The Karnataka High Court has quashed the summons issued by the Enforcement Directorate (ED) to Chief Minister Siddaramaiah’s wife, Parvathi, and Minister B S Suresh in connection with the Mysore Urban Development Authority (MUDA) case. The order was pronounced on Friday by Justice M Nagaprasanna, who stated:
"Allowed and quashed."
The court had reserved its judgment last month before delivering the verdict in favor of the petitioners.
Background of the Case
The case stems from allegations of illegal site allotments by MUDA. The ED registered an Enforcement Case Information Report (ECIR) soon after an FIR was filed by the Lokayukta police under court directions.
Senior Advocate Sandesh J Chouta, representing Parvathi, argued that she had already surrendered the allegedly illegal sites and was neither in possession nor benefiting from any proceeds of crime. He emphasized:
"Just the existence of dirty money is not enough for PMLA. There must be further activity related to the proceeds of crime to invoke the Act."
Chouta also pointed out that three conditions must be met to establish an offense under the Prevention of Money Laundering Act (PMLA):
- There must be a scheduled offense.
- Proceeds of crime must be derived from that offense.
- The person concerned must be directly or indirectly involved in the process or activity related to the proceeds.
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He argued that since Parvathi had returned the property to MUDA on October 1, 2024, she could not be considered to have enjoyed any proceeds of crime, making the invocation of PMLA unjustified.
"How does ED get jurisdiction to register ECIR? It was done in haste, soon after the FIR was registered by Lokayukta."
Additionally, Chouta highlighted the moral responsibility of his client, stating:
"As the wife of the Chief Minister, if fingers are pointed at him, it is my duty to clear these allegations at the earliest."
Arguments by Minister BS Suresh’s Counsel
Senior Advocate CV Nagesh, representing Minister BS Suresh, strongly contested the ED’s summons, stating:
"I assumed office as Minister in June 2023. The offense pertains to illegal allotment of sites before that. How am I connected to it?"
He further questioned the basis of the summons, noting that the complaint did not even mention his name. He argued that the ED’s actions lacked merit as the allegations were based on a private complaint that did not implicate him in any way.
On the other hand, Additional Solicitor General (ASG) Arvind Kamath, representing the ED, contended that the case involved corruption and that the investigation was not limited to just 14 sites. He stated:
"MUDA has been granting sites by violating rules. We are not just looking at the accused in the predicate offense; we are investigating the proceeds of crime."
Kamath refuted claims that the ECIR was registered hastily, arguing:
"There is no law prohibiting me from registering an offense after a predicate offense is registered. During our investigation, we found that individuals were pressured by the office of the accused to make allotments."
He further revealed that multiple properties had been purchased in the names of relatives, stating:
"The allotment of 14 sites is just the tip of the iceberg."
Kamath defended the summons issued by the ED, explaining that the information sought was necessary to establish whether the Minister was involved in site allotments to his relatives.
"Look at the questionnaire attached to the summons. We are only seeking details about properties held by the accused and their relatives. This is a civil inquiry, and judicial review does not apply."
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The High Court questioned the legitimacy of invoking the PMLA, especially since the sites were not obtained through sale or purchase but through allotment.
"One factor is that the sites did not go to the accused through sale or purchase but by way of allotment, in lieu of land usage. So, the proceeds of crime cannot be said to have emerged in the same manner."
Kamath, however, countered that possession of the property by MUDA did not negate the fact that it was originally linked to an offense.
"The petitioner claims the site has been surrendered to MUDA. The custody may be with MUDA, but I argue that MUDA is in possession of proceeds of crime."
Despite these arguments, the court found no justification for the ED’s summons and ruled in favor of the petitioners. With this verdict, the legal battle surrounding the MUDA case takes a significant turn, reaffirming the principles governing the invocation of PMLA.
Case Title: Parvathi vs. Directorate of Enforcement
Case Number: CRL.P 1132/2025
Petitioners' Counsel: Senior Advocates CV Nagesh, Sandesh J Chouta, Vikram Huilgol
Respondent’s Counsel: ASG Arvind Kamath
