Karnataka High Court
Mahalingappa S/O. Muttappa Ghanti vs Sri. Oppatteshwara S/O. Late Nagappa on 20 January, 2026
Author: V.Srishananda
Bench: V.Srishananda
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NC: 2026:KHC-D:616
CRL.P No. 103131 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA,AT DHARWAD
DATED THIS THE 20TH DAY OF JANUARY, 2026
BEFORE
THE HON'BLE MR. JUSTICE V.SRISHANANDA
CRIMINAL PETITION NO. 103131 OF 2025
(482(CR.PC)/528(BNSS))
BETWEEN:
1. MAHALINGAPPA S/O. MUTTAPPA GHANTI
AGE. 38 YEARS, OCC. TRADING BUSINESS,
R/O. ANAND NAGAR, NEAR WATER TANK,
OLD HUBBALLI, HUBBALLI, DIST. DHARWAD,
NOW AT AREKURATTI VILLAGE,
TQ. NAVALGUND, DIST. DHARWAD.
2. SMT. PARAMESHWARI ALIAS PAVITHRA
W/O. NAGAPPA GONDA,
AGE. 42 YEARS, OCC. SINECURE,
R/O. ULAVI VILLAGE,
DIST. UTTARA KANNADA-577434.
...PETITIONERS
(BY SRI. RAGHAVENDRA A. PUROHIT, ADVOCATE)
AND:
1. SRI. OPPATTESHWARA S/O. LATE NAGAPPA
AGE. 41 YEARS,
Digitally signed by
CHANDRASHEKAR
OCC. HOTEL BUSINESS,
LAXMAN
KATTIMANI
Location: High
Court of Karnataka,
OWNER OF PRIYADHARSHINI HOTEL.
Dharwad Bench
R/O. SHASTRI NAGAR, 2ND CROSS,
NEAR S.P. CIRCLE, BALLARI-583103.
2. THE STATE OF KARNATAKA,
BY BALLARI CEN CRIME POLICE STATION,
BALLARI, R/BY SPP DHARWAD,
HIGH COURT OF KARNATAKA, DHARWAD BENCH.
...RESPONDENTS
(BY SMT. KIRTILATA R. PATIL, HCGP FOR R2;
SRI. RAJASHEKAR B. HALLI, ADVOCATE FOR R1)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C. (U/S. 528 OF BNSS, 2023) PRAYING TO QUASH THE
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NC: 2026:KHC-D:616
CRL.P No. 103131 of 2025
HC-KAR
PROCEEDINGS IN SPL.C.NO. 656/2025 BALLARI CEN CRIME P.S CRIME
NO. 44/2023 FOR THE ALLEGED OFFENCE P/U/SEC. 3, 21(1) (2) (3)
OF THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT 2019,
U/SEC. 66(D) OF INFORMATION TECHNOLOGY ACT 2000 AND U/SEC.
420 R/W 34 OF IPC., PENDING ON THE FILE OF PRL. DISTRICT AND
SESSIONS COURT BALLARI, VIDE ANNEXURE-D IN SO FAR AS
PETITIONERSS/A1 AND A2 HEREIN CONCERNED AS NULL AND VOID.
THIS CRIMINAL PETITION COMING ON FOR ADMISSION, THIS
DAY, ORDER WAS MADE THEREIN AS UNDER:
ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE V.SRISHANANDA)
1. Heard Sri.Raghavendra Purohit, learned counsel appearing for petitioner and Smt.Kirtilatha R. Patil, learned High Court Government Pleader appearing for respondent No.1-State and Sri.Rajshekar B. Halli, learned counsel for respondent No.2.
2. This petition is filed under Section 482 of Criminal Procedure Code1 with the following prayer:
"WHEREFORE, the petitioners respectfully pray:-
A) To quash the Proceedings in Spl.C.No. 656/2025 Ballari CEN Crime P.S. Crime No. 44/2023 for the alleged offence punishable under section 3, 21(1) (2) (3) of The banning of unregulated deposit schemes Act 2019, U/sec. 66(d) of Information Technology Act 2000 and U/sec. 420 r/w. 34 of I.P.C., pending on the file of Prl. District & Sessions Court Ballari, vide Annexure-D in so far as 1 Hereinafter referred to as 'the CPC' -3- NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR petitioners/Accused Nos.1 and 2 herein concerned as null and void.
B) Issue any other order as this Hon'ble court may deems fit in the interest of justice."
3. Brief facts of the case are as under:
3.1 Respondent No.2 lodged a complaint with the CEN Police, Ballari, alleging that the petitioners herein had floated a concern by name Success Capital Company and had lured public by representing that if a sum of ₹ 1,00,000/- was invested with their company, every day sum of ₹ 2,000/- would be paid for of 100 years and if any other person is introduced to the Company by the person who invest the money will get extra 10% of the amount deposited amount.
3.2 It is alleged that after speaking to the first petitioner, the complainant said to have invested ₹.10,00,047/- from his savings bank account through RTGS into the account of the petitioners in the name of Success Capital Company. Second petitioner is the administrator of the said Success Capital Company.
3.3 When the petitioners failed to make the payment as agreed, the second respondent has approached the jurisdictional -4- NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR Police and lodged the complaint. It is also known from the complaint averments that C.Padmanab Reddy invested ₹ 19,97,112/-, Smt.Vani invested ₹ 25,00,000/- and Vijayalakshmi invested sum of ₹ 4,60,600/-. None of them were repaid and therefore sought for action.
4. Police after registering the case, investigated the matter and filed the charge sheet before the designated Special Court and learned Special Judge has taken cognizance of the offences alleged against the petitioners under Provisions of Banning of Unregulated Deposit Schemes Act, 20192 and Information Technology Act, 2000.
5. Petitioners being aggrieved by taking cognizance have now approached this Court with the aforesaid prayer.
6. Sri.Raghavendra Purohit, learned counsel for the petitioner, reiterating the grounds that in the petition would contended that under Section 7 of the BUDS Act, the local Police have no jurisdiction and there must be a special designated police to investigate the matter and He submitted that the investigation conducted by CEN, Police Station, Ballari, is without 2 Hereinafter referred to as 'the BUDS Act' -5- NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR jurisdiction, thereby vitiating the entire investigation process and the consequent filing of the charge sheet and sought for quashing of the pending proceedings.
7. He would further contended that all that the Police was required to do was to return the complaint for representing before the Special Police Station appointed under the Buds Act and therefore, sought for quashing the proceedings.
8. Per contra, Smt.Kiritilatha R. Patil, learned High Court Government Pleader supports the order taking cognizance by contending that Section 7 of the BUDS Act would not contemplate that the local police have no jurisdiction to investigate the matter and it is in the discretion of the Government to appoint a competent authority depending upon the nature of the fraud and the magnitude of the proceeds of the fraud and that itself would not take away the jurisdiction of the local police to investigate the matter under the Buds Act and sought for dismissal of the petition.
9. Sri.Rajashekar B. Halli, learned counsel for the defacto complaint-second respondent, adopting the submissions of the learned High Court Government Pleader, contended that a Co-ordinate bench of this Court in Criminal Petition -6- NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR No.100048/2024 connected with Criminal Petition No.102510/2023 dated 17.01.2025 has already taken note of the interplay between Sections 7 and 27 of the BUDS Act and has categorically held that there is no bar for the local police to investigate the matter and filing a charge sheet before the Special Court and sought for dismissal of the petition.
10. In order to appreciate the contentions urged on behalf of the petitioners, it is just and necessary for this Court to cull out Section 7 of the Act, which reads as under:
"7. Competent Authority. --
(1) The appropriate Government shall, by notification, appoint one or more officers not below the rank of Secretary to that Government, as the Competent Authority for the purposes of this Act.
(2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks fit, to assist the Competent Authority in discharging its functions under this Act.
(3) Where the Competent Authority or officers appointed under sub-section (2), for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars -7- NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed.
(4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while conducting investigation or inquiry in respect of the following matters, namely:--
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed. -8-
NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR (5) The Competent Authority shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this section.
(6) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.
(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).
(8) Subject to any rules made in this behalf by the Central Government, any officer referred to in subsection (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act:
Provided that the officer or officers referred to in sub-section (2) shall not---9-
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(a) impound any records without recording his reasons for so doing; or
(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Competent Authority."
11. On careful reading of the above provision it is crystal clear, that the State Government may appoint a competent authority, having regard to the magnitude of the proceeds of fraud involved in a given case.
12. In the present case, apart from the complainant, three other persons have been named as the persons who have allegedly lost the money namely Smt.Vani, Sri.Padmanab Reddy and Smt.Vijayalakshmi.
13. It is within the discretion of the State Government to appoint a competent authority, as contemplated under Section 7 of the BUDS Act, in order to seize the proceeds of the fraud allegedly committed by a person.
14. In the case on hand, merely non-appointing the competent authority under Section 7 of the BUDS Act would not take away the jurisdiction of the CEN Police, Ballari, to
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NC: 2026:KHC-D:616 CRL.P No. 103131 of 2025 HC-KAR investigate the matter after receiving the complaint from respondent No.2.
15. Thus, the argument put forth on behalf of the petitioners that the CEN, Police Ballari did not have the jurisdiction to investigate the matter pursuant to the receipt of the complaint given by respondent No.2, and that the charge sheet is therefore vitiated, cannot be countenanced in law.
16. Accordingly, the following order:
ORDER The petition dismissed.
Sd/-
(V.SRISHANANDA) JUDGE RHR/- CT:CMU LIST NO.: 2 SL NO.: 59