The development comes a day after the Karnataka Lokayukta gave a clean chit to CM Siddaramaiah, his wife BM Parvathy, and two others.
Published Feb 20, 2025 | 5:17 PM ⚊ Updated Feb 20, 2025 | 5:17 PM
Synopsis: The high court asked the ED if it was investigating money laundering or merely probing the initial allotment of sites, which was already under investigation as a predicate offence. The court also noted that the sites did not go to the accused by way of sale or purchase but by way of allotment, and hence it was not proceeds of crime.
The Karnataka High Court on Thursday, 20 February, reserved its order on a petition filed by Chief Minister Siddaramaiah’s wife, BM Parvathy, and Minister BS Suresha, seeking to quash summons issued by the Enforcement Directorate (ED) in connection with the alleged Mysore Urban Development Authority (MUDA) scam, Live Law reported.
The development comes a day after the Karnataka Lokayukta gave a clean chit to Siddaramaiah, Parvathy, and two others, submitting an 8,000-page ‘B-report’ to a special court, stating that the allegations against the chief minister and his family lacked sufficient evidence for a criminal case.
Activist-journalist Snehamayi Krishna, who filed the original complaint, criticised the report, alleging bias and an improper investigation. The report noted that the case was civil in nature and not suitable for further criminal proceedings.
During the hearing, senior advocate Sandesh J Chouta, representing Parvathy, argued that she had already surrendered the sites in question and was neither in possession of nor enjoying any proceeds of crime.
He contended that for the Prevention of Money Laundering Act (PMLA) to apply, there must be a clear element of money laundering beyond the mere existence of alleged “dirty money.”
The ED probe is focused on whether any money laundering activities occurred through the MUDA site allotments.
Referring to Vijay Madanlal Choudhary vs Union of India, Chouta outlined three essential criteria to constitute an offence under PMLA:
He asserted that Parvathy had returned the property on 1 October 2024, meaning she neither retained nor benefitted from the alleged proceeds of crime. He questioned the ED’s jurisdiction, arguing that its investigation followed the registration of an FIR by the Lokayukta in haste.
Chouta further contended that the ED was attempting to investigate the predicate offence itself – something already under the jurisdiction of the investigating officer handling the corruption case.
He challenged the ED’s claim that it was probing not just 14 sites but broader irregularities in MUDA’s allotment process.
Additional solicitor general (ASG) Arvind Kamath, representing the ED, countered that the investigation extended beyond the 14 sites, uncovering systemic violations in MUDA’s site allotment process.
He stated that the probe had revealed multiple instances where sites were allegedly purchased under the names of relatives of key individuals, including ministers.
“We are dealing with a case of corruption. Sec 13 is of PC Act is pressed into service. The investigation is not limited to 14 sites. The complaint is that MUDA has been granting sites by violating rules,” Kamath submitted, according to Livelaw.
He further argued that the speed at which Parvathy’s surrender request was processed – within a single day – raised suspicions.
“It happened at the speed of light. My submission is my friend Mr Chouta propounded theory of enjoyment of property. Then I will turn the entire PMLA over his head. Any person summoned can say taken my property,” he remarked, according to Livelaw.
The High Court questioned whether the ED’s investigation was genuinely targeting money laundering or merely probing the initial allotment of sites, which was already under investigation as a predicate offence.
“Where is the proceeds of crime here?. One factor is sites did not go to 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 proceeds of crime have emerged because of that,” the court asked, according to Live Law.
Kamath maintained that the ED had the right to pursue its investigation independently, asserting that merely because a predicate offence investigation was concluding with a B-report from the Lokayukta, the ED’s inquiry could not be dismissed.
The next hearing in the Lokayukta matter is scheduled for 24 February, with SP Udesh personally appearing before the court to present the investigation report.
(Edited by Dese Gowda with inputs from Nolan Patrick Pinto)
