Karnataka High Court Refuses To Stay Order Quashing ED Summons To Ex-MUDA Commissioner But Says Probe Into Scam Will Continue

The Karnataka High Court on Wednesday (April 2) refused to stay a single judge's order which quashed Enforcement Directorate's (ED) summons issued to Dr Natesha DB, the former MUDA Commissioner during whose tenure alleged illegal allotment of land was made to CM Siddaramaiah's wife Paravathi.The court however said that single judge's order cannot stall investigation against other accused persons and thus permitted the investigation to continue. A division bench of Chief Justice N V Anjaria and Justice K V Aravind while pronouncing its order said, "The prayer for stay as such is not accepted. However, we have found in favour this judgment which is not in Rem cannot stall investigation against other persons involved in the case. We have permitted investigations to continue.ED shall be at liberty to utilise all the documents materials which may have been gathered, recovered or seized at the place of petitioner as well as to utilise the statement of the petitioner for the purpose of rest of investigation in accordance with law"."This would not prejudice the respondent petitioner as his case is pending consideration on merits. Whether the statement can be retracted is also an issue at large to be considered during the appeal.All the investigation under the Act are permitted to be carried on in accordance with law notwithstanding the judgment of the single judge impugned in the appeal. ED is entitled to proceed and carry on investigation against other accused in accordance with law. The present application is disposed," the court added.On March 27, the court had reserved its verdict in Enforcement Directorate's application for stay. While allowing the former Commissioner of Mysore Urban Development Corporation's plea, the single judge had held that the search and seizure conducted at his 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. ED had moved an appeal as well as a stay application against this order.During the hearing last week, Additional Solicitor Generals S V Raju and Aravind Kamath appearing for the agency told the court that due to the order the investigation has been effectively stalled, the order is completely perverse affecting all future searches.Further it was submitted that judgment of the single judge is per-incuriam and if the judgment is prima facie wrong then it should be stayed.While allowing the former Commissioner of Mysore Urban Development Corporation's plea, the single judge had held that the search and seizure conducted at his 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 agency moved an appeal challenging the single judge's order and by way of interim relief sought to stay the order, alternatively declare that it cannot be used as a precedent.No criminal activity, can ED go after innocent citizensAppearing for the respondent Dr Natesha DB senior advocate Dushyant Dave had then submitted, "Here is a case where government is giving plots to land holder. Where is the question of money laundering here? It may be a wrong decision but there is no money derived from criminal activity. Therefore there are no proceeds of crime which is condition precedent. The plots were given in lieu of land acquired without authority of law because admittedly no compensation was paid. Plot was given to Shrimati Parvathy. I as a Commissioner have nothing to do with. It was given as a policy decision by MUDA. Allotment of plots is part of government policy, a statutory exercise. It has nothing to do with a crime".At this stage the bench had while referring to the provisions of PMLA orally said that proceeds of crime is not limited to money. To which Dave said that yes it can be in any form but it must be proceeds of crime."My emphasis is that there are no proceeds of crime. It is irrespective of a political party. Janta Dal government has given, Congress government has given, BJP government has given. Is the ED going to re-open all those millions of cases and say these are all proceeds of crime and therefore we will go after innocent citizens. That is the question before court today," Dave had emphasized.He had submitted that an "innocent action of government" need not be treated as a crime, as that is not the power of the agency and thats not how Supreme Court's decision in Vijay Madanlal Chaudhary v. UOI must be read.He had submitted that the single judge's judgment is imminently just judgment adding that the court was not only a court of law but also a court of equity which also protects rights of innocent citizens."My learned friend (ED's counsel) used the expression...

Karnataka High Court Refuses To Stay Order Quashing ED Summons To Ex-MUDA Commissioner But Says Probe Into Scam Will Continue

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