Karnataka High Court Reserves Order On Plea By CM Siddaramaiah's Wife, Minster BS Suresh To Quash ED Summons, ECIR In MUDA Case

Justice M Nagaprasanna reserved its order after hearing all the parties.

During the hearing senior advocate Sandesh J Chouta appearing for Parvathy submitted that she has surrendered the sites which are alleged to be issued illegally and is neither enjoying it nor is in possession of proceeds of crime. However, in haste the ED registered its ECIR soon after an FIR was registered by the Lokayukta police on the directions of the court, he said. 

Emphasising that existence of proceeds of crime is not enough to invoke provisions under the Prevention of Money Laundering (PMLA) Act Chouta said, “Just the existence of dirty money is not enough for PMLA. The entire argument of mine would be that to attract provisions of PMLA unless there is activity in furtherance of proceeds of crime, PMLA will not be attracted.”

Further he said “The three essentials for constituting an offence under the Act were, there should be scheduled offence, from which proceeds of crime is to be derived and the person concerned is directly or indirectly involved in the process or activity.”

He urged “In our case on 1-10-2024, property is returned back to MUDA. Thus the so-called proceeds of crime were not with the petitioner, so the question of she enjoying the proceeds of crime does not arise. She having done a process or activity post that does not arise. So you cannot invoke PMLA.”

“So how does ED get jurisdiction to register ECIR. It was done in haste, soon after the FIR was registered by Lokayukta,” he added. 

Chouta further submitted “I am the wife of the Chief Minister of the state and if fingers are pointed to him, I would have a moral responsibility that such allegations be doused at the earliest.”

Referring to provision of BNS he argued that “When the very allegation of these 14 sites whether legal or illegal is being investigated, and IO investigating the predicate offence has power to attach, it can be said that in this tearing hurry PMLA cannot be invoked when investigation is the same.”

It was contended that ED cannot now investigate the entire allotment made by MUDA and for that summons cannot be issued to the petitioner.

Chouta said, “Here already an investigation of a predicate offence is happening by another agency (Lokayukta). They are also trying to investigate into predicate offences. How can you investigate what is to be investigated in a predicate offence.”

Before concluding Chouta informed the court that through media reports he has learnt that the Lokayukta police would be filing a B report before the trial court in the investigation against the accused.

Meanwhile Senior Advocate CV Nagesh appearing for minister Suresha had earlier argued that “I assumed office as minister in June 2023. The offence is related to illegal or authorized allotment of sites. Proceeds of crime is in relation to the illegal allotment of sites, in what way am I connected to it? My tenure commenced only in June 2023. Before that I was an utter stranger to MUDA. Moreover, the basis of the complaint is a private complaint. In that there is not even a remotest mention about me. No reference has been made to the petitioner. Then what is the object of issuing the notice?"

On the other hand Additional Solicitor General Arvind Kamath appearing for the respondent ED opposed the plea saying that it was a case of corruption and the probe was not limited to the 14 sites.

“The complaint is that MUDA has been granting sites by violating rules. I am not concerned with the accused in the predicate offence, we are behind the proceeds of crime,” Kamath emphasized. 

Contesting the petitioners' contention that the ECIR was registered soon after FIR in predicate offence was registered Kamath said, “There is no law prohibiting me from registering an offence after registration of a predicate offence. During the course of our investigation, one of the persons has stated that he was put under pressure from the office of the accused to make the allotment. We have found dozens of people purchasing property in the names of their relatives.”

He claimed that “During investigation, the allotment of 14 sites is only a tip of the iceberg.”

Defending the questionnaire issued with the summons calling for details of properties held by the persons and their relatives he said “Look at my questionnaire why I am asking the details of relatives. I should be permitted to ask this info about their relatives. We want to know if he , as minister of Urban development, was involved in allotment. We want to know if there was an allotment of sites to his relatives. I have attached the questionnaire to the summons. This cannot be subjected to judicial review. As the investigation has revealed there is lot of illegal allotment of sites”.

Refuting the petitioners' submission that property has been returned to MUDA, Kamath said, “Allotment of sites is a criminal activity. If the theory propounded by the petitioner is accepted then it will turn the entire PMLA Act over it head. Any person who is summoned can say now take my property.”

To this the court said, “One factor is sites did not go to the accused by way of sale or purchase but by way of allotment, in lieu of usage of lands of the accused. So it is not that the proceeds of crime have emerged because of that.”

Meanwhile Kamath contended, “In my submission this petitioner cannot say that as on date of ECIR, I was not in enjoyment of the property. The petitioner claims sites is surrendered to MUDA. The custody may be with MUDA but I would say that MUDA is in possession of proceeds of crime.”

Stating that by issuing the summons, ED is only conducting a civil inquiry Kamath said, “At this point of time we have merely issued a summon. We have not made any acquisitions at all. I don't know why my friend made submission that her client is not guilty etc. We have conducted a civil inquiry. In case of a civil inquiry, proceedings under Sec 482 CrpC (Quashing) does not arise at all.”

He added “Look at the summons I have said come to my office, I want to record your statements, there is no allegation made, so there is no cause of action for the petitioners.”

He finally concluded by submitting, “There is a predicate offence and pursuant to that proceeds of crime are generated and we have issued summons which is merely a civil inquiry and this investigation is permissible in law. Merely because the investigating agency in the predicate offence has said there is no offence, until court accepts it, I have the legal right to continue.”

Accordingly the court reserved its order on the petitions.s

Case Title: Parvathi AND Directorate of Enforcement (CRL.P 1132/2025) and another

Counsel for petitioners: Senior Advocates CV Nagesh, Sandesh J Chouta, Vikram Huilgol

ASG Arvind Kamath for Respondent.

Case No: CRL.P 1132/2025