Can ED Conduct Search And Seizure Without Predicate Offence? Karnataka High Court To Decide

The Karnataka High Court on Thursday (January 29) directed ED's adjudicating authority not to close its search and seizure proceedings initiated against a partnership firm under scanner for betting and gambling, until the high court decides the firm's plea questioning the proceedings. 

The petitioner Puppy Tours and Travels LLP has sought to declare the search, seizure and freezing operations and consequent retention of property and records, conducted by ED as illegal and bad in law. It has also challenged a show cause notice issued by the ED on 29.09.2025 as well as all proceedings emanating therefrom.

After hearing the parties for some time, Justice M Nagaprasanna in his order dictated: 

"The learned ASG would submit that the search and seizure can take place even without predicate offence. In the light of said contention he would contend that search and seizure proceedings should not be stalled at the hands of this court. Learned counsel for petitioner submits that search and seizure would continue, but let not the adjudicating authority conclude the proceedings by passing a final order. In that light I deem it appropriate to direct that the adjudicating authority would not conclude the proceedings of search and seizure till the decision is arrived at in the case at hand". 

During the hearing, Additional Solicitor General Arvind Kamath appearing for the ED opposed the petition over maintainability and said, "As far as Article 226 is concerned, officers had jurisdiction to conduct search. No violation of natural justice principle. Writ is not maintainable. After search was conducted, all safeguards recognized under Vijay Madanlal Chaudhary have been followed. Officer concerned had reasons to believe..."

The court however orally said that if predicate offence is not there ECIR is not maintainable. To this Kamath said, "Without FIR I can do the search. It is in nature of civil proceedings. ECIR is just like a number that we write in register, not statutory document like FIR". 

He further said that petitioners had participated in the proceedings before the adjudicating authority in this case and raised the same grounds before the authority, which have been raised in the petitioner's petition before the high court. 

"Authority is seized of the matter. How can the petitioner run parallel proceedings? Hon'ble Supreme Court has said that should be allowed to complete its legal course of action. They (petitioners) should pursue their remedies there (before authority) and then come here. Let him address on maintainability, till then we will file our objections and matter may be heard on merits," the ASG said. 

To this the court orally said, "Till then don't precipitate. We will hear it. But don't make it fait accompli". At this stage Kamath said that investigation will continue, and precipitation would be arrest whereas the petitioner has not even been summoned. 

As Kamath argued that there was a "cloud of doubt" over maintainability of the petition the court orally said:

"We will decide that...There is no predicate offence. I will hear on issue whether predicate offence is necessary or not ECIR can stand on its own or otherwise...till I hear it don't take...let the seizure continue; let them not conclude the proceedings of such seizure till the matter is heard...I'll hear on merits not a problem. Seizure will continue. You don't close the proceedings of seizure. Let the adjudicating auth not conclude the proceedings till I pass an order. I'm not staying the proceedings". 

Previously the counsel for petitioner had argued that he was challenging the search conducted by the ED. He had questioned whether the central agency had any reasons to conduct the search on the day that it was conducted, claiming that there was nothing against the petitioner.

He had submitted that the freezing order issued by the ED also does not provide any reasons. The court was also told that the matter was listed before the concerned adjudicating authority on February 5.

Meanwhile ED's counsel had said that there was a predicate offence pending at Cyber Cell Madhya Pradesh. The petitioner's counsel however sought stay of proceedings before the authority.

The plea claims that the ED had registered a complaint in 2025 allegedly on the basis of FIRs under various provisions including IPC Section 420 (cheating), registered over a period of 10-15 years relating to alleged betting and gambling activities. The plea claims that the ED had alleged that several persons are involved in online betting and gambling activities and proceeds of crime have been generated from the same, which has been laundered attracting penal consequences under Section 3 of the PMLA.

The petitioner has alleged that the ED conducted search and seizure on 22.08.2025 to 09.09.2025 and seized valuables and has also frozen various bank accounts.

Thereafter a show cause notice was issued to the petitioner on 29.09.2025. The petition states that KC Veerendra (petitioner in the connected matter) was granted bail by the trial court.

It further states that only one predicate offence survives and even in that the concerned agency has filed a closure report (B report). Therefore, if the predicate offences have been quashed/ closed/ acquitted and in the sole surviving predicate offence, the agency has filed a closure report, the ED does not have any valid reason to believe in terms of Section 17(1) of the PMLA and moreso having nexus with the live predicate offence.

The matter is listed on February 12. 

Case title: PUPPYS TOURS AND TRAVELS LLP v/s UNION OF INDIA AND ANOTHER WP 964/2026

KC NAGARAJA v/s UNION OF INDIA AND ANOTHER WP 966/2026

Counsel for petitioners: Advocates Mayank Jain, Madhur Jain, Arpit Goel and Rajath