India

Under section 17 of the Indian Contract Act, 1872 (Contract Act), fraud includes acts committed by a party to a contract (or with their connivance, or by their agent), with the intent to deceive another party or induce that party to enter into the contract.

Under section 19 of the Contract Act, where consent to an agreement is caused by fraud, the contract is voidable at the defrauded party’s option. The defrauded party has two remedies:

• rescission, restoring parties to their pre-contractual positions; or
• insisting on performance and being put in the position they would have been as if the representation had been true.

Where property has been transferred to defeat or delay creditors, section 53 of the Transfer of Property Act, 1882 (TPA) provides a remedy addressing fraudulent dispositions. Declaratory relief, cancellation of instruments, specific performance, and injunctions are available under the Specific Relief Act, 1963 (SRA).

Where the defendant is a company or its management, fraud claims may also be brought by minority shareholders/stakeholders, including remedies for oppression and mismanagement under the Companies Act, 2013 (Companies Act).

The Insolvency and Bankruptcy Code, 2016 (IBC) enables avoidance and contribution remedies for preferential transactions, undervalued transactions, transactions defrauding creditors, extortionate credit transactions and fraudulent/wrongful trading. Persons involved in such fraudulent transactions may be directed to contribute to the corporate debtor’s estate.

The Prevention of Money Laundering Act, 2002 (PMLA)

Money laundering under the PMLA includes concealment, possession, acquisition, use, or projection of proceeds of crime as untainted property. The PMLA criminalises money laundering and applies to persons (both natural and juridical) who directly or indirectly indulge in, or knowingly assist in, any process or activity connected with the proceeds of crime (i.e. property derived from criminal activity relating to offences listed in the Schedule to the PMLA). The PMLA has both domestic and international application and extends to property and persons outside India.

Section 24 of the PMLA reverses the burden of proof (i.e. a person charged with money laundering must prove that any property is not involved in money laundering).

The Benami Transactions (Prohibition) Act, 1988 (BTA)

The BTA prohibits transactions or arrangements (also referred to as benami transactions) where:

• property is transferred to, or held by, a person (i.e. a benamidar), and the consideration has been provided, or paid by, another person (i.e. the beneficial owner for whose benefit the transaction is entered into);
• a transaction or arrangement in respect of property carried out in a fictitious name;
• a transaction or arrangement where the owner of, or person providing consideration for the property is not aware of, or denies knowledge of such ownership; and
• a transaction or arrangement where the person providing the consideration is not traceable or is fictitious.

In the event a benami transaction is discovered, such property is liable to provisional attachment and confiscation by the Central Government and all such persons involved in the transaction shall be subject to imprisonment and/or monetary fines which may extend to 25% of the fair market value of the property.

Fugitive Economic Offenders Act, 2018 (FEOA)

The FEOA applies to “fugitive economic offenders” (i.e. persons against whom an arrest warrant has been issued in respect of offences defined in the Schedule to the FEOA involving an amount of INR 1 billion or more, and who have left India to avoid criminal prosecution or refuse to return to India to face prosecution). The Act does not create new substantive offences but provides a mechanism for confiscation of assets.

Under section 4 of the FEOA, the Director of the Enforcement Directorate or any person authorised by the Central Government may file an application before the designated Special Court seeking a declaration that a person is a fugitive economic offender within the meaning of the FEOA. Upon such a declaration being made, the Special Court may pass appropriate orders directing confiscation of proceeds of crime in India or abroad and any other property or benami property in India or abroad belonging to the fugitive economic offender.

Prevention of Corruption Act, 1988 (PCA)

Under the PCA, both a public servant who demands or accepts illegal gratification and any person or organisation that gives or attempts to give such gratification to obtain a benefit, are subject to imprisonment, monetary fines, or both. The definition of gratification is non-exhaustive and includes pecuniary and non-pecuniary benefits. The definition of public servant is expansive, extending to officials of government-controlled corporations and persons performing public duties. To prove bribery, the prosecution must establish both the demand or offer of a bribe and the acceptance or obtainment of illegal gratification.

Companies Act, 2013

Section 447 of the Companies Act defines “fraud” to mean any act, omission, concealment of fact, or abuse of position committed with the intent to deceive, gain an undue advantage, or injure the interests of the company, its shareholders, creditors, or any other person, irrespective of whether there is any wrongful gain or wrongful loss. Punishment includes imprisonment of six months to ten years, with a fine not less than the amount involved in the fraud; where the fraud involves public interest, the minimum imprisonment is three years.

Investigations into allegations of serious corporate fraud are conducted by the Serious Fraud Investigation Office (SFIO). SFIO can commence an investigation into the affairs of a company under the following circumstances:

• receipt of a report from the Registrar of Companies;
• intimation of a special resolution passed by a company that its affairs require investigation;
• from a member of the general public; or
• request from any department of the Central Government or a state government.

Under general criminal statutes

General criminal statutes such as the Indian Penal Code, 1860 (IPC) address offences committed before 1 July 2024, including cheating, criminal breach of trust, criminal conspiracy, dishonest misappropriation, forgery, and fraudulent concealment of property. For offences committed after 1 July 2024, the Bharatiya Nyaya Sanhita, 2023 (BNS), which replaced the IPC, introduces economic offences within the definition of “organised crime” and criminalises fraudulent removal or concealment of property to prevent distribution among creditors. Penalties under the BNS include imprisonment, monetary fines, or both.

Civil jurisdiction

Under the Civil Procedure Code, 1908 (CPC) a suit may be instituted where the defendant resides or carries on business, or where the cause of action (wholly or in part) arises within the territorial jurisdiction of the court. Insofar as suits relating to immovable property are concerned, such proceedings will necessarily be required to be instituted before the court that has territorial jurisdiction over the immovable property. In cases where reliefs are sought against immovable properties situated in multiple jurisdictions, a plaintiff may choose to institute proceedings in any of the available jurisdictions.

Criminal jurisdiction

Criminal courts in India will accept jurisdiction over complaints and proceedings in cases where:

• any citizen of India commits an offence beyond India;
• any person commits an offence in Indian territory;
• any person commits an offence on a ship or aircraft registered in India; or
• a person commits an offence involving a computer source in India (as defined under the provisions of the Information Technology Act, 2000).

A non-exhaustive list of connecting factors includes the defendant’s residence, place of business, subordinate office, location of assets, location of immovable property, place where the cause of action or crime occurred, and the governing law or jurisdiction clause in the relevant contract.In asset tracing, the presence of bank accounts, securities, land, receivables, or digital assets in India is crucial because it gives the claimant a target for interim relief and execution.

Indian courts will apply the lex situs (law of the place where assets are situated) and the lex fori (law of the forum), even in cases where the underlying fraud originated abroad.

Courts have held that in cases where monies and properties are received in India by defendants who reside and carry on business in India, and the secretion of funds is effectuated in India, recovery must be in accordance with Indian law.

Traceable assets include:

• cash and bank accounts;
• securities and shares (including dematerialised holdings);
• real property (land and buildings);
• digital assets and cryptocurrencies (following a notification issued by the Central Government in 2023 to this effect);
• intellectual property;
• gold, jewellery and other valuables;
• insurance policies;
• vehicles, aircraft, and vessels; and
• beneficial interests in trusts, partnerships, and corporate entities.

The traceability of such assets is subject to information being made available in the public domain, as is more fully described in Question 5.1, below. Claimants can apply for disclosure orders, whereby the defendant is called upon to disclose all their assets, whether movable or immovable, on oath.

Under section 66 of the Indian Trusts Act, 1882 (Trusts Act), where a trustee wrongfully mingles trust property with their own, the beneficiary is entitled to a charge on the whole fund for the amount due to them. Courts have held that where trust money is mixed with the trustee’s own, the beneficiary can claim a charge or lien on the entire property.

Yes. Indian law recognises proprietary claims in cases involving fraud or breach of fiduciary duties. The Supreme Court of India in Operation Asha v. Shelly Batra (2026) 1 SCC 569 while recognising constructive trust as a common law principle, held that proprietary claims can be made by a party.

Section 63 of the Trusts Act provides that where trust property comes into the hands of a third person inconsistent with the trust, the beneficiary may require such person to formally acknowledge that the property is comprised in trust or may institute a suit for declaration to that effect.

Section 63 further provides that where the trustee has disposed of trust property and the money or other property received thereof can be traced into their hands, or those of their legal representative or legatee, the beneficiary has the same rights in respect thereof as they would have had in respect of the original trust property.

Courts have held that when a purchase is made exclusively with trust money, the beneficiary may elect to take the property in its entirety or have a charge on it.

Under Order 39 of the Civil Procedure Code, 1908 (CPC), a plaintiff may seek temporary injunctive reliefs, restraining a defendant from inter alia, disposing, alienating, encumbering or creating third-party rights over its assets. Such an application must be filed before a court with appropriate territorial and pecuniary jurisdiction over the assets sought to be protected.

A party is entitled to seek prohibitory and mandatory injunctive reliefs at an interim stage, which can include reliefs for disclosure of assets, whether movable or immovable, on oath.

In exceptional circumstances, a plaintiff may also be entitled to an ex parte ad-interim order (i.e. without notice to the defendant).

Under Order 38 rule 5 of the CPC, a plaintiff may seek attachment before judgment against the assets which are in the defendant’s possession. Such orders (akin to a Mareva injunction) are granted where it is demonstrable that a defendant is about to dispose of or deal with their assets to obstruct or delay execution of any decree that may be passed against them.

Under the Arbitration and Conciliation Act, 1996

Under section 9 of the Arbitration and Conciliation Act, 1996 (“A&C Act”), a party to a domestic or foreign-seated arbitration is entitled to approach Indian courts and apply for interim measures, seeking protective and conservatory reliefs. Insofar as foreign-seated arbitrations are concerned, a remedy under section 9 of the A&C Act is available unless specifically excluded in the agreement between the parties.

A party is entitled to invoke jurisdiction under section 9 of the A&C Act:

• prior to commencement of arbitration;
• during pendency of arbitration proceedings; and
• after conclusion of arbitration proceedings but before such an award is enforced.

While India does not have a centralised asset registry, a considerable amount of information is made available in the public domain, which can aid the process of identification of assets:

• Ministry of Corporate Affairs. The portal of the Ministry of Corporate Affairs (MCA) provides access to company registration details, annual financial statements, charge creations and modifications, director details, and significant beneficial owner filings. This enables identification of group structures, inter-corporate investments, and encumbrances on corporate assets.
• Land Records. Land records have been digitised in many states, which can then be searched for property ownership, encumbrances, and transaction history. In states where land records are not digitised, documents may be physically verified at sub-registrar offices which maintain registration records of sale deeds, mortgages, and other property transfers.

In cases where information concerning assets may not be publicly available, or is not subject to voluntary disclosures, a claimant may make an application before the court seeking disclosures under oath. A party may also file necessary applications under the CPC seeking:

• discovery and inspection of documents;
• responses to interrogatories; and
• production of documents by persons not party to the proceedings.

There is presently no remedy for pre-action disclosure under Indian law.

Indian courts and authorities can assist foreign proceedings through letters rogatory, mutual legal assistance requests, service of summons and judicial processes, taking of evidence, and reciprocal arrangements under a Mutual Legal Assistance Treaty (MLAT). For enforcement of orders which may be passed in a foreign proceeding, local courts will examine requests for recognition and enforcement subject to the nature and finality of the order so granted.

Indian courts will typically refuse recognition and enforcement of temporary or interlocutory orders, which have not yet attained finality. In such a circumstance, the claimant will necessarily need to institute fresh proceedings before the jurisdictional courts, using the foreign order as evidence in support of the reliefs sought. The Supreme Court in Surya Vadanan v. State of Tamil Nadu (2015) 5 SCC 450 has held that in such circumstances, the principle of comity of courts must be acceded to, and such foreign orders must be duly considered while granting appropriate reliefs.

The extent of cooperation by Indian courts and law enforcement agencies is typically subject to the country or territory which makes the order and the existence of an MLAT with such country/territory.

India (through the Ministry of Home Affairs) has executed bilateral MLATs with 40 countries for the purposes of mutual assistance in criminal matters, including investigations and ongoing criminal prosecutions. On the strength of such MLATs, letters rogatory requests are frequently made by investigating officers under provisions of the PMLA and FEOA, requesting assistance in investigation and/or prosecution of criminal matters. In cases where no bilateral MLAT exists, India may consider requests for mutual legal assistance on the basis of an assurance of reciprocity from the requesting state.

India is also a signatory to the following international conventions:

• United Nations Convention Against Transnational Organised Crime, 2000 (Palermo Convention); and
• United Nations Convention Against Corruption (Merida Convention).

India’s signing and ratification of the Palermo Convention and Merida Convention has led to the enactment of the PMLA and subsequent amendments to the PCA.

The procedure for recognition and enforcement of foreign judgments and decrees in India is subject to satisfaction of conditions under section 13 of the CPC and whether such a judgment was delivered by a reciprocating or non-reciprocating territory under section 44A of the CPC.

Conditions under section 13 of CPC

Section 13 states that a foreign judgment shall be conclusive as to any matter thereby adjudicated upon between the same set of parties except for the following circumstances:

• where it has not been pronounced by a court of competent jurisdiction;
• where it has not been given on the merits of the case;
• where it appears on the face of the proceedings to be founded on an incorrect view of international law or refusal to recognise Indian law in cases where such law is applicable;
• where the proceedings in which the judgment was obtained are opposed to natural justice;
• where it has been obtained by fraud;
• where it sustains a claim founded on a breach of any law in force in India.

Decrees from reciprocating territories

Under section 44A of the CPC, a reciprocating territory means any country or territory outside India which the Central Government declares (by notification in the Official Gazette) to be a reciprocating territory. Presently, India has notified the following 13 countries as reciprocating territories: United Kingdom, Singapore, United Arab Emirates, Hong Kong, New Zealand, Bangladesh, Malaysia, Trinidad and Tobago, The Cook Islands, Western Samoa, Papua New Guinea, Fiji, and Aden.

A foreign decree rendered by a superior court (as may be prescribed by notification in the Official Gazette) in a reciprocating territory can be enforced/executed in India as though such a judgment had been passed by an Indian Court. However, it is relevant to note that “decree” under section 44A has been defined to mean a decree or judgment of a court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty.

Decrees from non-reciprocating territories

In cases where a party obtains a judgment or decree from a foreign court in a jurisdiction which is not a reciprocating territory as described herein, such a party will be required to institute a fresh proceeding, using such a foreign judgment or decree as persuasive evidence of their claim. Such proceedings may be instituted in a court of appropriate territorial and pecuniary jurisdiction.

Section 60 of the PMLA prescribes the procedure for attachment, seizure and confiscation of property in response to requests from contracting states (i.e. states who are parties to the Palermo Convention and Merida Convention) arising out of, or in relation to, money laundering. The procedure is set out below:

• Where a letter of request is received by the Central Government from a court or authority in a contracting state requesting attachment, seizure, freezing, or confiscation of property in India derived from the commission of an offence under a corresponding law, the Central Government may forward such request to the Director for execution under the PMLA.
• Where the court or authority in a contracting state finds that the offence of money laundering under the corresponding law of that country has been committed, the Special Court, on receipt of an application from the Director of the Enforcement Directorate for execution of confiscation order, may order such confiscation in favour of the Central Government. On a request made by the contracting state, the Central Government may either return such confiscated property to the requesting state or compensate that state by disposing of such property on mutually agreed terms.
• The provisions of the PMLA insofar as they relate to attachment, confiscation and vesting of property with the Central Government (as found in Chapter III of the PMLA) and survey, searches, and seizures (as found in Chapter V of the PMLA) shall also apply to property in respect of which letters of request are received from a court or a contracting state for attachment or confiscation of property.
• Where any property in India is confiscated as a result of execution of a request from a contracting state in accordance with the provisions of the PMLA, the Central Government may either return such property to the requesting state or compensate that state by disposing of such property on mutually agreed terms that would take into account deduction for reasonable expenses incurred in investigation, prosecution, or judicial proceedings leading to the return or disposal of confiscated property.

Courts have observed that while it is essential to provide legal assistance and extend cooperation in response to requests received from contracting states, the same would have to be within the four corners of domestic law.

Orders obtained through foreign-seated arbitrations

If a foreign freezing or confiscation order has been obtained by way of an award of an Emergency Arbitrator/Arbitral Tribunal in a foreign-seated arbitration, a party is required to either institute proceedings under section 9 of the A&C Act or institute a fresh civil suit before the court of appropriate jurisdiction seeking the same reliefs as sought before the Emergency Arbitrator/Arbitral Tribunal.

The IBC includes dedicated provisions aimed at tracking, reclaiming, and safeguarding assets that may have been depleted through fraudulent or wrongful actions. Importantly, the IBC establishes avoidance mechanisms under sections 43–51, which permit the unwinding of certain transactions entered into prior to insolvency, such as preferential transactions (section 43), undervalued transactions (section 45), extortionate credit transactions (section 50), and transactions intended to defraud creditors (section 49) (“Avoidance Transactions”).

These mechanisms are intended to restore assets to the insolvency estate that were wrongfully transferred. Furthermore, section 66 deals with fraudulent and wrongful trading, imposing personal liability on directors and officers for conduct that resulted in asset depletion.

Additionally, the IBC also provides for a moratorium that inter alia prohibits initiating and continuing any suits or proceedings against the corporate debtor and transferring, disposing, or alienating the assets of the corporate debtor, including the beneficial right in such assets. In case a claim is made by or against the corporate debtor, the claimant will have to make an application before the NCLT under section 60(5).

Yes. Sections 25(2)(j) and 35(1)(l) of the IBC specifically empower the resolution professional (RP) or liquidator to continue or institute proceedings in relation to avoidance transactions. Further, under section 66 of the IBC, if in the course of the liquidation of a corporate debtor, or during the corporate insolvency resolution process (CIRP), the liquidator or RP discovers that the corporate debtor conducted its business operations and entered into transactions with a view to defraud its creditors or for any other fraudulent purpose, the liquidator or RP may file appropriate applications before the adjudicating authority (i.e. the National Company Law Tribunal) seeking a declaration that the transactions are fraudulent in nature and directions that persons involved in the fraudulent transactions contribute to the estate of the corporate debtor.

In addition to the response at Question 8.2, above, under the scheme of the IBC, the RP is duty-bound to identify and challenge preferential transactions (satisfying the conditions prescribed under section 43) and undervalued transactions (satisfying the conditions prescribed under section 46) during the “look-back period” preceding insolvency, by filing necessary applications before the adjudicating authority. The adjudicating authority may order the transaction to be set aside and direct the counterparty to release or transfer property to the liquidation estate. Crucially, the benefit of any such reversal accrues to the corporate debtor’s estate rather than to any individual claimant; persons seeking recourse from the restored assets are entitled to proceeds solely in accordance with the resolution plan or the waterfall mechanism under section 53 of the IBC.

The Insolvency and Bankruptcy Board of India (IBBI) is independently empowered to direct any person who has derived an unlawful gain or averted a loss by contravening the provisions of the IBC to disgorge an amount equivalent to such gain. Additionally, the IBBI may take steps to restore losses suffered by identifiable persons where such losses are directly attributable to the contravention.

Yes. Indian law permits civil and criminal actions to proceed in parallel. The Supreme Court of India in a series of judgments has held that both remedies may be pursued simultaneously as they operate before different courts with different standards of proof.

However, Indian courts have frowned on attempts by parties to give a criminal colour to disputes that are otherwise purely civil in nature. If a party is able to demonstrate that the complainant has maliciously instituted a criminal complaint in relation to disputes which are otherwise civil or contractual in nature, a jurisdictional court, in exercise of its inherent powers will have the power to quash such criminal proceedings.

Under PMLA

A director may provisionally attach any property or assets if there are reasons to believe (recorded in writing) that any person is in possession of proceeds of crime and such proceeds are likely to be concealed, transferred, or dealt with in a manner that may frustrate confiscation attempts. Such provisional attachment is valid for a period of 180 days.

Confiscation orders may be passed by an adjudicating authority in cases where trial under the PMLA cannot be conducted by reason of death of the accused or the accused having been declared a proclaimed offender. Such confiscated property vests with the Central Government, free of all encumbrances.

Under FEOA

Under the FEOA, a Special Court, upon declaration that a person is a “fugitive economic offender” within the meaning of the FEOA can pass orders directing confiscation of proceeds of crime and any other property (which includes benami property) owned by such a fugitive economic offender. The FEOA is designed to compel appearance of such individuals before courts in India to face prosecution. Section 11 of the FEOA stipulates that where such a person appears before the Special Court, the proceedings stand terminated.

Under BTA

Under the BTA, any property which forms the subject matter of a benami transaction is liable to be provisionally attached and can be subsequently confiscated by the Central Government. The confiscation proceedings under the BTA are civil in nature, with the Supreme Court in Manjula v. DA Srinivas, 2026 SCC OnLine SC 831, noting that confiscation is intended to ensure that a person who has violated the law is not permitted to enjoy the fruits of such violation.

Under BNSS

Section 107 of the BNSS confers upon the magistrate the power to attach property identified as “proceeds of crime”. Such power also includes the power to direct ex parte orders of attachment.

Yes. Section 8(8) of the PMLA, read with the Prevention of Money Laundering (Restoration of Confiscated Property Rules) 2016 states that the Special Court may direct the Central Government to restore confiscated property or a part thereof to a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering. This is, however, subject to the claimant sufficiently demonstrating to the Special Court that it has acted in good faith, has suffered the loss despite having taken all reasonable precautions, and is not involved in the offence of money laundering.

In proceedings relating to criminal fraud, and recoveries of assets made in pursuance to a criminal investigation, a victim will necessarily be required to make an application under the BNSS before the court supervising the investigation, and request that such an asset be released in their favour. Such an application can either be made during the course of investigation or trial, or at the conclusion of the trial.

The court, upon being satisfied that the asset belongs to the victim, may pass appropriate orders directing release of such asset on appropriate terms, such as requiring the victim to furnish a bond/security for return of the asset should it be required at a subsequent stage.

There is no statutory bar for non-residents/foreign entities who are victims of fraud to make appropriate applications, seeking release of assets that may have been recovered in the course of a domestic investigation. Repatriation of assets recovered during the course of investigation may be made under MLATs or under the provisions of the PMLA (as the case may be).

In the context of insolvency proceedings, the waterfall mechanism of hierarchy of claims will operate in appropriate cases where recovery of funds and assets are made.

Civil claims

Insofar as claims arising out of fraud are concerned, the Limitation Act, 1963 provides that the period of limitation for the commencement of an action shall only begin on the date on which the plaintiff/applicant has discovered the fraud or could have discovered the fraud with reasonable diligence.

Criminal actions

Chapter 38 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) prescribes the limitation period for taking cognisance of certain classes of offences (as prescribed under the BNS), which is described below:

• limitation period of six months, if the offence is punishable with fine only;
• limitation period of one year, if the offence is punishable with imprisonment for a term not exceeding one year; and
• limitation period of three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years.

Notwithstanding the above, a court may take cognisance of an offence after the expiry of the period of limitation if it is satisfied that the delay in presentation of the complaint has been properly explained, or it is necessary to do so in the interests of justice.

It is pertinent to note that the BNSS does not prescribe any limitation period for offences which are punishable with imprisonment exceeding three years. As such, any complaints for offences of cheating and dishonestly inducing delivery of property, or forgery for the purpose of cheating, or forgery of valuable security are not subject to any limitation bar.

Furthermore, the Economic Offences (Inapplicability of Limitation) Act, 1974 stipulates that the limitation provisions provided in Chapter 36 of the erstwhile Code of Criminal Procedure, 1973 (now replaced by Chapter 38 of the BNSS) shall not apply to any offences punishable under, inter alia, the Income Tax Act, 1961, the Customs Act, 1962 and the Foreign Exchange Regulation Act, 1973.

Yes. As stated in Question 10.1, above, section 17 of the Limitation Act states that the period of limitation for the commencement of an action shall only begin on the date on which the plaintiff/applicant has discovered the fraud or could have discovered the fraud with reasonable diligence. A party is entitled to take such a position under the following circumstances:

• the suit/application is based upon the fraud of the defendant or respondent or their agent;
• the knowledge of the right or title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or
• where any document necessary to establish the legal right of the plaintiff or applicant has been fraudulently concealed from them.

That being said, if a party is able to demonstrate that the alleged fraud is of a continuing nature, the period of limitation may also be treated as continuing.

• Bona fide purchaser. A person who acquires property in good faith, for valuable consideration, and without notice of the claimant’s prior equitable interest, acquires the property free of such interest. To avail this defence, the defendant must establish:
  • valuable consideration given;
  • no actual knowledge of the fraud at the time of acquisition; and
  • no constructive notice.

The burden lies on the person asserting the defence.

• Absence of fraudulent intent/mens rea. In criminal proceedings, the absence of mens rea is a complete defence. In contractual claims under section 17 of the Contract Act, the intent to deceive is an essential ingredient to sustain a claim for fraud.
• Procedural non-compliances. Typically, a defendant/accused who is subject to search and seizure or provisional attachment under the provisions of the BNSS or PMLA can contest the validity of such search and seizure proceedings on account of failure to comply with procedural requirements. In the event it is proved that due process as stipulated under the BNSS or PMLA (as the case may be) was not followed, then any subsequent recovery of property can be treated as non-est (i.e. having no legal effect) in the eyes of law.
• Under the Contract Act, once a party has knowledge of the fraud, it must opt either to affirm the contract or rescind the contract and demand that it must be put back in the same position as it was prior to the contract having been executed. Therefore, if after becoming aware of the fraud, a party chooses to affirm the contract, such party thereafter cannot place reliance on the same fraud and seek to rescind the contract.

Civil remedies include rescission, damages, restitution, declarations, cancellation of instruments, recovery of specific property, permanent injunctions, mandatory injunctions, accounts of profits, appointment of receivers, sale of attached property, and execution against assets.

Under the IBC, the NCLT can reverse avoidance transactions and direct all such parties that participated in such avoidance/preferential transactions to contribute to the corporate debtor’s estate.

Under criminal statutes such as BNS and PMLA, upon conviction of the accused, such individuals may be sentenced to imprisonment and/or pay monetary fines. Such monetary fines, while typically payable to the state, may also be directed to be paid to the victim/complainant.

As mentioned in the response to Question 9.4, above, upon a victim successfully demonstrating ownership or title, properties that were seized or confiscated may be returned at the conclusion of proceedings.

The Supreme Court of India in Operation Asha v. Shelly Batra (2026) 1 SCC 569 has held that a constructive trust arises the moment a breach of fiduciary duty occurs, obliging the fiduciary to treat profits as belonging to the principal. The court further observed that “the receiving of money which cannot be conscientiously retained is sufficient to raise a trust, in equity, in favour of the party for whom or on whose account the money was received”.

Please see the response to Question 9.4, above.

Interest

A party is entitled to pre-suit interest, pendente-lite interest and future interest, depending on the facts and circumstances of each case. The power to grant such interest is discretionary, and vests with the court. The objective of granting interest is compensatory, and not penal in nature.

Costs

A party is entitled to reasonable costs incurred in litigating such claims. The CPC defines costs to mean:

• fees and expenses of the witnesses incurred;
• legal fees and expenses incurred; and
• any other expenses incurred in connection with the proceedings.

The court has discretion to determine the quantum of costs payable; the general rule is that the unsuccessful party bears reasonable costs of the successful party. The CPC provides for “general costs”, “compensatory costs” for “false/vexatious claims”, and “costs for delay”.

Under Order 25 of the CPC, a defendant is entitled to make an application before the court, seeking security for the payment of all costs incurred and likely to be incurred by the defendant. In the event an order is granted, and the plaintiff fails to furnish such security within the time frame stipulated, the court shall make an order dismissing the suit.

Insofar as the question of apportionment of interest and costs in the context of arbitration proceedings is concerned, in the event the arbitration agreement provides for the manner in which interest and costs are to be levied, a tribunal is bound by such agreement between the parties. In the absence of such agreement, the discretion for awarding interest and costs vests with the tribunal.

India is a relatively claimant-friendly jurisdiction for fraud and asset recovery, for the following reasons:

• wide-ranging statutory powers for attachment and confiscation (PMLA, FEOA, IBC);
• recourse to ex parte orders seeking prohibitory and mandatory injunctions for urgent reliefs;
• powerful criminal investigation agencies with broad search and seizure powers;
• no general limitation for serious criminal offences; and
• recognition of Mareva-style injunctions.

Depending on the jurisdiction that is approached, applications seeking interim reliefs are typically listed before courts within two to four days of filing. Thereafter, if a court is satisfied that reliefs ought to be granted ex parte, then appropriate orders are ideally passed within one to two days from the date of effective hearing. Timelines will, however, vary depending on choice of forum.

Alternatively, if a court believes that interim reliefs ought to be granted after issuance of notice to the defendant/respondent, then such reliefs may be granted within two to six weeks from date of appearance of the defendant/respondent.

Typical costs include counsel and expert fees and court fees, which are calculated against the monetary value of the claim made or the asset against which relief is sought. The method of calculation of court fees payable is regulated by state-specific Court Fees Acts. While costs in India are relatively lower as compared to England and the United States, prolonged timelines and delays in litigation have the potential to increase overall costs.

Litigation funding

There is no express statutory or regulatory bar to third-party funding of litigation in India. Equally, there is no formal legislation which seeks to regulate third-party funding. Permissibility of third-party funding of litigation has evolved from judicial precedent.

To this effect, the Supreme Court of India in Bar Council of India v. A.K. Balaji & Ors (2018) 5 SCC 379 has observed that while advocates cannot fund litigation on behalf of their clients, there appears to be no restriction on third parties from funding the litigation and getting repaid after the outcome of the litigation.

Practitioners must anticipate delays in final adjudication of claims by courts. The availability of multi-tier appellate remedies contributes to prolonged timelines in adjudication.

India does not have a centralised asset registry, forcing claimants to rely on party disclosures and independent efforts to investigate and locate counterparty assets.

India presently does not have a statutory mechanism which provides for pre-action disclosures.

Bureaucratic delays in cooperating with and extending assistance under MLATs’ can hinder time-sensitive investigations.

The BNS vide Explanation (ii) to section 111(1) has for the first time introduced the concept of an “economic offence” within the meaning of the term “organised crime”. The BNS defines “economic offence” to include offences such as criminal breach of trust, forgery, counterfeiting of currency notes, banknotes and/or government stamps, mass marketing frauds, or acts done with a view to defraud a bank or financial institution or any other institution/organisation for obtaining monetary benefits in any form.

Developments to address conflicting interests between the IBC and PMLA:

• Policy developments have been recently notified with a view to address the deadlock between the IBC and PMLA, particularly in cases where large-scale corporate fraud is concerned, and the entities involved are parallelly subject to:
  • ED investigation and attachment orders under the PMLA; and
  • insolvency proceedings under the IBC.
• The IBBI in consultation with the ED issued a circular in November 2025 so as to standardise the process for restitution of assets (in favour of the insolvency professional) in cases where the assets of a corporate debtor have been attached by the Enforcement Directorate.

Indian courts are significantly expanding asset tracing and recovery mechanisms arising out of fraud-related actions. The Supreme Court in Vijay Madanlal Chaudhary v. Union of India, 2022 SCC OnLine SC 929 has upheld the constitutional validity of the provisions and powers conferred under the PMLA, including those relating to search, seizure, attachment, and confiscation of proceeds of crime.

The ruling of the Delhi High Court in Adnan Nisar v. Enforcement Directorate, 2024 SCC OnLine Del 6498 has expanded the scope of recognition and enforcement of cross-border investigations into allegations of money laundering. A single judge of the Delhi High Court held that a predicate offence registered under the corresponding law of a contracting state can form the basis for commencement of PMLA proceedings in India, upon demonstrating that the proceeds of such crime have travelled into India.

The Ministry of Finance by way of a notification expanded the scope of the PMLA by bringing activities related to virtual digital assets (VDA) and cryptocurrency within its ambit, thereby subjecting VDA entities to direct engagement with enforcement agencies such as the Enforcement Directorate (ED).

India is currently actively participating in UNCITRAL Working Group V, which is engaged in developing legislative principles to enhance cross-border cooperation for civil asset tracing and recovery in insolvency proceedings. This is likely to bring about appropriate reforms in domestic legislation in due course.