The Karnataka High Court has declined to quash summons issued by the Enforcement Directorate (ED) to builder Bharath Reddy and his wife, Rashmi Bharath Reddy, under the Prevention of Money Laundering Act, 2002 (PMLA). Justice Ravi V. Hosmani held that the summons could not be set aside merely because the petitioners disputed the particulars of the information and documents sought by the agency.
In an order dated October 5, 2026, the Court directed the couple to appear before the ED within two weeks, if they had not already done so, and submit the information and documents available with them.
Background
The petitioners challenged two summons dated July 14, 2026, issued under Section 50(2) and (3) of the PMLA in connection with Enforcement Case Information Report (ECIR) No. BGZO/34/2023.
The summons sought identity documents, agreements relating to projects developed by Aryan Hometec, bank statements dating from 2015–16, details of immovable properties, and income tax returns.
The petitioners argued that the summons did not adequately explain the reasons for seeking such extensive financial information. They also relied on proceedings relating to an FIR registered in connection with the projects, contending that the position of the underlying criminal case undermined the ED investigation.
The ED opposed the petition, arguing that the summons were issued in connection with an existing ECIR and that the FIR relied upon by the petitioners had been stayed only in relation to Bharath Reddy, not quashed.
Justice Hosmani examined whether the summons could be invalidated for allegedly lacking sufficient particulars. The Court acknowledged that authorities should ordinarily explain the purpose of summoning a person and ensure that the documents sought have a connection with the investigation.
The judgment observed:
"Normally, summons cannot be issued on vague or omnibus purposes. At the same time, absence of above would not per se vitiate summons, unless ED fails to demonstrate grounds for summoning before Courts in case of challenge, without need for disclosure of same to summonee if same would frustrate purpose of inquiry/investigation."
The Court also distinguished between a stay and the quashing of criminal proceedings. It held that a stay temporarily suspends proceedings but does not extinguish them. Therefore, the stay concerning the FIR against Bharath Reddy did not automatically invalidate the ED summons.
The Court noted that the petitioners could approach the summoning authorities directly if they faced difficulties in producing the requested documents.
Declining to quash the summons, the Court disposed of the writ petition and directed:
"Petitioners shall appear before respondents – authorities within two weeks from today if not already done, offer information/documents as available and seek time for furnishing further information/documents as informed to be necessary. Respondents are directed to consider request of petitioners before proceeding further."
