'You May Be Crusader Against Corruption But Act According To Law': Karnataka High Court Questions ED Searches On Excise Commissioner

The Karnataka High Court on Wednesday (July 15) questioned the Enforcement Directorate's (ED) decision to conduct search and seizure operations against an Additional Commissioner of Excise, his family members and other persons allegedly unconnected with the predicate offence, cautioning the agency that its zeal to combat corruption must operate within the confines of law."Maybe you (ED) are the crusader of corruption but it must be in accordance with law...If you really have the zeal to cut corruption in any department, do it in accordance with law. You need not come to the court and defend an action that is indefensible prima facie”, Justice M Nagaprasanna orally remarked.The Court was hearing pleas filed by Dr. Y. Manjunath, Additional Commissioner in the Excise Department, and his wife, Mahadevi Manjunath, assailing search and seizure proceedings conducted by the ED under Section 17 of the PMLA at their residences in Belagavi and Bengaluru on June 24 and 25.Expressing prima facie reservations over the ED's action, the Court directed the agency not to precipitate the matter till the next date of hearing.“…The petitioners are admittedly not accused. A few of them are officers of the Excise department and other persons totally unconnected to the predicate offence. While it is not the law that merely because the accused name is not found in said predicate offence, the offence under ECIR cannot be registered or subsequent proceedings cant be taken…however, there should be a money trail link between the accused in the predicate offence or any semblance of link stablished by chain of events or by search proceedings that have taken place…”, the Court noted in its order.The petitioners contended that the ED's action stemmed from a trap case registered by the Karnataka Lokayukta Police against one Jagadish Nayak, an excise official who was allegedly caught accepting a bribe of ₹25 lakh. They argued that neither the Additional Commissioner nor his family members had any connection with Nayak or the predicate offence.Senior Advocate Prabhuling Navadgi, appearing for the petitioners, argued that there was no scheduled offence relatable to his clients and, consequently, no “proceeds of crime” as defined under Section 2(1)(u) of the PMLA.“…there is no predicate offence. They[ED] have now issued a press release saying there is some kind of corruption in the excise department, therefore it is our duty to go and conduct search proceedings…I can't fathom it… there is a well-oiled system in Karnataka in the form of Lokayukta's to which complaints can be given..”, the senior counsel said.Questioning the ED's jurisdiction, the Court orally observed: “To get a right to search in a particular offence, there must be a predicate offence. One must be accused there or a money-trail connection with the accused must be there. Who is the accused and who is Jagadeesh Nayak? ... This is Section 7A of the Prevention of Corruption Act, it is not proceeds of crime.” The Court further remarked that while the ED may initiate proceedings in disproportionate assets cases under Section 13 of the Prevention of Corruption Act, the present case arose out of a trap case under Section 7A. “See if it's a Section 13 PCA proceeding, you can say someone amassed wealth disproportionate to the known source of income and thus you may spring into action... This is a Section 7A PCA case, a trap case. How do you go against unconnected people X, Y, Z?” the Court asked. During the hearing, ED counsel Madhu N. Rao defended the searches by submitting that the Lokayukta Police had registered Crime No. 1 of 2026 against senior officials of the Excise Department and maintained that there existed a predicate offence. “I will take instructions; there is a predicate offence, otherwise we will not even register an ECIR,” Rao submitted. The petitioners, however, reiterated that Jagadish Nayak neither worked under Dr. Manjunath nor had any nexus with him. The pleas also state that the ED officers themselves appeared surprised during the search upon learning that Nayak was working under another Additional Commissioner. The Court noted that ED proceedings under Section 17 of the PMLA carry serious consequences and observed that the agency's anti-corruption mandate cannot override statutory safeguards. “Instead of defending such action in the court, if you fine-tune your actions and do it there, no one will interfere,” the Court orally remarked. During the searches, the ED allegedly seized gold jewellery weighing around five kilograms valued at over ₹7.24 crore, diamond ornaments worth ₹54.70 lakh, cash of ₹2.5 lakh, foreign currency equivalent to ₹3.37 lakh, and several electronic devices. Recording the petitioners' contention that the attachment proceedings and consequent summons were illegal, the Court directed, “...Though in prima facie opinion, I deem it appropriate to direct the ED not to precipitate the matter till the next date of hearing.” For petitioners: ...

'You May Be Crusader Against Corruption But Act According To Law': Karnataka High Court Questions ED Searches On Excise Commissioner

Sebin James

One must be an accused or a money-trail connection with the accused must be there, Court said.

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Sebin James

'You May Be Crusader Against Corruption But Act According To Law': Karnataka High Court Questions ED Searches On Excise Commissioner

Sebin James

One must be an accused or a money-trail connection with the accused must be there, Court said.

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INR 1099+GST

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Sebin James

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