Karnataka High Court Admits Appeal Filed By ED Against Order Quashing Case Against Former MUDA Commissioner

The Karnataka High Court on Monday admitted the appeal filed by Enforcement Directorate challenging an order of the single judge which had allowed the petition filed by former Commissioner of Mysore Urban Development Authority (MUDA), Dr Natesha D B, during whose tenure alleged illegal allotment of land sites was made to Chief Minister Siddaramiah's wife Paravathi.The single judge bench had allowed the petition and held that the search and seizure conducted at the petitioner's residence by the ED and the subsequent statement recorded under Section 17(1)(f) of PMLA, is vitiated on the grounds of absence of 'reason to believe', and declared it to be invalid and illegal. It also quashed the summons issued to him under Section 50 of the Act.A division bench of Chief Justice N V Anjaria and Justice M I Arun while admitting the appeal said, “In the facts of the case, appeal is admitted. To be listed on April 8. As far as the operative direction (v) is concerned (in the single judge order) the counsel for respondent states that respondent shall not act upon the same and shall not initiate action against the officers during the pendency of the appeal. Reply shall be filed by the respondents before the next date of hearing.” For context the single judge had granted liberty to the petitioner to initiate action under Section 62 PMLA against the concerned officer of the ED. Whether the impugned search and seizure is vexatious or not, the Court said will be a matter of trial.The court orally observed that the direction ran contrary to other directions passed in the order. It also permitted the appellants to file an application seeking stay of order as there was no prayer made for interim relief in the appeal. Additional Solicitor General S V Raju appearing for the agency pleaded that this order is being cited in a number of cases and we are being prejudiced by it. Further he said that the learned judge is confused with regards to Section 19 and 17 of the PMLA Act. This order can't stand for a day. Senior Advocate Dushyant Dave appearing on caveat for the respondent said, “This order will stand.” The single judge had in its order observed that the Enforcement Directorate (ED) cannot give the elements of procedural fairness contained in the Prevention of Money Laundering (PMLA) a go-by in the course of its administration. The bench had allowed petition and held that the search and seizure conducted at the petitioner's residence by the ED and the subsequent statement recorded under Section 17(1)(f) of PMLA, is vitiated on the grounds of absence of 'reason to believe', and declared it to be invalid and illegal. It also quashed the summons issued to him under Section 50 of the Act.The court said, “Enforcement Directorate is a premier investigative agency established for the purpose of preventing serious offences of money laundering and confiscation of the proceeds of crime, and that it is expected to discharge its duties with fairness. The right to liberty and privacy under Article 21 of the Constitution vests a right against the conduct of arbitrary searches, and therefore, the search conducted on the premises of the petitioner under the garb of investigation, when there is no prima facie evidence to establish the offence under Section 3 is but an abuse of process of law.”It had added, “The Enforcement Directorate cannot give the elements of procedural fairness contained in the PMLA a go-by in the course of its administration. It is pertinent that the right to liberty and privacy of individuals cannot be trampled upon and that any curtailment of civil liberties is subject to the due process of law.”ED had recorded an ECIR on 01.10.2024, based on an FIR filed by the Lokayukta concerning a predicate offence related to the illegal allotment of sites by MUDA during the petitioner's tenure as Commissioner of MUDA. Pursuant to authorization by the Joint Director of the respondent agency, the Assistant Director conducted a search of the petitioner's residence on 28.10.2024 and 29.10.2024.Furthermore, the respondent examined the petitioner on oath under Section 17(1)(f) of the Act. On 29.10.2024, summons were served on the petitioner under Section 50.Further the court had said the existence of “reason to believe,” as required under PMLA mandates the presence of sufficient cause to indicate the commission of the offence of money laundering. Further, the Act necessitates a corresponding justification for the seizure of any records or proceeds of crime discovered during the search."Such a requirement ensures that the said property is not dissipated, layered, or integrated in a manner that renders it seemingly legitimate. In the instant case, no such material as was in possession at the time of search, has been furnished to this Court to probabilize the purported involvement of the petitioner. In absence of the same, any conclusion arrived at necessitating the search does not satisfy the threshold of “reason to believe”, as envisaged...

Karnataka High Court Admits Appeal Filed By ED Against Order Quashing Case Against Former MUDA Commissioner

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Karnataka High Court Admits Appeal Filed By ED Against Order Quashing Case Against Former MUDA Commissioner

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