Author: Krutika Patil, REVA University.
To the Point
The Mahadev Gaming app is an online betting platform that runs on the basis of a franchise system. The users of this software application can do live gambling in various games like poker,card games,tennis,football and cricket.
How the app worked was that , the websites had contact numbers listed. These contact numbers are accessible primarily in platforms like Whatsapp. The users reach out to them. One allows money deposits and points for users IDs used in betting, while the other connects to the websites for cashing out points from the assigned IDs.
The company is owned by Sourabh Chandrakar and Ravi Uppal who provided these services. This was active for the past four years. The company has amassed approximately Rs.5,000 crore through this scam. The owners of the Mahadev online betting app are alleged to have ties to Pakistan and connections with local businessmen and hawala operations.
The central probe agency’s actions are believed to be part of the agency’s nationwide searches at as many as 60 locations spanning Chattisgarh, Madhya Pradesh as well as national capital Delhi. The searches conducted include politicians , bureaucrats and other officials amounting to Rs. 6,000 crore.
It is one of the biggest illegal betting operations,covering sports events, card games and even Indian elections. The platform was suspected to engage in match-fixing , money laundering via cryptocurrency and manipulating games to ensure hefty profits for its promoters.
Abstract
The batch of applications has raised issues pertaining to the qualifications, promotion and selection of candidates who want to enter as civil judge. The hearing sought for the relief of clarifying the quota for LDCE,method of regular promotion, whether the minimum qualifying experience for appearing in the aforesaid examination needs to be reduced, introduction of the suitability test, restoration of three year practice or appropriate years needs to be determined. The court has heard the issues and considered the recommendation of appointed amicus curie to further facilitate the case. This landmark case has laid down the mandated years of three years of practice causing the members of the law fraternity to redirect and reevaluate their plans. This mandate has caused an uproar among the practicing young lawyers and the aspiring students who want to be judges.
Use of Legal Jargon
The following case has invoked the provisions for liability under money for “proceeds of crime”. Section 3 of the PMLA 2000 delineates the principal offences for which individuals or entities may face penalties related to money laundering. It specifies that any person found guilty of concealing, disguising, converting, transferring, or disposing of proceeds derived from criminal activities in contravention of the Act shall be subject to punishment. The definition of proceeds has been broadened, encompassing all associated transactions within the scope of money laundering offences. Consequently, any transfer of funds aimed at generating profit, any effort to obscure the origin of illegally acquired funds, or any action intended to facilitate illegal activities will be regarded as a violation of the Act, incurring significant penalties.The federal agency filed a money laundering case against Prevention of Money Laundering Act (PMLA) , the Interpol sent out red notice to the 14 accused mentioned in the chargesheet upon the EDs request. The Chhattisgarh Police began its crackdown on the scam in 2021, which led to multiple FIRs, arrests, and seizure of assets before the ED began its own investigation.
The provisions that empower the ED to seize property is enshrined in the section 106 of the BNSS. Along with it , the PMLA,2002 under section 17(1)(c) states that any officer authorized by the director or the deputy director to seize any record or property found as a result of such search.
The Proof
The body for investigation ,ED has carried out 170 raids , which has lead to the seizure or attachment of assests over worth ₹3,002.47 crore, and has reported questionable stock manipulations to the Securities and Exchange Board of India (SEBI). As of October 2023, law enforcement had confiscated 191 laptops, 858 smartphones, materials related to betting, and luxury vehicles valued at approximately Rs 2.50 crore. The inquiry uncovered the involvement of more than 3,033 bank accounts in this scheme, with roughly 1,035 bank accounts being frozen. The total funds deposited in these accounts are estimated to be around Rs 15.50 crore.The investigation has revealed that the funds collected through these means were transferred outside of India and reintroduced in the market under the disguise of foreign FPIs. All individuals charged have now been prosecuted in accordance with the Public Gambling Act of 1867 and the Information Technology Act, as the operation of this platform was entirely unlawful via web and mobile applications.
Case Laws
1. Vijay Madanlal Choudhary vs. Union of India, 2022 SCC Online SC 929
The judgment is significant because it enhances the Enforcement Directorate’s authority under the PMLA, a key tool in the fight against money laundering. The court has guaranteed the Enforcement Directorate’s ability to continue performing its functions efficiently by confirming the validity of those laws.
2. K. Sowbaghya Vs. Union of India, Ministry of Finance, North Block Department of Revenue and Ors. (2016) 338 ELT 65
In this case, the High Court upheld the constitutional validity of several critical provisions of the PMLA, including Sections 3 (definition of money laundering), 5 & 8 (attachment of property), and 17–19 (search, seizure, and arrest).
It clarified that money laundering is a standalone offence and held that proceeds of crime can be provisionally attached even before a conviction. The court further read into the statute the requirement of mens rea, protecting innocent owners from wrongful prosecution.
3. Tariq Ahmed Dar Vs. Enforcement Directorate 2013 Cri LJ 363
The case reaffirms that mere possession of funds, if linked to illegal activities (like betting or terrorism), can attract charges under Section 3 of the PMLA—even if the laundering act is not directly proven at the time of arrest.
Conclusion
The case of Mahadev betting scam app is a testament on how the laws that are often interpreted gets misused. The founders aware of the lacuna in law made the situation advantageous to them. The structure was created and functioned to avoid getting caught. This layered hawala transactions made catching them difficult. The scam went to enormous lengths, pulling in politicians and celebrities. The operation would never have been found if not for the lavish wedding of the founder.
This instance raises the need to bring forth strict and defined laws and regulations. The mode of betting is now via the internet, which needs to be governed. The case brings forth the awareness and action that is needed urgently.
FAQS
1.Is online betting legal in India?
No, online betting is largely illegal except in a few states like Sikkim and Nagaland under licensed models. The central government has not enacted a comprehensive law on this, leading to exploitation of loopholes by operators like Mahadev.
2. What is the Mahadev Betting App Scam in legal terms?
The Mahadev Scam involves the operation of an illegal online betting platform that violates Indian gambling laws. It constitutes offences under the Public Gambling Act, 1867, the Information Technology Act, 2000, and most significantly, money laundering under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002.
3. How is this case different from other economic offences like the Vijay Mallya or Nirav Modi case?
While Mallya and Modi cases involved bank fraud and siphoning of corporate loans, the Mahadev scam is rooted in illicit gambling and subsequent laundering through cash-based channels and digital wallets. However, all involve cross-border money laundering and fall under PMLA.
4. How does this case fall under the Prevention of Money Laundering Act (PMLA)?
The proceeds earned from illegal betting were allegedly laundered through hawala channels, shell companies, and benami assets. This satisfies the definition of money laundering under Section 3 of PMLA, where the “proceeds of crime” were projected as legitimate earnings.
REFERENCES
https://ssrana.in/articles/mahadev-betting-app-law-around-search-seizure-bank-a-c/
https://www.thehindubusinessline.com/blexplainer/mahadev-betting-app-case-how-dubai-based-promoters-routed-illicit-betting-funds-into-stock-market/article69583510.ece
https://www.business-standard.com/india-news/mahadev-betting-case-everything-known-about-the-rs-6-000-cr-scam-so-far-123121300347_1.html
https://enforcementdirectorate.gov.in/sites/default/files/latestnews/Press%20Release%20-%20Mahadev%20Online%20Book%2015.09.23.pdf
