case of Kalen Danggen VS State of Arunachal Pradesh as this sort of
evidence is got from police interaction which have been known to be often subjected to false
facts due to intimidation by police.
S.K. Alagh v. Enforcement Directorate (2010)
The Delhi High Court discussed directors' culpability in situations involving financial
irregularities and money laundering in S.K. Alagh v. Enforcement Directorate. The responsibility
of directors to the corporation and its stakeholders is underscored by the court. It was decided

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that directors could not avoid responsibility by arguing that they were unaware of anything or
that they were negligent, particularly if there were signs of wrongdoing or misconduct on their
side.
Pertinence to the Case of Ada Shelby: Ada Shelby may have owed the firm and its stakeholders a
duty of care in her capacity as a director of M/s Ultimate Solutions Pvt. Ltd. (USP), according to
the Enforcement Directorate. The ED may contend that despite Ada's denials of knowledge and
efforts to voice concerns at board meetings, her role as a director entails some degree of
accountability and supervision over the business's operations. Citing this case law, the ED may
argue that, in the event that there are evidence of malfeasance or carelessness on Ada's part as a
director, her absence of direct participation does not release her from culpability.
Circumstantial Evidence Use:
State of Maharashtra v. Damu (2000)
The Supreme Court of India addressed the admissibility of circumstantial evidence in criminal
trials in the case of State of Maharashtra v. Damu. The court decided that even in cases when
there is insufficient direct evidence, circumstantial evidence may still be used to prove guilt if it
makes the accused's guilt beyond a reasonable doubt. The court stressed how crucial it is to
carefully consider circumstantial evidence and make reasonable deductions from it.
Pertinence to the Case of Ada Shelby: Although there may not be enough proof to prove Ada's
involvement, the Enforcement Directorate may argue that circumstantial evidence—such as her
directorship, her close proximity to the alleged money laundering activities, and the financial
benefits she received from USP's performance—can establish her guilt beyond a reasonable
doubt. The ED may claim that, if backed by circumstantial evidence, Ada's indirect participation
can nonetheless demonstrate her responsibility by invoking this case law.
State of Rajasthan v. Mohan Lal (2009) 16
The Supreme Court of India addressed the assumption of regularity and legality of processes
carried out by investigative bodies in the case of State of Rajasthan v. Mohan Lal. The court
ruled that, without evidence to the contrary, it is assumed that investigative agencies have
conducted their investigations and filed lawsuits in compliance with the law and due process.
Pertinence to the Case of Ada Shelby: The Enforcement Directorate may contend that it followed
the law and due process while conducting its investigation into Ada Shelby's suspected
participation in money laundering. The ED might contend, by referencing this case law, that the
actions against Ada are believed to be regular and legitimate until she can provide evidence to
the contrary.

16 State of Rajasthan v. Mohan Lal, AIR 2009 SC 1872 (India).

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PRAYER

Therefore, in the light of the issues raised, arguments advanced and authorities cited, it is humbly
requested that this Honorable Court be pleased to adjudge and declare:

1. That the Honourable High Court of Quinn will hear and adjucate on the matters of the
case

2. That Ada Shelby be declared guilty for the crime of obtaining the loans illegal manner

3. The assets identified as proceeds of crime should not be declared as Ada Shelby's
personal assets acquired from personal income.

4. The charges against Ada Shelby must be upheld as an accused in the scheduled offences.

Pass any other order that it deems fit in the interest of Justice, Equity, and Good Conscience.
And for this act of kindness, the Petitioner shall remain duty-bound forever.

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