The petition raises a question that recurs whenever a public servant is caught in a money-laundering case: can the retirement benefits earned over a career, pension, gratuity, provident fund, leave encashment, be frozen as ‘proceeds of crime’? The petitioners say no, that such statutory dues, absent a direct link to a scheduled offence, fall outside the definition of proceeds of crime, and that keeping them frozen despite favourable orders offends the guarantees of equality, life and property. The Delhi High Court has not yet decided the question; it has issued notice to the Enforcement Directorate and sought its response.
New Delhi: The Delhi High Court has issued notice on a writ petition raising the question whether pension and other statutory retirement dues can be treated as ‘proceeds of crime’ under the Prevention of Money Laundering Act, 2002 (PMLA), and challenging the continued freezing of such benefits by the Enforcement Directorate [Santosh Kumar Gupta and Another v. Deputy Director, Directorate of Enforcement].
Justice Dr. Swarana Kanta Sharma issued notice on the petition and directed the respondent to file a counter affidavit within four weeks, listing the matter for hearing on December 3, 2026.
The reliefs sought
The petitioners have challenged an order of May 2026 of the Appellate Tribunal under the PMLA, and have sought a direction to the Enforcement Directorate to comply with earlier orders of the Special Judge (CBI), Jaipur, and of the Appellate Tribunal, and to release and de-freeze all their pension, gratuity, provident fund, leave encashment and retiral-benefit accounts and fixed deposits, together with the interest accrued on them.
At the heart of the petition is a prayer for a declaration that pension, gratuity, employees’ provident fund, leave encashment and fixed deposits created out of statutory retiral dues do not constitute ‘proceeds of crime’ within the meaning of Section 2(1)(u) of the PMLA, in the absence of a direct nexus with criminal activity relating to a scheduled offence. The petitioners further contend that the continued withholding of pensionary and retiral dues, despite judicial orders, is violative of Articles 14, 21 and 300A of the Constitution, and seek payment of the accrued interest on the withheld benefits.
Why it matters
The question the petition frames is a live and consequential one under the PMLA. ‘Proceeds of crime’ is defined, in Section 2(1)(u), as property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, or its value, or property equivalent in value where the tainted property is taken or held outside the country. Whether an asset falls within that definition therefore turns on its nexus with the criminal activity; property that has no such connection, on the petitioners’ argument, cannot be attached or frozen merely because its owner is an accused. Statutory retirement dues, earned over years of service and payable by operation of law, are said to be a paradigm of untainted property, unless a specific link to the alleged offence is shown.
The constitutional dimension the petitioners invoke sharpens the point. Pension is not a bounty but a right earned for past service, and the courts have repeatedly treated the withholding of pensionary benefits as engaging the right to property under Article 300A and, where it affects a dignified existence, the right to life under Article 21. The petitioners’ case is that these protections are not suspended by the pendency of a money-laundering proceeding, and that once appellate and other orders have gone in their favour, the continued freezing of the benefits is without authority of law.
It must be emphasised that the Court has, at this stage, only issued notice; it has expressed no view on any of these contentions, which the Enforcement Directorate will have the opportunity to answer in its counter affidavit. The underlying PMLA proceedings are pending, and nothing in this order bears on the merits of the money-laundering allegations against the petitioners or on the ultimate characterisation of the assets. What the order does is put in issue, for adjudication, the significant question of whether, and when, statutory retiral dues can be treated as proceeds of crime, an answer to which will have implications well beyond this case.
Case Title: Santosh Kumar Gupta and Another v. Deputy Director, Directorate of Enforcement [W.P.(C) 13684/2026]
Bench: Justice Dr. Swarana Kanta Sharma, High Court of Delhi at New Delhi
Date of Order: September 17, 2026
Appearances: Advocates Purushottam Sharma Tripathi and Prakhar Singh for the petitioners; Advocates Annirudh Sharma and Ankit Swami for the Enforcement Directorate.
Status: Notice issued; counter affidavit directed within four weeks. Listed for December 3, 2026. No view expressed on merits.
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