IN THE HONBLE SUPREME COURT OF INDIA

S.L.P NO. 5 OF 2013

RONNIE

V.

UNION

TERRITORY OF

CHANDIGARH
Petitioner

Respondent

S.L.P NO.6 OF 2013

RONNIE

AND

BILAL MASID
Petitioner

V.

UNION TERRITORY OF CHANDIGARH

Respondent

W.P. CIVIL NO.3 OF 2013

BILAL MASID

V.

Petitioner

UNION TERRITORY OF CHANDIGARH

Respondent

MEMORIAL FOR THE PETITIONER

UNION TERRITORY OF CHANDIGARH

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

Table of contents

TABLE OF CONTENTS

INDEX

OF

AUTHORITIES..................................................................................................................ii

Statutes.................................................................................................................................i
i

Books....................................................................................................................................i
i

Table of Cases....................................................................................................................iii

LIST

OF

ABBREVIATIONS................................................................................................................iv
STATEMENT OF JURISDICTION..................................................................................................... vi
STATEMENT OF FACTS................................................................................................................ vii
STATEMENT OF ISSUES................................................................................................................. ix
SUMMARY

OF

ARGUMENTS............................................................................................................

ARGUMENTS ADVANCED.................................................................................................................1

CONTENTION I: WHETHER THE SLP NO. 5 IS MAINTAINABLE ?.1

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

Table of contents

CONTENTION II: THAT SECTION 4 OF PREVENTION OF MONEY LAUNDERING ACT, 2000

AND SECTION 3,4,7 AND 13 OF FOREIGN EXCHANGE MANAGEMENT ACT ,1999 IS NOT
VALID ................................................................................................................................ 5
CONTENTION III: THAT

CHANDIGARH POLICE IN SEALING AND SEIZURE OF

ARTICLE 19(1)(G) OF FUNDAMENTAL RIGHTS .
........................12
THE ACTION OF
BILAL MASID SHOP HAS
VIOLATED

PRAYER.15

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

Index of authorities

ii

INDEX OF AUTHORITIES

TABLE OF STATUTES

Constitution of India, 1950

Indian penal code, 1860

Criminal procedure code,1973

Foreign exchange management act,1999

Foreign exchange regulation act,1973

P M L A, 2000

Immoral trafficking act,1956

TABLE OF BOOKS

Seervai, H.M Constitutional laws of India Vol -1, 4th Ed 1999

Seervai, H.M Constitutional laws of India Vol -2, 4th Ed 1999

Basu, D.D Shorter Constitution of India 13th Ed 2001

Mahendra P Singh V N Shuklas Constitution of India 10th Ed 2001

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

Index of authorities

ii

TABLE OF CASES

Obayya Pujary Vs Member Secretary, Kspcb,Bangalore AIR 1999 KARLJ 651

State Of Maharashtra Vs Sajid Husain APPEAL(CRL) 1402 1409 Of 2007

State Of Up Vs Pappu Alias Yunus And Anr. (2005) SCC 594

Kalwate Vs State Of Himachal Pradesh AIR 1953 SC 131

Harjinder Singh Vs State Of Punjab AIR 1985 SC 40

K. Ramakrishna Vs. State of Bihar, 2000 Cr.L. J.4597 (SC)

Prem Pharmaceuticles and Others Vs. State of Madhya Pradesh 1991 (O) MPLJ
473.

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

Index of authorities

ii

MEMORIAL ON BEHALF OF PETITIONER

ARMY INSTITUTE OF LAW MOOT COURT COMPETITION, CHECKMATE- 2013

List of Abbreviations

iv

LIST OF ABBREVATIONS

AIR

All India Reporter

Art.

Article

Cr Pc

Criminal Procedure Code

FEMA

Foreign Exchange Management Act

FERA

Foreign Exchange Regulation Act

FIR

First Information Report

Hon,Ble

Honourable

INR

Indian National Rupees

IPC

Indian Penal Code

PMLA

Prevention Of Money Laundering Act

RBI

Reserve Bank Of India

SC

Supreme Court

SLP

Special Leave Petition

KAR

Karnataka

CRLJ

Civil rights Law journals

&

and

List of Abbreviations

Ed

iv
edition

Statement of jurisdiction

vi

Ltd

limited

Ors

others

Para

paragraph

Pg

page

V.

Versus

UOI

Union of India

Const

Constitution

Statement of jurisdiction

vi

STATEMENT OF JURISDICTION

THE PETITIONERS HAVE

APPROACHED THE

HONBLE SUPREME COURT OF INDIA UNDER

ARTICLE 136 OF THE INDIAN CONSTITUTION FOR SLP-NO.5 AND SLP-NO.6 OF 2013 AND
UNDER ARTICLE 32 OF THE INDIAN CONSTITUTION FOR THE WRIT PETITION.

Statement of Facts

vii

STATEMENT OF FACTS

THE DISAPPEARANCE OF RAGINI

Ronnie hooda had fallen in love with Ragini Sikand and had got married despite all the
opposition from Raginis family.On 5th January, after seeking blessing from Raginis parents,
they left for their honeymoon to Dubai. On their way to Dubai they met Sheikh Al- Murztaza
Arzai who invited them to his villa. When Ragini and Ronnie reached A- Murztaza Arzai s
resident, Ragini was not allowed to sit in the meeting and was send off with the 3 wifes of al Murztaza Arzai where Ronnie and Arzai were discussing an investment in a mobile payment
gateway for which a sum of 7000 bitcoins was transferred to Ronnies account. Thus when
Ronnie called for his wife, Al murtaza informed that he had become delusional and that he did
not have a wife. Further, Ronnie had found his hotel room replaced into a business suite from a
honeymoon suite and all his wifes belongings had disappeared.
TRIAL IN DUBAI
When Ragini s Father ,Mr.Bhisham Sikand came to know about the whole incidence, he
immediately registered a case against Ronnie which further led to an inquiry. Ronnie was
charged under Article 344 of the penal code and Article 2 of the Federal Laws. After Hearing
Detailed arguments, the court acquitted Ronnie.
FIR NO .920 OF 2012
As soon as Ronnie reached the Delhi Airport , he was arrested by Chandigarh police acting on a
FIR filled by Ragini s mother under section 363,366,367,368,370,371 of the Penal Code and
also under Section 5,8 of the Immoral traffic Act, 1956.Ronnie applied for bail and was granted
Bail in the above case.

FIR NO. 923 OF 2012

Statement of Facts
vii
Ronnie in order to pay for his legal defence and other needs approached Bilal Masid , a currency
broker who was dealing in Bitcoins. He transferred 5000 bitcoins to Bilal, for which he received
Rs.36,00,000 in cash. As soon as the exchange was made, the Chandigarh police with special
team in charge of economic offences arrested Bilal and Ronnie and Filed an FIR No.923 under
section 4 of the PMLA,2002 and Section 3,4,7 and13 FEMA,1999.During the investigation Bilal
Masid s shop was also sealed and all his electronic machinery was ceased.
FILING OF QUASH PETITION AGAINST FIR 920 OF 2012 AND NO.923 OF 2012
Ronnie filed a quashing petition in the honble Punjab and Haryana High court and took the plea
of double Jeopardy that he cannot be tried for the same charges which he had already faced in
Dubai. Also, Ronnie and Bilal moved a quashing petition against FIR No.923 stating that no
exisiting laws in India is broken by the use of bitcoins and also took the plea that Bitcoins can
not be termed as a currency, and therefore Indias Existing laws did not apply.But both the
petitions was dismissed by the Honble High court.
FILING OF SPECIAL LEAVE PETITION AND WRIT PETITION
Ronnie aggrieved by the decision in both the petition filed a special leave petition in the Honble
Supreme Court challenging the decision in both petition. Bilal Masid also preferred a SPL
challenging Fir No. 923 of 2012 and also filled an Writ Petition before the Honble Supreme
Court stating that the actions of police has violated his fundamental rights.
FINAL ARGUMENT
The Honble Supreme court granted Special Leave in both cases. And have Fixed Writ petition
No.3 of 2013 filed by Bilal Masid to be heard along with SLP No.5 and 6 of 2013.

Statement of Issues

ix

STATEMENT OF ISSUES

I.

II.

WHETHER THE SLP NO.5 IS MAINTAINABLE ?

WHETHER THE SECTION 4 OF PMLA 2000 AND SECTION 3,4,7 AND 13 OF

FEMA,1999 ARE NOT VALID.?

III.

WHETHER THE ACTION OF CHANDIGARH POLICE IN SEALING AND

SEIZURE OF BILAL MASID SHOP HAS
RIGHTS ?

VIOLATED

FUNDAMENTAL

statement of arguments

SUMMARY OF ARGUMENTS
THAT THE SLP NO 5 IS MAINTAINABLE
The SLP no.5 is maintainable as no offence is made out in the fir. Ronnie was also not liable
under various sections of ipc for kidnapping from India without consent as the ingredients to
prove the offence under section 360 are absent it is further submitted that Ronnies fundamental
right to protection against double jeopardy has been violated as he has been prosecuted and
punished for the same offence more than once.

THAT THE SECTION 4 OF PREVENTION OF MONEY LAUNDERING ACT, 2000 AND SECTION 3, 4,
7 AND 13 OF FOREIGN EXCHANGE MANAGEMENT ACT, 1999 IS NOT VALID:
Bitcoin is a digital commodity which is not backed by any government or authority and hence
can not be termed as a currency. Thus, the various sections under PMLA,2000 and FEMA,1999
are not applicable in the present case.

THAT THE ACTION OF CHANDIGARH

HAS VIOLATED ARTICLE

POLICE IN SEALING AND SEIZURE OF BILAL MASID SHOP

19(1)(G) OF FUNDAMENTAL RIGHTS

The action of police in sealing the shop and seizure of electronic items from the shop has brought
bilal masids business to a standstill and he is facing loss due to it as the business could not be
carried out. this act was not at all reasonable neither was in the public interest. Hence it violated
the right to freedom of profession of bilal masid.

Arguments Advanced

ARGUMENTS ADVANCED

1. CONTENTION 1- THAT THE SLP NO. 5 IS MAINTAINABLE

It is humbly submitted that in the instant case Ronnie has been charged in the FIR filed before
Chandigarh Police under various provisions of IPC for the offence of kidnapping Ragini and
subjecting her to slavery, prostitution, etc. Ronnie has also been charged under various sections
363, 366, 367, 368, 369, 370, and 371 of Indian Penal Code, 1860. Ronnie is also charged under
Sections 5 and 8 of Immoral Traffic (Prevention) Act, 1956. Thus, charging Ronnie of offences
such as kidnapping from India and further subjecting Ragini to slavery and prostitution, etc. is
totally baseless without any evidence and no offence for which Ronnie is charged in the said FIR
can be made out. If the FIR cannot make out any case, it will be a valid reason for quashing it. If
no offence is proved , FIR cannot stand. The Apex Court has stated in a case that the test is that
taking the allegations in the complaint as they are, without adding or subtracting anything, if no
offence has been made out then the Court will be justified in quashing the proceedings in
exercise of its powers under section 482 of the Code 1. Hence, it is humbly submitted that the said
FIR must be quashed by the Honble Court to prevent the abuse of process of the court.
Ronnie not liable for offences under the mentioned sections of IPC in the FIR no. 920 of
2012
It is humbly submitted before this Honble court that Ronnie has been charged under various
sections under IPC viz. Section 363, 366, 367, 368, 369, 370 and 371.2 Out of which section 371
deals with punishment for kidnapping from India, but this allegation cannot be said to be true. As
kidnapping from India as defined under section 360 IPC must be without consent but in the
instant case, it is clearly given in the facts that Ronnie and Ragini were in love with each other
and Ragini wanted to marry him despite the fact she knew that he had a past criminal record and
was also a divorcee. Moreover, Ragini and Ronnie both took blessings from her parents before
leaving for honeymoon. Hence, he is not liable and he has been charged wrongly under the said
1

K Ramakrishna v. State of Bihar, 2000 CrLJ 4597 (SC).

Moot proposition para11

Arguments Advanced

provision. Ronnie is also charged under section 369 of IPC which is applicable only to the cases
in which a child under 10 years of age is kidnapped. In the instant case Ragini was of 24 years of
age when Ronnie has been charged for kidnapping her. Thus, it is proved that the charges framed
against Ronnie are based on totally frivolous grounds, and the FIR must be quashed accordingly.
Ronnie has been charged under section 360 of IPC, for kidnapping from India.
The essential ingredients of section 360 constituting the offence of kidnapping from India are;3
a) That the person kidnapped was at the time of the offence in India
b) that the accused conveyed him beyond the limits of India
c) that the person conveyed was without consent of such person
Here in the instant case, Ronnie although conveyed Ragini from India but it was with the prior
consent of Ragini as it is clearly stated in the facts that Ragini despite knowing about the
criminal past of Ronnie was very much willing to live with Ronnie forever. and she was very
much willing to marry Ronnie. In fact, they went out of India to celebrate honeymoon.Hence, the
essential ingredients of section 360 are not fulfilled and Ronnie has wrongly been charged for the
offence of kidnapping form India under section 360 of IPC.
Quashing of First Information Report (FIR)
It is humbly submitted before this Honbles court that Ronnie has been charged in FIR No. 920
of 2012 under certain provisions of IPC and Immoral Traffic (Prevention) Act, 1956 for
kidnapping Ragini from India, subjecting and inducing her to slavery and prostitution. Ronnie
filed a quashing petition before High Court under section 482, Criminal Procedure Code which
was accordingly dismissed by the High Court. The High Court has the power to prevent abuse of
the process of any court under section 482 Cr.P.C. 4 The word Process is a general word
meaning in effect anything done by the court, and includes criminal proceedings in a subordinate
3

R.P. Kathuria, Law of Crimes and Criminology ,312 (2007).

Section 482 Cr.P.C-Saving of inherent power of High Court.- Nothing in this Code shall be deemed to limit or
affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order this
Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice.

Arguments Advanced

court.5 It is ,therefore, within the power of the Honble High Court to interfere in the interest of
justice and to stop abuse of the process of law. The term an abuse of the process has been
explained in the case of Prem Pharmaceuticals And Ors. v. State Of Madhya Pradesh 6 as an
abuse of the process may be committed by a party by starting proceeding which is wanting in
bona fide and is frivolous, vexatious or oppressive. In the instant case, Ronnie was at first
charged by Raginis Father in Dubai under its Penal Code and Federal Law on combating Human
Traffic where Ronnie faced litigation for approximately one year. He was acquitted there and
that when he returned back to the country dejected at the loss of his wife, Raginis Mother again
sued him under IPC and Immoral Trafficking (Prevention) Act. This is done to harass and
oppress Ronnie.
In the instant case the FIR no. 920 of 2012 does not make out any offence for which Ronnie has
been charged as he married Ragini with her consent and took her to honeymoon after taking
blessings from parents. There is no evidence, direct or indirect, which shows any type of role
played by Ronnie in disappearance of Ragini, neither it can be circumstantially deduced that
Ronnie was involved in kidnapping Ragini from India for slavery or prostitution. Ronnie is not
liable for the said provision for which he has been charged. Thus, the said FIR must be quashed
as no offence could be drawn out.
Moreover, it is also to be brought up in the light of this Honble Court that suing Ronnie under
different laws and different jurisdiction is just to harass Ronnie. It is a well settled principle of
law if the allegations made in FIR do not make any offence, prima facie, it can be quashed.

Whether Roonies fundamental right of protection against double jeopardy is violated?

The Constitution of India gurantees protection against double jeopardy to every person. This
right is given under article 20(2) of the constitution which provides as under:
No person can be prosecuted and punished for the same offence more than once.

Shailender Malik, The Code of Criminal Procedure, 11(2011).

Prem Pharmaceuticals And Ors. v. State Of Madhya Pradesh 1991 (0) MPLJ 473.

Arguments Advanced

Whereas Mr. Roonie was first prosecuted in Dubai for allegedly kidnapping his wife Ragini and
when he was acquitted of the charges leveled against him by the court of competent jurisdiction,
afresh proceedings were initiated against him in India .
It is further submitted that Section 300 of the Criminal Procedure Code also contains the
protection of accused against double jeopardy. The analysis of section 300(1) says that the basic
rule is that a person who has once been tried by the court of competent jurisdiction for an offence
and convicted or acquitted of such an offence shall, while such conviction or acquittal remains in
force, not to be liable to be tried again for the same offence.
It must be noted that in the instant case, Mr Ronnie was tried in Dubai before the court of
competent jurisdiction and he was acquitted. Subsequently when he came to India he was again
charged for various offences for which he had already been charged and acquitted in Dubai.
Thus his statutory right under section 300 of Criminal procedure Code and his fundamental right
against Article 20(2) was violated.

CONTENTION 2- THAT THE SECTION 4 OF PREVENTION OF MONEY

LAUNDERING

ACT,

2000

AND SECTION

3,4,7

AND

13

OF FOREIGN

EXCHANGE MANAGEMENT ACT ,1999 ARE NOT VALID.

It is humbly submitted before this honble court that the Special leave Petition has been preferred
for quashing The FIR No. 923 dated 1 January 2013 which was registered for exchange of
bitcoins for Indian currency between Ronnie and Bilal Masid. The FIR was framed under the
charges of section 4 of Prevention of Money Laundering Act, 2002 and section 3, 4, 7 & 13 of
Foreign exchange Management Act.7
It is humbly submitted that the charges framed are inappropriate as bitcoins does not fall under
the definition of currency.

Para 12, factsheet

Arguments Advanced

(I)
Whether Bitcoin is a currency or not ?
Bitcoin is a decentralized, P2P network-based virtual currency that is traded online. 8 Bitcoin,
when paired with third-party services, allows users to mine, buy, sell, or accept bitcoins from
anywhere in the world. Bitcoins decentralized feature is unique among virtual currencies.
Though Bitcoin developers maintain Web sites providing guidance to the Bitcoin community,
they do not have a centralized database or authority. The P2P network issues bitcoins through
the mining process and validates all transactions.
Furthermore it is humbly submitted before this honourable court that bitcoin is not a currency
because it is not listed in ISO 42179 wheras it recognizes the precious metals such as gold, silver,
platinum etc but not the Digital currency bitcoins.
Blacks law dictionary defines currency as
Coined money and such bank-notes or other paper money as are authorized by law aud do in
fact circulate from hand to hand as the medium of exchange.
And thus, it is submitted that bitcoin does not fall under the definition of currency because it is
not authorized by any law and are not controlled by any government.
The first legal issue directly relating to bitcoins was first adjudged in France 10. The France court
did not make any claims about the legitimacy of bitcoin but has claimed that using bitcoins is not
illegal in France. In 2011 , the bank which Mt Gox was using for their activities in France had
closed Mt Goxs account arguing that bitcoin is an electronic money, Macaraja (the entity
representing Mtgox in France) is not a bank, therefore illegal for Macraja to be handling this.
Mtgox challenged the decision, and took CIC to court claiming its right to a bank account under
French law. In response to the cics position , Mt Gox argued that bitcoins are not an electronic
currency but rather an immaterial good, like software, and the court that it was not competent to
determine the issue of bitcoins validity. Nevertheless, it has established one important legal
precedent that without any judgement on what bitcoin was, Mtgox was safe to continue operating
by default. Thus in the present facts, the court accepted that bitcoin is an immaterial good and
thus it is outside the provisions of FEMA.
8

Bitcoin.org (15.2.2013)

ISO 4217 is a standard published by the International Standards Organization, which

delineates currency designators and country codes. The ISO 4217 code list is used in banking and business globally.
10

Covering digital currencies ,precious metals and online payments (15.2.2013) see
http://www.dgmagazine.com/list-of-bitcoin-court-cases-complaints-regulatory-actions-etc/

Arguments Advanced

Germanys financial supervisory authority, Bafin, has published a report delineating their status
under German law11. The document has the following to state on the subject: tokens of value
meant to be used as a method of payment which are issued by barter clubs, private exchange
rings or other payment systems in exchange for real economic goods or services or like for
example bitcoins, which are issued in computer networks without any service in return , are
therefore exempt from the definition of e money , even though they fulfil the same economic
function as e money and have the actual potential of privately issued currencies. The legal
concept of e money in Germany applies only to instruments that ultimately derive from legal
tender currencies and so bitcoins is effectively classified as a commodity.
HSBCs global head of e channels strategy and innovation , Andrew Davis , stated that he
believes that virtual currencies are going to enter the mainstream soon because it is becoming
normal way of buying goods and services, around the world and that HSBC has bitcoins highly
in mind.12
Argundeo, Bitcoins can also be termed as domestic currency because it can be mined in India and
thus the provisions of FEMA,1999 does not relate to bitcoins.
In the view of the foregoing, it is humbly submitted before this court that the defence taken by
the petitioner is valid in the present context as bitcoin cannot be termed as a currency.

(II)

Whether the charges framed under section 4 of Prevention of Money Laundering Act,
2002 satisfy the essentials provided in the definition of money laundering?

Ronie was chraged under section 4 of PMLA, 2002 which provides the punishment for Money
Laundering and the term Money Laundering has been defined under Section 3 of PMLA, 2000.
It states that:-

11

A recap of mega-corporate and government attention on bitcoin this past year(15.2.2013)

see, http://bitcoinmagazine.com/a-recap-of-mega-corporate-and-government-attention-onbitcoin-this-past-year/
12

A recap of mega-corporate and government attention on bitcoin this past year(15.2.2013)

see, http://bitcoinmagazine.com/a-recap-of-mega-corporate-and-government-attention-onbitcoin-this-past-year/

Arguments Advanced

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 Money laundering.
For the purpose of the above section the term Proceeds of Crime 13 is also defined in the act
which states that:
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.
Further offences are mentioned in the schedule provided in the act
Ronnie was also charged under Immoral Trafficking Prevention Act 2002. These charges must
be proved for proving the charges of money laundering as it will be concluded that the proceeds
of crime came from immoral trafficking. However, It is evident from the facts and the
circumstances that there is no evidence to show that the petitioner, was indulged in the
Trafficking.

The charges framed were on the basis that Ronnie, after meeting Ragini, married her and went
for honeymoon to Dubai wherein his wife disappeared in a disputed way. After a lot of search
and attempt to convince people, his efforts went all in vain.14 And he was charged by the Dubai
court where he was acquitted of all the charges. When Ronnie came back to India he faced
another legal proceeding of allegations including Immoral trafficking, abduction etc. For the
purpose of his legal expenses and other expenses he converted the Bitcoins into Indian currency
and thus was framed for Money laundering for exchanging Bitcoins into Indian Rupee.15
13

Section 2(u) PMLA,2002.

14

Moot prop 4 and 5

15

Moot prop 12

Arguments Advanced

Dealing in Proceeds of crime is an important essential under the Act 16. However, the facts of the
case state that Ronnie was a serial entrepreneur who was always in search of Venture capitalists
and for this purpose he found Sheik Al-Murtaza, who invited Ronnie to his villa where they met
and discussed the details of the proposed investment into a mobile payments gateway that
Ronnie was building. The meeting turned out to be fruitful and a sum of 7000/- Bitcoins was
immediately transferred to Ronnies account.
The above circumstances clearly state that the money was transferred for the purpose of
investment in the proposed Mobile payment gateway. Hence, the issue of proceeds of crime is
not valid. Since the essentials of the Act rely upon the Proceeds of crime, they therefore cannot
be satisfied.
Hence, it is humbly submitted before the honble Supreme Court that the charges framed under
PMLA, 2002 does not satisfy the essentials of the act and hence is not valid.

(III)

Whether the Petitioner is liable for various offences mentioned under FEMA ?

It is humbly submitted before this Honble court that the regulations of FEMA,1999 are not
applicable in the pertinent case because as stated above bitcoin is not a currency and hence does
not fall under the provisions of FEMA,1999.
Argundeo, without conceiving to the fact that bitcoin is a currency the allegations under section
3, 4, 7 and 13 of the Foreign Exchange Management Act, 1999 are not valid and there has been
no violation of any such provisions. It is thus submitted before this Court that according to the
facts of the case petitioner Ronnie in order to pay for the legal defense and other needs withdrew
money from his business account, for this purpose he approached Bilal, a currency broker who
dealt in Bitcoins. By transferring 5000/- Bitcoins to Bilal he received a sum of Rs 36,00,000 in

16

PMLA, 2002.

Arguments Advanced

cash17; as the transaction was completed Ronnie was arrested on totally irrelevant grounds
alleging him of violating sections 3 , 4, 7 and 13 of FEMA.
Section 3 of FEMA states that:Dealing in foreign exchange, etc.- Save as otherwise provided in this Act, rules or regulations
made there under, or with the general or special permission of the Reserve Bank, no person shall(a) deal in or transfer any foreign exchange or foreign security to any person not being an
authorized person;
(b) make any payment to or for the credit of any person resident outside India in any manner;
(c) receive otherwise through an authorized person, any payment by order or on behalf of any
person resident outside India in any manner18.
(d) enter into any financial transaction in India as consideration for or in association with
acquisition or creation or transfer of a right to acquire, any asset outside India by any person.ith
foreign and comes under chapter of foreign exchange
The above mentioned provision deals with and comes under chapter of foreign exchange which
does not regulate Bitcoins as the transaction done in Bitcoins does not satisfy the definition of
Foreign Exchange given under section 2(n) of FEMA:
"foreign exchange" means foreign currency and includes,(i) deposits, credits and balances payable in any foreign currency,
(ii) drafts, travelers cheques, letters of credit or bills of exchange, expressed or drawn in Indian
currency but payable in any foreign currency,

17

Moot proposition. 12

18

Section 3 Foreign Exchange Management Act, 1999 [herein after referred as FEMA]

Arguments Advanced

10

(iii) drafts, travelers cheques, letters of credit or bills of exchange drawn by banks, institutions
or persons outside India, but payable in Indian currency.19
It can be witnessed that the list includes firstly tangible objects whereas Bitcoins under no
circumstances is tangible and the significant feature of currency under its definition is that it has
to be notified by RBI and the RBI specifically has not notified Bitcoins as a form of currency
therefore it is proved that Bitcoins do not meet the standards and guideline for meeting up the
requirement of currency. Therefore respective section made as a ground of FIR does not stand
relevant.
Under section 4 of the FEMA, 1999 20 , the appellants did not hold, acquire, own or possess an
foreign currency as bitcoin is not a foreign currency but a domestic currency.
Further, it is submitted that Section 7 of FEMA, 1999 provides with provision regarding
exporting of goods and services. And in the above situation, there has been no incidence of
exporting of goods and services. As stated above bitcoin can also be termed as a commodity but
it can not fall under the above stated provision because there has been no exporting of bitcoins.
Further, Section 13 of FEMA penalizes for the violations of section 3, 4 and 7 and in the instant
case the respective sections were not violated.
Henceforth, the ground of FIR made for the violation section 3, 4, 7 and 13 are not valid and
clearly show the intentions of police who deliberately arrested Ronnie under false accusation.
Therefore it is humbly submitted that FIR No. 923 lodged against Ronnie is not valid and should
be quashed with immediate effect.

CONTENTION 3 - THAT

THE ACTION OF

CHANDIGARH

BILAL MASID SHOP HAS VIOLATED ARTICLE

19

20

POLICE IN SEALING AND SEIZURE OF

19(1)(G) OF FUNDAMENTAL RIGHTS .

Section 2(n) Foreign Exchange Management Act, 1999

Section 4 of FEMA- Save as otherwise provided in the act, no person resident in India shall
acquire, hold, own. possess, or transfer any foreign exchange, foreign security or any
immovable property situated outside India.

Arguments Advanced

11

The writ petition was filed by the petitioner for violation of his fundamental rights after his shop
was sealed and all the electronic machinery and other documents were also sealed on the grounds
that the transaction between Bilal and Ronnie for exchange of Bitcoins violated several
provisions of Foreign Trade and Exchange laws and various RBI Regulations and that it also
amounted to an offence under the Prevention of Money Laundering Act. It is humbly submitted
that the grounds taken and actions done are completely frivolous unreasonable.
Whether there is violation of fundamental rights under article 19(1)(g)?
The Petitioner is a currency broker who used to deal in Bitcoins, a digital currency, and in the
process of a particular dealing between Ronnie and him the whole issue came up. The Police
with the special team in-charge of economic offences arrested Bilal as well as Ronnie for the
offences they alleged on the petitioner. In the course of the police action the shop of Bilal was
sealed with all the electronic machineries This particular action of the police and the special
team clearly denies Bilal the right to carry on Trade and Commerce guaranteed under article
19(1)(g) primarily. The article states that the citizens have the right to practice any profession, or
to carry on any occupation, trade or business. The present transaction of exchange of Bitcoin
between Ronnie and Bilal took place when the former wanted to bear his legal expenses along
with other expenses. If believing the allegation to be justified the money exchanged i.e. 36,
00,000/- INR could have been ceased and investigated of its legality but the police and the team
accompanying it even ceased the shop of the petitioner on the same allegations. For the
knowledge of the court, any authorized dealings in currency are not an illegal business and it is
authorized by the law. The facts of the case say that the petitioner was running a shop which
dealt in exchange of currencies. The clear indication is that even if the dealings could be termed
as illegal, the shop running for other exchanges cannot be sealed. The limitations imposed on a
freedom should not be arbitrary or excessive or beyond what is required in the interests of the
public.21 Hence the action taken was completely arbitrary and cannot at all be termed as
reasonable. In the instant case the benefit sought in closing the shop is unreasonable and uncalled
for. Hence it clearly violates the Fundamental right to trade and profession guaranteed under the
constitution.

21

M.R.F Ltd. v. Inspector, Kerela Govt., AIR 1999 SC 188

Arguments Advanced

12

The action of police in sealing the shop and seizure of electronic items from the shop has
brought Bilal masids business to a standstill and he is facing loss due to it as the business
could not be carried out.
That, the grounds taken for the sealing and seizure are unreasonable:
The grounds taken by the Police and the Special team for sealing and seizure was the violation of
several provisions of Foreign Trade and Exchange Laws and various RBI Regulations and that it
also amounted to an offence under the Prevention of Money Laundering Act. And it is humbly
submitted that as stated and proved above the provisions of FEMA are not applicable in the
present context.
Whether the action taken for sealing of shops did not follow the procedure assigned
under the PMLA, 2002 or not ?
The PMLA, 2002 has the provision that the attachment of the property should take place in the
manner provided in the Second Schedule to the Income-tax Act, 1961. The Second Schedule of
the Income act, 1961(hereinafter IT Act, 1961) in provision 2 talks about the issuance of notice.
It says that a notice should be served upon the defaulter to pay the amount specified in the
certificate within fifteen days from the date of service of the notice and imitating that in default
steps would be taken to realize the amount under this schedule. Since under the PMLA, 2002 the
attachment is done according the provisions of IT Act, 1961, there should have been a notice
served to the petitioner which according to the circumstances of the case can be inferred to not
have been served. The fact of the case say that as soon as the exchange took place between the
Petitioner and Ronnie the Chandigarh police with special team in-charge of economic offenses
arrested the Petitioner and Ronnie for violation of different laws in force in India. The
investigation took place and the shop was sealed and the all electronic machinery was sealed and
the facts clearly say that no notice was issued to the petitioner regarding sealing of shops and
without following the procedure the action took place.
Hence, the action of the police in sealing the shop without following the procedure is violation
of fundamental right.

Arguments Advanced

13

Prayer

15

PRAYER

In the light of the facts of the case, arguments advanced, issues raised and authorities cited, the
counsel for the petitioner humbly prays before this Honble Court to kindly adjudge and declare:

THAT THE SLP NO. 5 IS MAINTAINABLE

THAT THE SECTION

AND SECTION

4 OF PREVENTION OF MONEY LAUNDERING

3,4,7 AND 13 OF FOREIGN EXCHANGE

ACT,

2000

MANAGEMENT

ACT ,1999 ARE NOT VALID .

THAT THE ACTION OF CHANDIGARH POLICE IN SEALING AND SEIZURE OF

BILAL MASID SHOP HAS VIOLATED ARTICLE

19(1)(G) OF FUNDAMENTAL

RIGHTS.

Thus. That FIR no. 923 & 920 be quashed.

And pass any other appropriate order as this Honble Court may deem fit.
And for this act of Kindness, the Counsel for the petitioner, as in duty bound,
shall forever pray.

Respectfully Submitted
Sd/Counsel for petitioner