Sri R M Manjunath Gowda vs Directorate Of Enforcement on 22 April, 2025

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Karnataka High Court

Sri R M Manjunath Gowda vs Directorate Of Enforcement on 22 April, 2025

Bench: M.Nagaprasanna

Reserved on : 17.04.2025
Pronounced on : 22.04.2025 R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 22ND DAY OF APRIL, 2025

BEFORE

THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

WRIT PETITION No.11786 OF 2025 (GM - RES)

BETWEEN:

1 . SRI R.M.MANJUNATH GOWDA
S/O RAMAPPA GOWDA
AGED ABOUT 62 YEARS
R/O KARAKUCCHI
SIRIGEREPONT
SHIVAMOGGA - 577 211.

2 . SMT.ASHA H.C.,
W/O R.M.MANJUNATH GOWDA
AGED ABOUT 63 YEARS
R/O KARAKUCCHI
SIRIGEREPONT
SHIVAMOGGA - 577 211.
... PETITIONERS
(BY SRI JAYAKUMAR S.PATIL, SR.ADVOCATE FOR
SRI VARUN JAYAKUMAR PATIL, ADVOCATE)

AND:

1 . DIRECTORATE OF ENFORCEMENT
MINISTRY OF FINANCE AND
DEPARTMENT OF REVENUE
2

III FLOOR, "B" BLOCK,
BMTC, K.H.ROAD
SHANTINAGAR
BENGALURU - 560 027.

2 . ASSISTANT DIRECTOR
DIRECTORATE OF ENFORCEMENT
III FLOOR, "B" BLOCK,
BMTC, K.H.ROAD
SHANTINAGAR
BENGALURU - 560 027.
... RESPONDENTS

(BY SRI ARVIND KAMATH K., ADDL.SOLICITOR GENERAL OF INDIA
A/W SRI MADHUKAR DESHPANDE, SPL.PP)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING
ARREST ORDER, ARREST MEMO, GROUNDS OF ARREST, REASONS
TO BELIEVE AT ANNX-K, L, M AND N AND DECLARE THAT ARREST
AND DETENTION OF PETITIONER BY THE RESPONDENTS IS
ILLEGAL AND VOID; DECLARE THE ARREST AND DETENTION OF
THE P-1 FROM 08.04.2025 IN ECIR/BGO/05/2021 REGISTERED BY
DIRECTORATE OF ENFORCEMENT AS ILLEGAL AND CONSEQUENTLY
DIRECT THE RESPONDENT TO RELEASE THE PETITIONER
FORTHWITH AND ETC.,

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 17.04.2025, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
3

CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA

CAV ORDER

The petitioners - husband and wife, are at the doors of this

Court calling in question an order of arrest, arrest memo, grounds

of arrest and reasons so depicted to believe that the petitioners are

in possession of proceeds of crime and consequently declare that

the arrest and detention of the 1stpetitioner is illegal and void. As a

consequence thereof, a declaration is also sought that the arrest

and detention of the 1st petitioner is illegal and seek direction to

release the 1stpetitioner from prison.

2. For the sake of convenience, unless otherwise referred to

by their rank in the writ petition, the 1st petitioner would be

referred to, as the petitioner, in this order.

3. Facts adumbrated are as follows:-

The petitioner, at the relevant point in time, was an elected

Director of the District Central Co-operative Bank ('DCC' Bank) from

1997 and has also been the Chairman of the DCC Bank,
4

Shivamogga, for over 19 years. The petitioner claims to be active

in public field and has contested elections to the Thirthahalli

assembly constituency in the previous elections and lost. On

17-07-2014, a crime in Crime No.325 of 2014 is registered against

the employees of DCC Bank and investigation would commence in

the said crime by the jurisdictional Police and later owing to

magnitude of the alleged crime, the matter was transferred to the

Crime Investigation Department of the State i.e., CID. The

petitioner was not named as an accused. During investigation, on

the score that there were some materials against the petitioner, he

was later added as accused No.15 and is said to have been taken

into custody for custodial interrogation. The Police, after

investigation, file a charge sheet against all employees, but not

against the petitioner. The petitioner was dropped from the array of

accused due to lack of evidence.

4. Since charge sheet was filed in Crime No.325 of 2014, the

further proceedings were taken up. There were other crimes also

registered in C.C.Nos.2634 of 2019, 2775 of 2019 and 2776 of

2019. In C.C.No.2634 of 2019, there were two accused - one the
5

Manager and the other the custodian of the pledged articles of the

City Branch of the DDC Bank in Shivamogga, in C.C.No.2776 of

2019 there were 9 accused and in C.C.No.2775 of 2019 there were

11 accused. But the petitioner was never an accused in any of these

crimes. The accused in C.C.No.2776 of 2019 file a discharge

application and those accused come to be discharged. This order

was challenged by the Bank as well as the State by filing a revision

before the Court of Session. The revision so filed is allowed and the

matter is remitted back to the hands of the concerned Court, which

had discharged the accused, for reconsideration. Against the said

order of remand, four writ petitions are preferred in Writ Petition

Nos. 12423 of 2021, 12426 of 2021, 12451 of 2021 and

Crl.P.No.3006 of 2021. It appears that this Court had granted an

interim order of stay of the order of remand.

5. In the interregnum, it appears, that the petitioner was

disqualified to function or contest the elections of DCC Bank. The

said order comes to be challenged in an appeal filed under Section

106 of the Karnataka Co-operative Societies Act, 1959 ('KCS Act'

for short) and the order of disqualification was set aside. In the
6

meanwhile, to take action under the KCS Act permission was

granted for prosecution of the petitioner under Section 111 of the

KCS Act, authorizing an officer to file a complaint against the

petitioner. Now emerges a crime in Crime No.16 of 2021 filed

before the Jayanagar Police Station, Shivamogga for offences

punishable under Sections 120B, 168, 200, 403, 405, 409, 418,

419, 420, 424, 425, 427, 467, 468, 474 r/w 34 of the IPC and for

offences under Sections 109(11)(14)(15) of the KCS Act. The

petitioner challenges registration of crime invoking the jurisdiction

of this Court under Section 482 of the Cr.P.C. The petition comes to

be allowed and the crime in Crime No.16 of 2021 stood quashed

qua all the accused in respect of the offences under the IPC. Insofar

as the offences under the KCS Act, the petitioner was reserved

liberty to pursue appeal before the Karnataka Appellate Tribunal.

The appeal so filed by the petitioner is also dismissed by the

concerned Tribunal in terms of its order dated 16-02-2021.

6. As observed hereinabove, crime in Crime No.325 of 2014

in which the name of the petitioner had been dropped, further

investigation was taken up and an additional charge sheet was filed
7

under Section 173(8) of the Cr.P.C., now bringing the petitioner

into the crime for offences punishable under Sections 409 and 202

r/w 36 of the IPC. The learned Magistrate before whom the

additional charge sheet is filed is yet to take cognizance in respect

of the additional charge sheet against the petitioner. One more

crime was registered against the petitioner invoking offences

punishable under Section 13(1) and 13(2) of the Prevention of

Corruption Act, 1988. This was registered in the year 2014 itself.

The police, after investigation, keep the charge sheet ready and

seek sanction to prosecute the petitioner. The petitioner prefers

Writ Petition No.10108 of 2024 and it appears that an interim of

stay is operating in the said case. The issue in the lis does not

relate to the merit of the crime under the Prevention of Corruption

Act or the crime in Crime No.325 of 2014.

7. The respondent/Directorate of Enforcement conducts a

search in the residential premises of the petitioner in Thirthahalli

Taluk on 05-10-2023 and also at other places and issues summons

to the petitioner for appearance. This brings the petitioner to this

Court in Writ Petition No.22780 of 2023 against the summons so
8

issued after registration of ECIR and also another writ petition in

Writ Petition No.22989 of 2023 challenging the additional charge

sheet so filed arraigning the petitioner as accused No.15 in Crime

No.325 of 2024. Both the writ petitions so filed come to be

dismissed by a coordinate Bench of this Court in terms of its order

dated 20-02-2024. The petitioner prefers a writ appeal against the

said order in Writ Appeal No.497 of 2024. The writ appeal is also

dismissed by the Division Bench affirming the order of the learned

single Judge by its order dated 22-03-2025.

8. After the dismissal of the writ appeal springs the

proceedings in the subject petition. It is the averment in the

petition that the petitioner had an eye infection and wanted to

undergo a surgery. At that point in time, the officers of Directorate

of Enforcement coming to know that the petitioner was staying in

the Bank's guest house gained entry into the room of the petitioner

and is said to have been detained and taken to the office of the

Directorate of Enforcement and later produced before the Court of

Session on 09-04-2025 at 2.30 p.m. It is then the petitioner was

given the arrest order, arrest memo, grounds of arrest and reasons
9

to believe that he was in possession of proceeds of crime. The

petitioner being in custody is now before this Court in the subject

petition.

9. Heard Sri Jayakumar S. Patil, learned senior counsel

appearing for the petitioners and Sri K. Arvind Kamath, learned

Additional Solicitor General of India appearing for the respondents.

10. The learned senior counsel Sri Jayakumar S. Patil

appearing for petitioners would vehemently contend that the

grounds so found in the grounds of arrest are completely

erroneous, and they do not relate to predicate offence. The

predicate office against the petitioner in which he is drawn back by

filing an additional charge sheet is Crime No.325 of 2014 or for

offences under Sections 409 and 202 of the IPC. Both those

offences are not scheduled offences under the provisions of the

Prevention of Money Laundering Act, 2002 ('the Act' for short).

Therefore, the Directorate of Enforcement has no jurisdiction to

initiate proceedings and conduct search or seizure, as is done in the

case at hand. He would submit that the only scheduled offence is

the one under the Prevention of Corruption Act and sanction
10

granted to prosecute is stayed by a coordinate Bench of this Court.

Therefore, the act of Directorate of Enforcement, the moment writ

appeal comes to be dismissed, is misuse and abuse of the power

and runs completely contrary to the judgments of the Apex Court in

the cases of ARVIND KEJRIWAL v. DIRECTORATE OF

ENFORCEMENT1, VIJAY MADANLAL CHOUDHARY v. UNION OF

INDIA2 and MANTRI DEVELOPERS v. DIRECTORATE OF

ENDORCEMENT3.

10.1. The learned senior counsel would take this Court

through the grounds in the grounds of arrest to contend that there

is nothing that would indicate that it is proceeds of crime against

the petitioner and not even a semblance against his wife, the 2nd

petitioner. The learned senior counsel would seek to contend that

there are no facts or reasons to believe that the petitioner or his

wife is in possession of proceeds of crime, even prima facie.

Therefore, he would contend that the arrest of the petitioner,

search and seizure thereto are contrary to law; contrary to law for

1
(2025) 2 SCC 248
2
2022 SCC OnLine SC 929
3
2022 SCC Online Kar 1831
11

the reason that the grounds found in the grounds of arrest are

contrary to law, they cannot form the grounds of arrest and the

reasons to believe run counter to Section 19 of the Act. He would

contend that the Directorate of Enforcement cannot conduct

investigation for offences under the IPC or under the Prevention of

Corruption Act. They have to conduct investigation only insofar as

proceeds of crime, but the Directorate of Enforcement here is

wanting to conduct investigation into the entirety of the offences

against the petitioner. He would, therefore, contend that the entire

proceedings are illegal.

11. Per contra, the learned Additional Solicitor General of

India Sri K. Arvind Kamath appearing for the Directorate of

Enforcement would refute the submissions to contend that the

moment summons was issued, the petitioner challenges the

summons. By a detailed order, it comes to be dismissed by a

learned single Judge of this Court in terms of his order dated

20-02-2024 holding that summons would not become a subject

matter of challenge. This was challenged before the Division Bench

by the petitioner in Writ Appeal No.497 of 2024. The Division Bench
12

affirms the order of the learned single Judge and holds that

summons cannot become a subject matter of challenge. It is after

that proceedings are taken up by the Directorate of Enforcement,

as ECIR had been registered way back in the year 2021. The

Directorate of Enforcement did have the reason to believe that the

petitioner and his wife were in possession of proceeds of crime and,

therefore, prior to taking the petitioner into custody all norms that

are necessary to be followed i.e., the grounds of arrest and the

reasons to believe were completely complied. There is twin

compliance in its entirety in the case at hand.

11.1. The learned ASGI would take this Court through the

elaborately drawn reasons to believe to contend that there is huge

misappropriation of funds by the petitioner. The 1st petitioner,

being the Chairman of the bank, had appointed the Manager, who

under the instructions of the 1st petitioner caused misappropriation

of an amount totaling to ₹62,77,63,560/- and in the process, large

amount of proceeds of crime is generated. The modus operandi

involved was opening of 785 fraudulent gold loan accounts without

the knowledge of accounts holders, by utilizing fake, fabricated and

Page No.12 is retyped and replaced vide chamber order dated 23.04.2025
13

forged documents and syphoning off gold ornaments by replacing

them with gold quoted ornaments and the assets obtained by the

petitioner has grown exponentially or tenfold after he comes into

the umbrella of DCC Bank. The assets are huge in number and,

therefore, there is no doubt that the petitioners are in possession of

proceeds of crime. No fault can be found with the arrest of the

petitioner. The arrest of the petitioner was available in law. It is

only that he should be served with grounds of arrest and prima

facie reasons to believe that he is in possession of proceeds of

crime. He would vehemently refute every one of the submissions

and seek dismissal of the petition.

12. I have given my anxious consideration to the submissions

made by the learned senior counsel, and the Additional Solicitor

General of India and have perused the material on record.

13. The afore-narrated facts are a matter of record. The

crimes that are registered against the petitioner, how he goes out

and comes back into the web of crime are all narrated hereinabove.

The issue in the lis does not relate to merit of the predicate offence.

It pertains to the proceedings by the Directorate of Enforcement in

the ECIR so registered against the petitioners. An ECIR comes to

Page no.13 is retyped and replaced vide chamber order dated 23.04.2025
14

be registered in the year 2021 and summons for the first time was

issued in the year 2023. Writ Petition No.12451 of 2021 and

connected cases were filed seeking quashment of proceedings

which arose out of crime No.325 of 2014. Writ Petition No.22780 of

2023 was preferred by the petitioner challenging the summons so

issued in ECIR 5 of 2021 dated 06-10-2023 asking the petitioner to

appear. The coordinate Bench by an elaborate order considering the

judgment of the Apex Court in the case of VIJAY MADANLAL

CHOUDHARY (supra) dismisses all the petitions on 20-02-2024,

including the writ petition filed by the petitioner challenging the

summons so issued on 06-10-2023. The reasons so rendered in

rejecting the ECIR are as follows:

"REASONING FOR THE FINDING IN W.P
No.22780/2023

23. It is now settled in view of the judgment of
the Hon'ble Apex Court in the case of Vijay Madanlal
Chowdhary (referred supra) that an offence under the
PML Act would be attracted only when any of the
offences mentioned in the schedule to the PML Act is
registered. The authorities under the PML Act cannot
prosecute any person on notional basis or on the
assumption that a scheduled offence has been
committed unless it is so registered with the
jurisdictional Police or pending enquiry or trial by way
of a complaint before a competent forum. It is also
equally well settled that the registration of an ECIR
cannot be equated to the registration of an FIR as the
15

said document is an internal document for the
purposes of the Enforcement Directorate. The
proceeds of crime as defined under Section 2(1)(u) of
the PML Act is dependent on illegal gain of property as
a result of criminal activity relating to a scheduled
offence. The position of law is well settled that when once
the accused is acquitted in the predicate offence or if it is
quashed by a Court of competent jurisdiction or if he is
discharged, there can be no offence under the provisions of
the PML Act. With these prefatory notes, if the case on hand
is perused, the petitioner was the Chairman of D.C.C. Bank
during the period between 1997-98, 1999-2010, 2011-2014,
2015-2020. It was during his tenure that a statutory
audit disclosed several deficiencies and lapses in the
Town branch of the D.C.C. Bank inasmuch as the
accused No.1 was appointed as a Senior Assistant at
the branch and though was promoted between 2005
and 2014, yet was continued in the Town branch of the
Bank though there weren't any promotional post at the
Town branch of the D.C.C. Bank. Separate charge
sheets are filed against accused No.1 and others for
sanctioning gold loan to friends and relatives by
accepting fake ornaments and in many cases, gold
loans were advanced without getting the gold pledged.
In many cases, it was alleged that the loans were
disbursed to many customers who were the relatives
of accused No.1. It was alleged that accused No.1
with the help of accused No.15 had misappropriated
Rs.62,00,00,000/- belonging to the D.C.C Bank and
accused No.15 had not taken any action. The petitioner
was charge sheeted for the offences punishable under
Sections 409, 202 read with Section 36 of IPC in C.C.
No.2775/2021 which were not schedule offences
under the PML Act. Therefore, the apprehension of
accused No.15 / petitioner that he is sought to be
prosecuted under the PML Act is wholly unwarranted
and baseless. The petitioner was issued with a
summons by the respondents to appear before them.
The power to issue summons under the PML Act is found in
Section 50 of the PML Act which is akin to Section 61 of
Cr.P.C and reads as follows:
16

"50. Powers of authorities regarding summons,
production of documents and to give evidence, etc (1)
The Director shall, for the purposes of section 13, have the
same powers as are vested in a civil court under the Code of
Civil Procedure, 1908 (5 of 1908) while trying a suit 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.

(2) The Director, Additional Director, Joint Director,
Deputy Director or Assistant Director 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 Act.

(3) 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.

(4) Every proceeding under sub-sections (2) and (3)
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).

(5) Subject to any rules made in this behalf by the
Central Government, any officer referred to in sub-section (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:
17

Provided that an Assistant Director or a Deputy
Director shall not -
(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 Joint Director."

24. A perusal of Section 50(2) of the PML Act leaves
no doubt that the Enforcement Directorate has the power to
summon any person whose attendance it considers
necessary whether to give evidence or to produce any
records during the course of any investigation or proceeding
under the PML Act.

25. It could be that the Enforcement Directorate
requires the attendance of the petitioner to give evidence or
to produce any records in respect of the schedule offences
committed by the other accused. After all, the allegation
was that the accused No.1 had the benevolence of the
accused No.15 / petitioner herein and therefore, he was
bound to assist the Enforcement Directorate and this did not
in any way prejudice the petitioner. This apart, the
petitioner was accused of an offence in Crime No.4/2014 for
the offences under Section 13(1)(e) read with Section 13(ii)
of the P.C. Act, 1988 and a charge sheet was filed on
20.03.2018. It could be that the summons was issued to the
petitioner in that regard. Under the circumstances, the
petitioner cannot challenge the issuance of summons and his
apprehension that he is sought to be prosecuted for an
offence registered against him in C.C No.2775/2021 under
the PML Act is unwarranted as the offences alleged against
him are not schedule offences under the PML Act. In this
regard, it is apposite to refer to the findings recorded by the
Hon'ble Apex Court in the case of Vijay Madanlal
Chowdhary and others:

"467. In light of the above analysis, we now proceed to
summarise our conclusion on seminal points in issue in the
following terms: -
18

(i) The question as to whether some of the amendments to
the Prevention of Money-laundering Act, 2002 could not have
been enacted by the Parliament by way of a Finance Act has
not been examined in this judgment. The same is left open
for being examined along with or after the decision of the
Larger Bench (seven Judges) of this Court in the case of Rojer
Mathew 705.

(ii) The expression "proceedings" occurring in Clause (na) of
Section 2(1) of the 2002 Act is contextual and is required to
be given expansive meaning to include inquiry procedure
followed by the Authorities of ED, the Adjudicating Authority,
and the Special Court.

(iii) The expression "investigation" in Clause (na) of Section
2(1) of the 2002 Act does not limit itself to the matter of
investigation concerning the offence under the Act and is
interchangeable with the function of "inquiry" to be
undertaken by the Authorities under the Act.

(iv) The Explanation inserted to Clause (u) of Section 2(1) of
the 2002 Act does not travel beyond the main provision
predicating tracking and reaching upto the property derived
or obtained directly or indirectly as a result of criminal activity
relating to a scheduled offence.

(v) (a) Section 3 of the 2002 Act has a wider reach and
captures every process and activity, direct or indirect, in
dealing with the proceeds of crime and is not limited to the
happening of the final act of integration of tainted property in
the formal economy. The Explanation inserted to Section 3 by
way of amendment of 2019 does not expand the purport of
Section 3 but is only clarificatory in nature. It clarifies the
word "and" preceding the expression projecting or claiming as
"or"; and being a clarificatory amendment, it would make no
difference even if it is introduced by way of Finance Act or
otherwise.

(b) Independent of the above, we are clearly of the view that
the expression "and" occurring in Section 3 has to be
construed as "or", to give full play to the said provision so as
to include "every" process or activity indulged into by anyone.
Projecting or claiming the property as untainted property
would constitute an offence of money-laundering on its own,
being an independent process or activity.
19

(c) The interpretation suggested by the petitioners, that only
upon projecting or claiming the property in question as
untainted property that the offence of Section 3 would be
complete, stands rejected.

(d) The offence under Section 3 of the 2002 Act is dependent
on illegal gain of property as a result of criminal activity
relating to a scheduled offence. It is concerning the process
or activity connected with such property, which constitutes
the offence of money laundering. The Authorities under the
2002 Act cannot prosecute any person on notional basis or on
the assumption that a scheduled offence has been committed,
unless it is so registered with the jurisdictional police and/or
pending enquiry/trial including by way of criminal complaint
before the competent forum. If the person is finally
discharged/acquitted of the scheduled offence or the criminal
case against him is quashed by the Court of competent
jurisdiction, there can be no offence of money-laundering
against him or any one claiming such property being the
property linked to stated scheduled offence through him.

(vi) Section 5 of the 2002 Act is constitutionally valid. It
provides for a balancing arrangement to secure the interests
of the person as also ensures that the proceeds of crime
remain available to be dealt with in the manner provided by
the 2002 Act. The procedural safeguards as delineated by us
hereinabove are effective measures to protect the interests of
person concerned.

(vii) The challenge to the validity of sub-section (4) of Section
8 of the 2002 Act is also rejected subject to Section 8 being
invoked and operated in accordance with the meaning
assigned to it hereinabove.

(viii) The challenge to deletion of proviso to sub-section (1) of
Section 17 of the 2002 Act stands rejected. There are
stringent safeguards provided in Section 17 and Rules framed
thereunder. Moreover, the pre-condition in the proviso to Rule
3(2) of the 2005 Rules cannot be read into Section 17 after
its amendment. The Central Government may take necessary
corrective steps to obviate confusion caused in that regard.

(ix) The challenge to deletion of proviso to sub-section (1) of
Section 18 of the 2002 Act also stands rejected. There are
similar safeguards provided in Section 18. We hold that the
amended provision does not suffer from the vice of
arbitrariness.
20

(x) The challenge to the constitutional validity of Section 19
of the 2002 Act is also rejected. There are stringent
safeguards provided in Section 19. The provision does not
suffer from the vice of arbitrariness.

(xi) Section 24 of the 2002 Act has reasonable nexus with the
purposes and objects sought to be achieved by the 2002 Act
and cannot be regarded as manifestly arbitrary or
unconstitutional.

(xii) (a) The proviso in Clause (a) of sub-section (1) of
Section 44 of the 2002 Act is to be regarded as directory in
nature and this provision is also read down to mean that the
Special Court may exercise judicial discretion on case-to-case
basis.

(b) We do not find merit in the challenge to Section 44 being
arbitrary or unconstitutional. However, the eventualities
referred to in this section shall be dealt with by the Court
concerned and by the Authority concerned in accordance with
the interpretation given in this judgment.

(xiii) (a) The reasons which weighed with this Court in Nikesh
Tarachand Shah for declaring the twin conditions in Section
45(1) of the 2002 Act, as it stood at the relevant time, as
unconstitutional in no way obliterated the provision from the
statute book; and it was open to the Parliament to cure the
defect noted by this Court so as to revive the same provision
in the existing form.

(b) We are unable to agree with the observations in Nikesh
Tarachand Shah distinguishing the enunciation of the
Constitution Bench decision in Kartar Singh 708; and other
observations suggestive of doubting the perception of
Parliament in regard to the seriousness of the offence of
money-laundering, 706 Supra at Footnote No.3 707 Supra at
Footnote No.3 708 Supra at Footnote No.190 537 including
about it posing serious threat to the sovereignty and integrity
of the country.

(c) The provision in the form of Section 45 of the 2002 Act, as
applicable post amendment of 2018, is reasonable and has
direct nexus with the purposes and objects sought to be
achieved by the 2002 Act and does not suffer from the vice of
arbitrariness or unreasonableness.
21

(d) As regards the prayer for grant of bail, irrespective of the
nature of proceedings, including those under Section 438 of
the 1973 Code or even upon invoking the jurisdiction of
Constitutional Courts, the underlying principles and rigours of
Section 45 may apply.

(xiv) The beneficial provision of Section 436A of the 1973
Code could be invoked by the accused arrested for offence
punishable under the 2002 Act.

(xv) (a) The process envisaged by Section 50 of the 2002 Act
is in the nature of an inquiry against the proceeds of crime
and is not "investigation" in strict sense of the term for
initiating prosecution; 538 and the Authorities under the 2002
Act (referred to in Section 48), are not police officers as such.

(b) The statements recorded by the Authorities under the
2002 Act are not hit by Article 20(3) or Article 21 of the
Constitution of India.

(xvi) Section 63 of the 2002 Act providing for punishment
regarding false information or failure to give information does
not suffer from any vice of arbitrariness.

(xvii) The inclusion or exclusion of any particular offence in
the Schedule to the 2002 Act is a matter of legislative policy;
and the nature or class of any predicate offence has no
bearing on the validity of the Schedule or any prescription
thereunder.

(xviii) (a) In view of special mechanism envisaged by the
2002 Act, ECIR cannot be equated with an FIR under the
1973 Code. ECIR is an internal document of the ED and the
fact that FIR in respect of scheduled offence has not been
recorded does not come in the way of the Authorities referred
to in Section 48 to commence inquiry/investigation for
initiating "civil action" of "provisional attachment" of property
being proceeds of crime.

(b) Supply of a copy of ECIR in every case to the person
concerned is not mandatory, it is enough if ED at the time of
arrest, discloses the grounds of such arrest.

(c) However, when the arrested person is produced before
the Special Court, it is open to the Special Court to look into
the relevant records presented by the authorised
representative of ED for answering the issue of need for
22

his/her continued detention in connection with the offence of
money-laundering.

(xix) Even when ED manual is not to be published being an
internal departmental document issued for the guidance of
the Authorities (ED officials), the department ought to explore
the desirability of placing information on its website which
may broadly outline the scope of the authority of the
functionaries under the Act and measures to be adopted by
them as also the options/remedies available to the person
concerned before the Authority and before the Special Court.

(xx) The petitioners are justified in expressing serious
concern bordering on causing injustice owing to the vacancies
in the Appellate Tribunal. We deem it necessary to impress
upon the executive to take corrective measures in this regard
expeditiously.

(xxi) The argument about proportionality of punishment with
reference to the nature of scheduled offence is wholly
unfounded and stands rejected."

26. The reliance placed by the learned senior
counsel for the petitioner on the judgment of the Hon'ble
Apex Court in the case of Y. Balaji (referred supra) that stay
of a predicate offence eclipses a scheduled offence is
inapplicable to the facts of this case as the summons is not
issued by the respondents on the premise that a schedule
offence is registered against the petitioner. Likewise, the
judgment relied by him in the case of CBI v. Ramesh Gelli
(referred supra) is also inapplicable as Section 13 was made
a schedule offence by virtue of Act 16 of 2018. Even
otherwise, there is nothing on record to prejudge the
case whether the summons was issued in respect of
the charge sheet filed against the petitioner under
Section 13(1)(e) read with Section 13(ii) of the P.C
Act, 1988 or to take further steps in the matter of the
investigation into the offences against the co-accused.
Therefore, all the contentions urged by the learned
senior counsel for the petitioner in assailing the
summons issued to the petitioner are liable to be
rejected and are accordingly, rejected. Consequently,
23

W.P. No.22780/2023 filed by the petitioner lacks merit
and is dismissed."

(Emphasis supplied)

The coordinate Bench considers the judgment of the Apex Court in

the case of VIJAY MADANLAL CHOUDHARY and all those

identical submissions of the learned senior counsel that is now

projected, even the submission that the Enforcement Directorate is

now wanting to investigate into the matter. After considering the

said submissions, the coordinate bench holds there is nothing on

record to prejudge the case whether summons was issued in

respect of charge sheet filed against the petitioner under the

offences under the Prevention of Corruption Act and the petition

was thus dismissed. The 1st petitioner challenges the said dismissal

before the Division Bench in W.A.No.497 of 2024. The Writ Appeal

comes to be dismissed holding that summons issued by the

Enforcement Directorate under Section 50 of the Act cannot be

subject matter of challenge in a writ petition. The Division Bench

dismisses the appeal on the following reasons:

".... .... ....
24

44. Insofar as the reliance placed by Sri. Kamath on the
judgment in the case of Vilelie Khamo (supra) is concerned,
the Supreme Court has, in the said judgment, stated as under:

"xx xx xx xx xx
Suffice it is to state that at this stage we are
dealing with a summons that has been issued.
In such view of the matter, the impugned order
stands set aside and the appellant is at liberty to proceed
in pursuance to the summons that had been issued.
However, we make it clear that all issues are left open to
the respondent, in the event of him being arrayed as an
accused."

45. Sri. Patil has referred to the judgment of the Madras
High Court in the case of K.Govindaraj -Vs.- Union of India
and Others [WP No.5402/2024 and connected matters,
decided on 16.07.2024], more particularly on paragraph
No.14, wherein reference has been made to the interim order
passed by the Supreme Court. In the said order, the Supreme
Court has clearly said that the persons to whom summons are
issued under Section 50(2) of the Act, are obliged to respect
and respond to the said summons. Hence, the said judgment
shall not come to the aid of the appellant.

46. So in view of the settled position of law as noted
above, suffice it would be to state, there is no illegality in the
issuance of summons to the appellant. In fact on the basis of
the aforesaid conclusion of ours, it necessarily follows that a
challenge to summons is not maintainable in view of the
judgment in the case of Kirit Shrimankar (supra), wherein
the Supreme Court has held, mere summons does not
constitute a positive action entitling the petitioner to question
it in a writ petition. Similarly, the Supreme Court in the case
of Kunisetty Satyanarayana (supra), has held that mere
charge sheet or show-cause notice does not give rise to any
cause of action, because it does not amount to an adverse
order which affects the rights of any party unless the same
has been issued by a person having no jurisdiction to do so. It
is not the case of the appellant that the Officer who had issued
summons did not had the appropriate jurisdiction. Sri.
Kamath is right in stating that, the summons does not make
25

any allegations against the appellant and merely requires him
to appear before the Authority. There is no adverse order
against the appellant. Under such circumstances, there was
no cause of action to file a writ petition.

47. One of the submissions of Sri. Patil was that, the
learned Single Judge should not have decided the petition filed
by the appellant and other accused together. According to Sri.
Patil, the appellant who was the petitioner in WP
No.22780/2023, challenged proceedings under PMLA and in
WP No.22989/2023, challenged FIR No.325/2014 as it has
caused prejudice to the appellant. He relied upon the
provisions of Section 44 of the PMLA to contend that the trial
of both sets of offences by the same Court shall not be
construed as joint trial. In other words, the same should be
held in separate trial. This provision according to him, is
recognizing that no prejudice should be caused to the accused.
On this submission of Sri. Patil, the submission of Sri. Kamath
was, no such plea was raised on behalf of the appellant before
the learned Single Judge. In fact according to him, it was at
the behest of the appellant that the petitions were clubbed and
heard. Suffice it would be to state, we find that the detailed
arguments were advanced in the petition before the learned
Single Judge without any objection for separating the writ
petition from which the impugned order arises. In fact the
plea of Sri. Kamath was also that, the appellant had filed WP
No.22780/2023 on the ground that the other accused in the
predicate offences had filed writ petitions challenging the
proceedings and that in such petitions, the further proceedings
in respect of predicate offences were stayed. According to Sri.
Kamath, the appellant produced copies of the interim order in
such petitions and sought to take advantage of such orders in
his petition. In other words it is his submission that, in view of
the stand taken by the appellant, the learned Single Judge had
heard and decided them together. The submission of Sri.
Kamath do prima facie reflects that, at the behest of the
appellant, the petitions were clubbed together and decided.
There is nothing in the impugned order of the learned Single
Judge which depicts that such an objection was taken by the
appellant during the hearing of the petitions. In the absence
of any objection, the writ petition having been heard and
decided, surely the plea advanced by Sri. Patil is an
afterthought and is liable to be rejected. It is ordered
26

accordingly. Insofar as the judgments in the cases of Bhajan
Lal (supra) and Abhishek Banerjee (supra) relied upon by
Sri. Patil are concerned, the same shall not have any
applicability to the issue in hand, moreso in view of our
conclusion above.
48. In view of our discussion made hereinabove, we
hold that the present appeal filed by the appellant is totally
misconceived; the learned Single Judge is justified in rejecting
the writ petition. We also, dismiss the appeal; the impugned
order dated 20.02.2024 passed by the learned Single Judge in
WP No.22780/2023 is upheld."

14. After the aforesaid orders, comes the fulcrum of the

present lis. The petitioner was taken into custody for investigation

by the Directorate of Enforcement allegedly on 08-04-2025 but by

an arrest order on 09-04-2025. The arrest order reads as follows:

"F.No.ECIR/BGZO/05/2021 Date: 9-04-2025

ARREST ORDER

WHEREAS, I, Ajay Choudhary, Assistant Director,
authorized in this behalf by the Central Government, have
reason to believe that Mr. R.M. Manjunatha Gowda S/o
Late Shri Ramappa Gowda, resident of #153, Village
Karakuchhi, Post Shrigere, Taluk Shimoga, Dist: Shimoga,
Karnataka-577 211, has been guilty of an offence
punishable under the provisions of the Prevention of
Money Laundering Act, 2002 (15 of 2003).

NOW THEREFORE, in exercise of the powers conferred
upon me under sub-section (1) of Section 19 of the Prevention
of Money Laundering Act, 2002 (15 of 2003), I hereby arrest the
said Mr. R.M.Manjunatha Gowda at 02.48 Hrs. on 09-04-
2025 and he has been informed of the grounds as well as
reasons to believe for such arrest."

(Emphasis supplied)
27

Not only the arrest order, the arrest memo, the intimation of arrest,

grounds of arrest and reasons to believe all the necessary statutory

compliances are followed while drawing up proceedings of arrest. I

deem it appropriate to notice each one of them.

THE ARREST MEMO:

"भारत सरकार
GOVERNMENT OF INDIA
संयु नदे शक का कायालय वतन नदे शालय बगलु आंच लक कायालय
, , ,

OFFICE OF THE ADDITIONAL DIRECTOR, DIRECTORATE OF
ENFORCEMENT, BENGALURU ZONAL OFFICE
तीसरा तल, ख. लॉक, बी.एम.ट$.सी., शां तनगर-ट$.ट$.एम.सी,
के.एच.रोड, शां तनगर, बंगलौर - 560 027.
rd
3 Floor, B Block, BMTC, Shantinagar - TTMC,
K.H.Road, Shantinagar, Bengaluru - 560 027.

080-2253 7807 080-2253 7883 [email protected]
______________________________________________________________
F.No: ECIR/BGZO/05/2021 Date:09.04.2025
ARREST MEMO

Sr Particular Details

Name and Mr. R. M. Manjunatha Gowda S/o Late Shri
1 Parentage of
Ramappa Gowda
Arrestee
Mr. R. M. Manjunatha Gowda, #153, Village
2 Address Karakuchhi, Post Shrigere, Taluq Shimoga, Dist.
Shimoga, Karnataka-577211

Office of the Directorate of Enforcement, 3rd Floor,
3 Place of Arrest B Block, BMTC, Shantinagar - TTMC, K. H. Road,
Shantinagar, Bengaluru - 560 027

4 ECIR No and ECIR/BGZO/05/2021 and offence under Section 3
28

Offences of PMLA, 2002

5 Date of Arrest 09.04.2025

6 Time of Arrest 02:48 Hours

Name of the Officer
7 along with Sh, Ajay Choudhary, Assistant Director
Designation
1. Somanna Sagara (09986354990)
Name and
2. Nagaraja Kuruvalli (09481736222)
8 Telephone Number
From mobile number 9845805599 of Mr. R.M.
to whom informed
Manjunatha Gowda

Sd/- Sd/-

Signature of the arrestee Signature of the arresting officer

Witness: Sd/-

....

THE INTIMATION OF ARREST:

"भारत सरकार GOVERNMENT OF INDIA संयु नदे शक का कायालय, वतन नदे शालय, बगलु आंच लक कायालय, OFFICE OF THE ADDITIONAL DIRECTOR, DIRECTORATE OF ENFORCEMENT, BENGALURU ZONAL OFFICE तीसरा तल, ख. लॉक, बी.एम.ट$.सी., शां तनगर-ट$.ट$.एम.सी, के.एच.रोड, शां तनगर, बंगलौर - 560 027.

3rd Floor, B Block, BMTC, Shantinagar - TTMC, K.H.Road, Shantinagar, Bengaluru - 560 027.

080-2253 7807 080-2253 7883 [email protected] ______________________________________________________________ F. No. ECIR/BGZO/05/2021 Date: 09.04.2025 29 Intimation of Arrest Mr. Somanna Sagara (09986354990) & Mr. Nagaraja Kuruvalli (09481736222) have been informed today, i.e., on 09.04.2025 about the arrest of Mr. R. M. Manjunatha Gowda S/o Late Shri Ramappa Gowda, Resident of #153, Village Karakuchhi, Post Shrigere, Taluq Shimoga, Dist. Shimoga, Karnataka-577 211, by mobile number 9845805599 of Mr. R.M. Manjunatha Gowda himself over phone call. Further, the Arrest memo and order along with Grounds of Arrest and Reason to Believe for arrest, was served to Mr. R. M. Manjunatha Gowda, in person. Further, Mr. Somanna Sagara & Mr. Nagaraja Kuruvalli have been informed that Mr. R. M. Manjunatha Gowda would be kept in lock-up in ED Office, Bengaluru and would be presented before the Hon'ble Special Court (PMLA), Bengaluru, today i.e. on 09.04.2025.

(Ajay Choudhary) Assistant Director Bengaluru Zonal Office"

Signature of the Arrestee Witness:

1.

2.

....

THE GROUNDS OF ARREST:

"GROUNDS OF ARREST OF SRI R.M.MANJUNATHA GOWDA

1) Based on the complaint filed by the Shimoga District Co-

Operative Central Bank Limited (SDCC Bank) against Smt. B. Shobha, Branch Manager of the SDCC Bank, City Branch and others, an FIR bearing No. 325/2014 dated 17.07.2014 was registered at Doddapete Police Station, Shivamogga, Karnataka against Smt. B. Shobha, Bank Manager and others of SDCC Bank, Shivamogga under Section 406, 408, 409, 420 and 34 of IPC, 1860.

2) As per Charge-sheet bearing no. 02/2014 dated 18.10.2014 filed under Section 409, 120B, 201 r/w 37 of IPC in FIR No. 325/2014, by the Police before the Hon'ble 2nd JMFC Court, Shivamogga against Smt. B. Shobha, Bank Manager and others, it was revealed that large-scale misappropriation of funds took place at the Shivamogga District Co-Operative Central Bank city branch which was orchestrated primarily by the branch manager, Accused No.1 Smt. Shobha. As the sole in-charge of the branch from August 2005, she exploited her position to misappropriate a significant amount of bank funds, totalling Rs. 62,77,63,560/-. The modus operandi involved opening savings 785 fraudulent gold loan accounts without the knowledge of the Bank account holders, utilizing fake, fabricated, and forged documents. To facilitate this, Shobha enlisted the help of Accused No.2 Ravindra. V, the cashier, and Accused No.3 Shashidhar. N, the gold custodian. Ravindra handed over sanctioned loan amounts to Shobha without proper authorization, while Shashidhar made false entries in the gold custodian book, indicating the pledge of pure gold ornaments when in reality, many loans were sanctioned against gold-coated silver bangles or with no gold pledged at all. Accused No.5 Sunder Shet, the bank's appraiser, played a crucial role by dishonestly certifying that the gold-coated silver bangles and low karat gold ornaments were pure gold, thus enabling the fraudulent loan sanctions. Mr. Sunder Shet conspired with Shobha and Shashidhar for personal gain, contributing to the wrongful loss incurred by the bank. Accused No.8 Gururaj, a goldsmith, manufactured the gold- coated silver bangles as per the instructions of Shobha and her family members, received Rs.16,00,000 from the misappropriated funds for his services and for purchase a 31 bangle manufacturing machine. Accused No.6 Jeethu, proprietor of Vaibhav Lakshmi Jewellers, also conspired with Shobha, making online transactions of gold and silver using the misappropriated funds and earning an illegal profit of Rs. 1,11,64,000/-, which he used for acquiring properties and vehicles. Family members of Smt. Shobha, Accused No. 9 Jagadeesh. C.S. (husband), Accused No.10 Chandrahasa. M.B. (brother), and Accused No.17 Basappa (father of Smt. Shobha), were also involved in the scam. They had pledged gold coated silver bangles as pure gold to avail loans at the behest of Smt. Shobha, further aiding her misappropriation. They also benefited directly from the scam, purchasing properties, land, silver articles, and vehicles using the ill- gotten gains. Accused No.11 S.A. Shivakumar, the car driver for the bank's Chairman, was also implicated. He conspired with Shobha, purchased land and sites using the misappropriated funds, and even fraudulently obtained a gold loan by pledging an artificial gold-coated chain. The entire scam came to light following an anonymous complaint in July 2014, which led to a surprise inspection by senior officials of the co-operative society. The inspection revealed a significant discrepancy between the cash book balance and the physical cash available, indicating a misappropriation of Rs. 1,79,20,235-58/-. Further investigation uncovered the larger scale of the fraud involving the fraudulent gold loans. Notably, Accused No.18 G. Ramachandra, the branch manager of the Head Office, also played a role in attempting to shield Shobha. On the instruction of Accused No.15 R.M. Manjunatha Gowda, the Chairman, G. Ramachandra made false entries in the bank cash book, showing a deposit of Rs. 50,00,000/- from Smt. Shobha. He also sanctioned fraudulent gold loans worth Rs. 34,53,000/- against 2 Kg 134 grams of gold and illegally took 366 grams of gold ornaments from the pledged gold.

3) Further, as per chargesheet, on 15.07.2014, Co-operative society officials along with officials of the bank, on physical verification of cash at SDCC Bank, City Branch, Shivamogga, reported shortage of Rs.1,79,20,235-58 which was done by B. Shobha in criminal conspiracy with Ravindra V. (Cashier).

4) Another FIR in crime No. 04/2014 dated 29.05.2014 under section 13(1) (e) read with section 13(2) of PC Act, 1988 was registered at Lokayukta Police Station, Shivamogga against 32 Mr. R.M Manjunatha Gowda, President the Shimoga District Co-operative Central Bank Limited, Shivamogga and Ex- President, Karnataka State Cooperative Apex Bank, Bangalore. In this matter, a charge sheet bearing No. 02/2018 dated 20.03.2018 was filed under Section 13(1)(e) r/w 13(2) of PC Act, 1988 by the Karnataka Lokayukata before the Ld. Principal District and Sessions Judge, Shivamogga against Mr. R M Manjunatha Gowda.

5) Additional charge-sheets were filed under Section 409, 420, 465, 468, 471, 201, 120B r/w 37 of IPC by the Police before the Hon'ble 2nd JMFC Court, Shivamogga against Smt. Shobha, Bank Manager and others for misappropriation of the bank's money totalling to Rs. 62,77,63,560/-.

6) Another FIR in crime No. 04/2014 dated 29.05.2014 under section 13(1) (e) read with section 13(2) of PC Act, 1988 was registered at Lokayukta Police Station, Shivamogga against Mr. R.M Manjunatha Gowda, President the Shimoga District Co-operative Central Bank Limited, Shivamogga and Ex- President, Karnataka State Cooperative Apex Bank, Bangalore. In this matter, a charge sheet bearing No. 02/2018 dated 20.03.2018 was filed under Section 13(1)(e) r/w 13(2) of PC Act, 1988 by the Karnataka Lokayukata before the Ld. Principal District and Sessions Judge, Shivamogga against Mr. R M Manjunatha Gowda.

7) Addendum to ECIR/BGZO/05/2021 was issued on 04.10.2023 incorporating the FIR No. 04/2014 dated 29.05.2014 registered at Lokayukata Police Station, Shivamogga and corresponding Charge sheet bearing No. 02/2018 dated 20.03.2018 which was filed by the Karnataka Lokayukata Police before the Ld. Principal District and Sessions Judge, Shivamogga.

8) As per chargesheet filed by the LEA, it was also revealed that, despite being aware of rules and bylaws of the bank regarding transfers and promotion, you violated the same by ensuring that Mrs. B. Shobha, in spite of her being promoted to the rank of General Manager in the year 2013, continued to be posted in the city branch where she had been working from 2005 onwards. Further, as the Chairman of the Advisory Committee for the City Branch from 2006 to 2014. the 33 Advisory Committee never convened a meeting during their tenure, indicating a lapse in duty. This negligence allowed the accused, Shobha B. (the then General Manager at SDCC Bank, City Branch) to carry out irregularities within the said branch. Audit reports (both internal and statutory) from 2006-07 to 2011-12 highlighted several significant deficiencies within the city branch, yet no appropriate action was taken against the accused, Shobha B.

9) During the course of investigations it was revealed that Shri Shivakumar S A, S/o Appu Rangappa, your driver at SDCC Bank used to transport parcels containing cash on the basis of directions given to him and around the time of 2013 Karnataka Assembly Elections, he transported money contained in a parcel given by Smt. Shobha to Shri Durgappagowda at your instruction.

10) During the course of investigation, it was revealed that you & Shobha connived and diverted funds from bank through fraudulent sanction of gold loans and used the same for investments and acquiring properties along with Shri.T. Manjappa and others

11) That as and when funds were required by you, you used to communicate through phone with Smt. Shobha B. In response, she used to issue cheques for withdrawal of money or cash from the accounts of the said 34 persons and they would hand over the money to persons whose names were instructed by you.

12) During the course of investigations it was revealed that you knew about the spurious gold pledged against Rs. 62.23 Crores misappropriated from the DCC Bank, City Branch and yet you failed to take any action against B. Shobha & Others as you were yourself the beneficiary of such "proceeds of crime."

13) You deliberately did not transfer B. Shobha from the city branch of SDCC bank as she was misappropriating the bank funds under your supervision and protection and from the statements recorded under of PMLA, it was revealed that on 34 multiple occasions such misappropriated funds, i.e, "proceeds of crime" were directly and indirectly received by you.

14) During the course of investigations, it was revealed that you gave instructions to B. Shobha regarding sanction of gold loans using fake gold ornaments.

15) From the investigation carried out under PMLA, it is clearly noticeable that "proceeds of crime" generated by Ms. B. Shobha from the commissioning of schedule offence of diversion of funds from the bank by opening fake gold loan accounts, were laundered and handed over to you. You had acquired various movable and immovable properties and were found to be in possession of various such properties acquired from PoC generated from schedule offence. When asked to explain the source of funds from which properties were acquired, you had no plausible explanation to offer. You along with your wife were also found to be in possession of assets in disproportionate to their known sources of income. These movable and immovable properties are nothing but the properties acquired from the proceeds of crime.

16) You have directly and indirectly received the "proceeds of crime" Mrs. B. Sobha through cash and also got many properties transferred from the close relatives of Mrs.B. Shobha to your close relatives.

17) Further, it was revealed that you have amassed disproportionate assets, both movable and immovable, significantly exceeding your legitimate income during the check period from 11.01.1997 to 30.05.2014, which coincides with your tenure in public offices. The investigation done by LEA concluded that you have possessed assets and incurred expenses totalling Rs. 7,36,15,141.55/- during the check period, against a calculated legal income of Rs. 3,41,07,842.72/- This resulted in identification of disproportionate assets valued at Rs. 3,95,07,298.83, which is 115.83% more than your legal income as you failed to provide a satisfactory account for the excess wealth acquired by you. As per Chargesheet, it was also revealed that your wife Smt. H.C. Asha, was in possession of Rs. 5 Crores (Approx) worth movable and immovable properties.

18) The assets found in the name of your wife can be directly attributed to you as she stated in her statement dated 05.10.2023 recorded under section 17 of PMLA, 2002 stated that she was unaware of the funding sources for the properties in her name, as you, handled all financial matters, including filing her ITRs.

19) That from the investigations conducted so far, it can be concluded that, you are guilty of the offence of money laundering u/s 3 of the Act and punishable u/s 4 of the Act as you have failed to reveal anything about the possession/concealment/use/gain from the proceeds of crime which is involved in money laundering. However, the materials gathered during the course of investigation under PMLA, it is fully evident that you have indulged in criminal activities relating to the scheduled offences and generated huge amount of proceeds of crime which is involved in money laundering.

20) Hence, in view of the above discussions, there are reasons to believe that you are guilty of the offence of money-laundering as defined under Section 3 of PMLA, 2002 which is punishable under Section 4 of PMLA, 2002 as you have been found to be knowingly involved in the criminal activities related to scheduled offences thereby generating, assisting, acquiring, proceeds of crime and projecting and claiming the same as untainted property. Therefore, you are being arrested under Section 19 of PMLA, 2002 on 09.04.2025.

Sd/- 9/4/2025 Signature of Arrestee I have been intimated about my rights, as laid down by the Hon'ble Supreme Court of India in the case of D.K. Basu V.s. State of West Bengal with regard to the rights of arrestee person.

(1) Somanna Sagara Sh/Smt (2) Nagaraj Kuruvalli _ has been informed about my arrest at phone number (1) 9986354990 at 3.08 AM on (2) 9481736222 3.12 36 09.04.2025.

Sd/- 9/4/2025 3.15 A.M. Signature of Arrestee Witness:

1. Sd/- (Gowramma V) 9/4/25

2. Sd/- (Gourab Das) 09/04/25 Sd/- 9/4/2025 Signature of Arresting Officer"

(Emphasis supplied)

15. It now becomes germane to notice Section 19 of the Act, it reads as follows:

"19. Power to arrest.--(1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.

(3) Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction:

Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Special Court or Magistrate's Court."

(Emphasis supplied) Section 19 requires that at the time of arrest the Directorate of Enforcement should have reasons to believe that the person who is being arrested is in possession proceeds of crime. Therefore, those reasons to believe are to be deduced into writing. The elaborate reasons to believe so drawn by the Directorate of Enforcement against the petitioners in the case at hand are as follows:

REASONS TO BELIEVE:

"Reasons to believe to place Shri R M Manjunatha Gowda under Arrest u/s 19 of PMLA, 2002 on 09.04.2025

1) Based on the complaint filed by the Shimoga District Co-

Operative Central Bank Limited (SDCC Bank) against Smt. B. Shobha, Branch Manager of the SDCC Bank, City Branch and others, an FIR bearing No. 325/2014 dated 17.07.2014 was registered at Doddapete Police Station, Shivamogga, Karnataka against Smt. B. Shobha, Bank Manager and others of SDCC Bank, 38 Shivamogga under Section 406, 408, 409, 420 and 34 of IPC, 1860.

2) As per Charge-sheet bearing no. 02/2014 dated 18.10.2014 filed under Section 409, 120B, 201 r/w 37 of IPC in FIR No. 325/2014, by the Police before the Hon'ble 2nd JMFC Court, Shivamogga against Smt. B. Shobha, Bank Manager and others, it was revealed that large scale misappropriation of funds took place at the Shivamogga District Co-Operative Central Bank city branch which was orchestrated primarily by the Branch Manager, Accused No.1 Smt. B. Shobha. As the sole in-charge of the branch from August 2005, she exploited her position to misappropriate a significant amount of bank funds, totaling Rs. 62,77,63,560/-. The modus operandi involved opening savings 785 fraudulent gold loan accounts without the knowledge of the Bank account holders, utilizing fake, fabricated, and forged documents. To facilitate this, Shobha enlisted the help of Accused No.2 Ravindra. V, the cashier, and Accused No.3 Shashidhar. N, the gold custodian. Ravindra handed over sanctioned loan amounts to Shobha without proper authorization, while Shashidhar made false entries in the gold custodian book, indicating the pledge of pure gold ornaments when in reality, many loans were sanctioned against gold- coated silver bangles or with no gold pledged at all. Accused No.5 Sunder Shet, the bank's appraiser, played a crucial role by dishonestly certifying that the gold-coated silver bangles and low carat gold ornaments were pure gold, thus enabling the fraudulent loan sanctions. Mr. Sunder Shet conspired with Shobha and Shashidhar for personal gain, contributing to the wrongful loss incurred by the bank. Accused No.8 Gururaj, a goldsmith, manufactured the gold-coated silver bangles as per the instructions of Shobha and her family members, received Rs. 16,00,000 from the misappropriated funds for his services and for purchase a bangle manufacturing machine. Accused No. 6 Jeethu, proprietor of Vaibhav Lakshmi Jewelers, also conspired with Shobha, making online transactions of gold and silver using the misappropriated funds and earning an illegal profit of Rs. 1,11,64,000/-, which he used for acquiring properties and vehicles. Family members of Smt. Shobha, Accused No. 9 39 Jagadeesh. C.S. (husband), Accused No.10 Chandrahasa. M.B. (brother), and Accused No.17 Basappa (father of Smt. Shobha), were also involved in the scam. They had pledged gold coated silver bangles as pure gold to avail loans at the behest of Smt. Shobha, further aiding her misappropriation. They also benefited directly from the scam, purchasing properties, land, silver articles, and vehicles using the ill-gotten gains. Accused No.11 S.A. Shivakumar, the car driver for the bank's Chairman, was also implicated. He conspired with Shobha, purchased land and sites using the misappropriated funds, and even fraudulently obtained a gold loan by pledging an artificial gold-coated chain. The entire scam came to light following an anonymous complaint in July 2014, which led to a surprise inspection by senior officials of the co-operative society. The inspection revealed a significant discrepancy between the cash book balance and the physical cash available, indicating a misappropriation of Rs. 1,79,20,235-58/-. Further investigation uncovered the larger scale of the fraud involving the fraudulent gold loans. Notably, Accused No.18 G. Ramachandra, the branch manager of the Head Office, also played a role in attempting to shield Shobha. On the instruction of Accused No.15 R.M. Manjunatha Gowda, the Chairman, G. Ramachandra made false entries in the bank cash book, showing a deposit of Rs. 50,00,000/- from Smt. Shobha. He also sanctioned fraudulent gold loans worth Rs. 34,53,000/- against 2 Kg 134 grams of gold and illegally took 366 grams of gold ornaments from the pledged gold.

operative Central Bank Limited, Shivamogga and Ex- President, Karnataka State Cooperative Apex Bank, Bangalore.

5) In this matter, a charge sheet bearing No. 02/2018 dated 20.03.2018 was filed under Section 13(1)(e) r/w 13(2) of PC Act, 1988 by the Karnataka Lokayukata before the Ld. Principal District and Sessions Judge, Shivamogga against Mr. R M Manjunatha Gowda.

6) Additional charge-sheets were filed under Section 409, 420, 465, 468, 471, 201, 120B r/w 37 of IPC by the Police before the Hon'ble 2nd JMFC Court, Shivamogga against Smt. Shobha, Bank Manager and others for misappropriation of the bank's money totaling to Rs. 62,77,63,560/-.

7) Another FIR in crime No. 04/2014 dated 29.05.2014 under section 13(1) (e) read with section 13(2) of PC Act, 1988 was registered at Lokayukta Police Station, Shivamogga against Mr. R.M Manjunatha Gowda, President the Shimoga District Co-operative Central Bank Limited, Shivamogga and Ex- President, Karnataka State Cooperative Apex Bank, Bangalore. In this matter, a charge sheet bearing No. 02/2018 dated 20.03.2018 was filed under Section 13(1)(e) r/w 13(2) of PC Act, 1988 by the Karnataka Lokayukata before the Ld. Principal District and Sessions Judge, Shivamogga against Mr. R M Manjunatha Gowda.

8) As per the charge sheet filed by the Karnataka Lokayukata, on 29.05.2014 a case under the Prevention of Corruption Act, 1988, against the accused Sh. R. M. Manjunatha Gowda was registered. He played significant roles as the President of the District Central Co-Operative Bank in Shimoga, a position he held from his election on 11.01.1997, and as the President of the Karnataka State Co-Operative Apex Bank in Bengaluru, starting from his election on 30.04.2010. He served as a public officer in these capacities until the time when raids were conducted at premises tied to his official duties such as his presidential chambers at both banks and guest house rooms at the Apex Bank, as well as personal premises on 30.05.2014 41 by the LEA. It was revealed that he amassed disproportionate assets, both movable and immovable, significantly exceeding his legitimate income during the check period from 11.01.1997 to 30.05.2014, which coincides with his tenure in these public offices. The investigation done by LEA concluded that R. M. Manjunatha Gowda possessed assets and incurred expenses totaling Rs. 7,36,15,141.55/- during the check period, against a calculated legal income of Rs. 3,41,07,842.72/- This resulted in identification of disproportionate assets valued at Rs. 3,95,07,298.83, which is 115.83% more than his legal income as he failed to provide a satisfactory account for the excess wealth acquired by him. As per Chargesheet, it was also revealed that the wife of the accused Smt. H.C. Asha, was in possession of Rs. 5 crores (Approx.) worth movable and immovable properties.

9) That the Hon'ble Court has taken cognizance of the charge sheet filed by the Karnataka Lokayukta Police on 07.04.2018. However, the Hon'ble High Court of Karnataka vide its order dated 04.04.2024 in W.P. 10108 of 2024 filed by R.M. Manjunatha Gowda had stayed the trial before the special court.

10) Further, as per Charge-sheet dated 30.07.2021 in FIR No. 325/2014, it was alleged that R.M. Manjunatha Gowda, served as the President of the Shivamogga DCC Bank for approximately 23 years. As President, he possessed complete control and supervision over all branches and staff. Despite his knowledge of the bank's bylaws and regulations, he allowed Shobha B (A-1) to continue working at the city branch, even after her promotions to higher positions. Further, he served as the Chairman of the Advisory Committee for the city branch but failed to convene a single meeting. Audit reports highlighting serious deficiencies within the branch were ignored and statutory reports detailing lapses were shelved. R.M. Manjunatha Gowda also unilaterally made decisions during Board meetings, suppressing director input and instructing bank officials to conceal irregularities. He failed to take disciplinary action against 42 Shobha B and other involved employees, and neglected to perform inspections of the city branch.

That Shobha B, who was an employee rose through the ranks, even to positions that did not exist at her working location. She carried out numerous irregularities within the city branch of SDCC Bank, including creating fake gold jewellery for fraudulent loans and establishing fake accounts in the names of her relatives. She misappropriated over Rs. 62-63 Crore of the bank's funds.

That N.G. Nagabhushan, the Managing Director, also held a position of significant authority, having control over all bank branches and staff. Despite prior allegations against Shobha B, he allowed her to continue working at the city branch and even promoted her to a position that did not exist there. He violated staff rules regarding transfers and shelved statutory audit reports detailing serious lapses. Nagabhushan concealed irregularities from the management board and failed to take disciplinary action against Shobha B and other involved employees. He also neglected to perform inspections of the city branch.

Further, Bank officials Nagabhushan, Manjappa, and Mahabalagiri brought irregularities to the Chairman's notice but were instructed to conceal the information. Other bank staff reported Shobha's fraudulent activity, but their concerns were ignored. The bank directors were prevented from speaking during board meetings and were kept uninformed about the fraud.

11) An ECIR/BGZO/05/2021 dated 15.01.2021 was recorded at the Directorate of Enforcement, Bengaluru Zonal Office. Addendum to this ECIR was issued on 04.10.2023 incorporating another FIR No. 04/2014 dated 29.05.2014 registered at Lokayukata Police Station, Shivamogga and corresponding Charge sheet bearing No. 02/2018 dated 20.03.2018 which was filed by the Karnataka Lokayukata Police before the Ld. Principal District and Sessions Judge, Shivamogga in the said FIR.

12) During investigation, searches u/s 17 of PMLA, 2002, were conducted on 05.10.2023 at various premises linked with the accused persons which resulted in seizure of various incriminating documents.

i. From the statement dated 05.10.2023 recorded u/s 17 of PMLA, 2002 of Smt. Asha Manjunatha Gowda, wife of Sri R M Manjunatha Gowda, it was revealed that she possessed various properties in her name and in the name of her husband. Further, she stated she was unaware of the funding sources for the properties, as her husband, Shri. R.M. Manjunatha Gowda, handled all financial matters, including filing her ITRs. Thus, lacking corresponding income sources herself, any disproportionate assets found in Smt. Asha Manjunatha Gowda's name can be directly attributed to Sri R.M. Manjunatha Gowda.

ii. During the course of investigations, Summons u/s 50 of PMLA, 2002 was issued to R.M. Manjunatha Gowda on 06.10.2023 for appearance on 09.10.2023. R.M. Manjunatha Gowda instead of appearing for investigation, filed the W.P. 22780/2023 before the Hon'ble High Court of Karnataka seeking to quash all proceedings initiated in the ECIR/BGZO/05/2021.

iii. That vide order dated 20.02.2024 the Hon'ble High Court was pleased to dismiss the said W.P. 22780/2023. Consequently, Summons were issued to R.M. Manjunatha Gowda again on 14.03.2024 and 28.03.2024 for appearance on 20.03.2024 and on 04.04.2024 respectively. However, he again did not appear before this office to join the investigation and filed a Writ Appeal No. 497/2024 dated 25.03.2024 before the Division bench of the Hon'ble High Court of Karnataka challenging order dated 20.02.2024 passed by the learned Single Judge in WP No.22780/2023. The Division Bench, of the Hon'ble High Court also dismissed the said writ appeal vide order dated 22.03.2025.

13) As per Chargesheet, filed by the Lokayuktha Police various movable/immovable assets were discovered in the name of R.M. Manjunatha Gowda (Accused) 44

14) That searches u/s 17 of PMLA, 2002, were again conducted on 08.04.2025 at various premises linked with the accused persons and statements of other accused were recorded under section 17(1)(f) of PMLA, 2002. During the searches it was unearthed that substantial portion of proceeds of crime generated from the diversion of loan funds by Ms Sobha and her accomplices on the instructions of Shri. R M Manjunath Gowda had been handed over to him or his associates. Statements of the key persons who were either co-conspirators or witness were recorded during the search wherein they inter- alia stated that funds have been laundered by Shri. R M Manjunath Gowda. Details of some of statements recorded are as under:

a) Shri Shivakumar S A, S/o AppuRangappa: He joined as a gardener in Shimoga District Co-operative Central Bank (SDCCB) in the year 1998. Eventually, he became the driver of Shri. R M Manjunath Gowda, President of SDCCB, in the year 2000. He also used to transport parcels containing cash on the basis of directions given to him. He also used to deliver parcels containing cash for the bank from which he came to know that the loan amounts being sanctioned by the City Branch were exceeding the limit of Rs. 10 lakhs per day; that around the time of 2013 Karnataka Assembly Elections, he transported money contained in a parcel given by Smt. Shobha to Shri Durgappagowda on the instruction of Shri. R M Manjunath Gowda: that at that time, Shri. Durgappa gowda had told him that he was going to give that parcel to Shri. Krishnegowda, who was a member of a Zilla Panchayat and hailed from his village i.e. Umblebailu;

that in his understanding, the source of the funds for investments and payments made by Smt. Shobha for acquiring properties were the funds misappropriated by her from SDCC Bank under instructions from and in collusion with Shri R M Manjunath Gowda, Shri. T. Manjappa and others.

b) Shri V. Raveendra S/o Shri K.B.Venkatesh, then cashier at City branch of Shimoga District Co- operative Central bank:

i. On being asked about the amount misappropriated from the SDCC Bank, City Branch which lead to filing of FIR No. 325/2014, he stated that Smt.B. Shobha, the then Branch Manager of SDCC Bank, City Branch handed him 38 cheques amounting to Rs.1,71,89,326/- of different customers. However, before making entry in Scroll 45 Book, Mr. Santhosh Kumar, the then Managing Director of SDCC, City Branch, at the instructions of Mr. Manjunath Gowda, came to the bank and took over the said 38 cheques. Thereafter Smt. B.Shobha made deposit of Rs.50 lakhs against the deficit amount of Rs.

1,71,89,326/- and the remaining deficit amount is still pending in the Scroll Book. In addition to the above, around Rs.62.23 Crores were sanctioned by Smt. B.Shobha with the consent of Shri. Manjunath Gowda, Chairman of SDCC against spurious gold (silver ornaments coated with gold). The said of amount of Rs.62.23 Crores was disbursed into the bank accounts opened in the name of 34 different persons, who are relatives of Smt. B. Shobha.

ii. On being asked why the deposit of Rs.50 lakhs against the deficit amount of Rs. 1,71,89,326/- was made by Smt. B. Shobha, the then Branch Manager and also about the source of the said Rs.50 lakhs, he stated that in order to cover the deficit amount of Rs. 1,71,89,326/- , Smt. B.Shobha availed a loan of Rs.50 lakhs against gold from Main branch of SDCC; that a total of 38 cheques for an amount of Rs 1,71,89,326/- were given to him by Mrs. Shobha B. and the cash of the said amount was handed over to Mr. Maltesh who handed over the same to Mrs. Shobha B. Further, the driver of Mr. Manjunath Gowda , Mr. Shiv Kumar, visited the branch and the said cash amount was handed over to him for the delivery of same to Mr. Manjunath Gowda; that Mr. Santosh Kumar, MD physically visited the branch and stated that as per the direction of the Chairman, Mr. R.M. Manjunath Gowda, he asked for handing over the 38 number of cheques and took away the same.

iii. He further stated that as and when funds were required by Mr. Manjunath Gowda, he used to communicate through phone with Smt. Shobha B. In response, she used to issue cheques for withdrawal of money or cash from the accounts of the said 34 persons and would hand over the money to persons whose names were instructed by Shri Manjunath Gowda; that Shri Manjunath Gowda also knew about the spurious gold pledged against Rs.62.23 misappropriated from the DCC Bank, City Branch; further, internal auditors namely Shri. Mahabalgiri, Shri. K G Krishnamurthy and Gold appraiser (Shri. Sunder Shet for DCC Bank, City Branch) 46 were under direct control of Shri Manjunath Gowda and used to manipulate record/data stored in the bank.

iv. Mr. S A Shivakumar, the driver of Shri Manjunath Gowda used to go to Smt. Shobha B. at the DCC Bank for collecting money/cash on behalf of Shri Manjunath Gowda

c) Shri Mahadevappa G S/o Shri Kendappa, currently working as Deputy General Manager of SDCC Bank, City Branch Smt. B. Shobha had not complied with the bank's prescribed limit and sanctioned gold loans beyond the prescribed limit; that being president of the bank, Shri R M Manjunatha Gowda had say in the transfer of the bank officials.

d) Shri N Shashidhara, S/o Nanjappa, the then Gold Custodian at SDCC Bank, City Branch, Shivamogga i. Smt. Shobha B has indeed made several gold loan entries in the books of the bank, but no gold has actually been mortgaged to the bank. These entries were made in the books of the bank to account for the funds misappropriated by Smt. Shobha B and Shri RM Manjunath Gowda.

ii. Shri ManjunathGowda, the then Chairman of Shimoga DCC Bank gave instructions to Smt. B. Shobha regarding sanction of several gold loans using fake gold ornaments iii. Shri N. Shashidhara made entries in respect of the 795 fraud gold loan accounts in the gold custodian book as per the instructions of Smt. B. Shobha, along with entries pertaining to genuine gold loans. These gold loan entries were made in the books to cover the funds misappropriated by Smt. B. Shobha and Shri Manjunath Gowda; that it was common knowledge among the city branch staff of the bank that the fraud gold loans which were facilitated by Smt. Shobha B were done as per the instructions of Shri R M Manjunatha Gowda.

e) Shri Jagadisha C S, S/o Shri. Chowdaplara Kenchappa Siddappa, and husband of Smt. B. Shobha at City branch of Shimoga District Co-operative Central Bank 47 i. On being asked about end use of the misappropriated loan amount, he stated that total amount of Rs. 75 Lakhs (approx.) were given to Shri. R M Manjunath Gowda (President of District Co- Operative Central Bank) during the 2013 state assembly elections and he helped Shobha in arranging the cash amounts by way of withdrawing the amounts from the fake bank accounts opened in the name of their relatives/known persons. Further, he also stated that some portions of the misappropriated amounts were also given to Shri. Durgappa Gowda (Director of District Co-Operative Central Bank), Shri. Krishne Gowda (politician and agriculturist) and amount of Rs. 45 to 50 Lakhs was given to Shri. Shivakumar (Driver of Shri. R M Manjunath Gowda) by his wife.

ii. That Mr. R. M. Manjunath Gowda used to exert pressure on my wife through his driver Shri. Shivakumar as he was in need of money during the 2013 State Assembly Elections.

f) Shri Chandrahasa M B, S/o Late Shri. B Basappa (Brother of B. Shobha):

i. Mr. R.M. Manjunatha Gowda was accomplice in misappropriating the funds by adopting the modus operandi of opening fake gold loan accounts using fake gold ornaments as mortgage and finally withdrawing in cash of sanctioned gold loan amount. In the process he also shared the booty on several occasions, however on one instance, Mr. R.M. Manjunatha Gowda received an amount of Rs. 40 Lakhs for his 2013 MLA election campaign from Smt B. Shobha. Smt. B. Shobha also purchased one property in the name of her father which in turn transferred to brother of Mr. R.M. Manjunatha Gowda

- Shri. Nageshan without any consideration. The said property comprises of a plot of 20 guntes in Bommana Katte village, Kasaba 2nd Hobli, Shimoga Taluk, survey no. 149/3.

15) During the investigations under PMLA, it was found that MrManjunath Gowda had acquired various movable and immovable properties from the proceeds of crime generated from the funds diverted from the Shimogga 48 District Cooperative bank. Some of the properties acquired and possessed by Shri Manjunath Gowda and his family members are as under:

16) IMMOVABLE AND MOVABLE PROPERTIES DETAILS OF ACCUSED AND HIS FAMILY MEMBERS BEFORE THE CHECK PERIOD.

SL PROPERTY PROPERTY DATE OF VALUE IN WITNESS NO DETAILS HOLDER EARNING RS COLLECTED NAME 1 10 Acre land Smt. H.C. 86,000-00 SRO Shivamogga in Sy.No.1 Asha W/o 25.07.1984 letter No. Maleshankara Accused. SROS/210/2015-16 S.F. Grama, dated 25.07.2015 Shivamogga produced the sale Taluk. deed No.1017/1984- 85 dated 19.07.1984 this certified that SmtAshaManjunatha Gowda purchased 10 Acre land in Sy.No.1 Maleshankara S.F. Grama Shivamogga Taluk for Rs.86,000/-

                                                                             (Document        No.5.
                                                                             Page No 126-134).
                                              Total           86,000-00
                                                         2.

3. IMMOVABLE AND MOVABLE PROPERTIES DETAILS OF ACCUSED AND HIS FAMILY MEMBERS AT THE END OF CHECK PERIOD.


S    PROPERTY DETAILS                   PROPERTY       DATE OF      VALUE IN RS          WITNESS
L                                        HOLDER        EARNING                          COLLECTED
N                                         NAME
O
1    2 Acre 20 Guntaland in                A.G.O.      27.10.2006          75,000-00   SRO Thirthahalli
     Sy.No.186, KonandaruGrama,          (Accused                                      letter      No.
     AgraharaHobli, ThirthahalliTaluk   Governmen                                      SROT/other/ 07/
     Shivamogga District.                t Officer).                                   2014-15 dated
                                                                                       09.06.    2014
                                                                                       (Document
                                                                                       No.5. Page No
                                                                                       19-33).
2    10 Gunta land in Sy No 10/5,          AGO         23.07.2008        3,00,000-00   Senior     SRO
     Kashi pura grama, Shivamogga                                                      Shivamogga
     Taluk.                                                                            letter      No.
                                                                                       SROS/98/ 2013-
                                                                                       14 dated 07.06.
                                                                                       2014 (Document
                                                                                       No.5. Page No
                                             49



                                                                               83-87).
3   5 Acre agricultural land in Sy     Smt H.C.    07.11.2011   45,40,000-00   Senior     SRO
    No.69/1, Sominakoppagrama,         Asha, w/o                               Shivamogga
    Shivamogga Taluk.                    AGO                                   letter      No.
                                                                               SROS/98/ 2013-
                                                                               14 dated 07.06.
                                                                               2014 (Document
                                                                               No.5. Page No
                                                                               88-94).
4   21 Acre 07 Gunta land out of         AGO       28.06.2006   10,50,000-00   SRO Thirthahalli
    24 Acre 27 gunta land in Sy.No.                                            letter      No.
    155 /2, Konandurugrama,                                                    SROT/other/ 07/
    Thirthahalli Taluk.                                                        2014-15 dated
                                                                               09.06.    2014
                                                                               (Document
                                                                               No.5. Page No
                                                                               01-08).
5   4 Acre 36 Gunta land in              AGO       18.02.2012   19,11,000-00   SRO Thirthahalli
    Sy.No.10/1, KasabaHobligrama,                                              letter      No.
    Thirthahalli taluk.                                                        SROT/other/ 07/
                                                                               2014-15 dated
                                                                               09.06.    2014
                                                                               (Document
                                                                               No.5. Page No
                                                                               45-55).
    BUILDINGS.
6   Site No.37 measuring 60*30         Smt H.C.    2007-08      41,06,237-00   PWD Port and
    +22/2 with newly constructed       Asha w/o                                inland     water
    RCC house, Property No 33/86,        AGO                                   transport depart
    Bettamakki new extension,                                                  ment No.1 sub-
    Thirthahalli town panchayat                                                division
    limits.                                                                    Shivamogga
                                                                               office     letter
                                                                               No.AEE/PWD/No
                                                                               .1/UVS 2015-16
                                                                               /104/4,    dated
                                                                               19.05.2015.
                                                                               (Document
                                                                               No.5. Page 138-
                                                                               157).
7   Hall adjacent to Farm House,       Smt H.C.    2005          9,94,818-00   PWD Port and
    KarakuchiGrama, Sirigere post,     Asha, W/o                               inland     water
    Shivamogga Taluk. (Ground            AGO                                   transport depart
    floor constructed in the year                                              ment No.1 sub-
    1995-1997 adjacent to this big                                             division
    hall has been constructed in the                                           Shivamogga
    year 2005.                                                                 office     letter
                                                                               No.AEE/PWD/No
                                                                               .1/UVS 2015-16
                                                                               /104/4,    dated
                                                                               19.05.2015.
                                                                               (Document
                                                                               No.5. Page 135-
                                                                               137 and 158-
                                                                               168).
8   R.C.C. house constructed in site     AGO       20.06.2008   29,62,000-00   Senior      SRO
    No.12 Municipal Katha No 1548                                              Shivamogga
    and Site No 13 Municipal Katha                                             letter       No.
                                                 50



     No.1549, Malleswara Nagar                                                              SROS/98/ 2013-
     Extension Ward No.8                                                                    14 dated 07.06.
     Shivamogga city.                                                                       2014 (Document
                                                                                            No.5. Page No
                                                                                            73-82).
 9   Flat total built up area 3456 Sq     SmtDeepa.      02.08.2013          80,00,000-00   Senior     SRO
     feet with two car parking area          A.V.                                           Hebbala
     No 1002A and 1002 B in               Relative of                                       Bengaluru letter
     basement and ground floor at            AGO                                            No.
     BBMP assess ment No.2/4,                                                               SRO/Hebbal/112
     Municipal Katha No.8, 1st Main,                                                        /2014- 15 dated
     6th cross, Lottegollahalli,                                                            30.07.2014
     Kasabahobli, Bengaluru North                                                           (Document
     BBMP ward No. 100.                                                                     No.5. Page No
                                                                                            95-125).
     SITES:
10   Site No.37 measuring 60*30           Smt H.C.       23.05.2007             75,000-00   SRO Thirthahalli
     +22/2, Property No 33/86,            Asha w/o                                          letter      No.
     Bettamakki new extension,              AGO                                             SROT/other/ 07/
     Thirthahalli town panchayat                                                            2014-15 dated
     limits.                                                                                09.06.    2014
                                                                                            (Document
                                                                                            No.5. Page No
                                                                                            34-44).
11   Vacant site No's 1, 2, 3, 4, 5, 6,      AGO         09.03.2009          81,73,700-00   Senior     SRO
     7, 8, 9, 10, 11, 12, 13, 14, 15,                                                       Shivamogga
     16, 17, 18, 19, 20, 21 and 22                                                          letter      No.
     total 81,737 Sq feet in                                                                SROS/176/
     Sy.No.69, 74, 75/1, and 76 of                                                          2014-15 dated
     AnupinakatteGrama,                                                                     21.07.    2014
     PuradaluGramapanchayat,                                                                (Document

Kasabahobli Shivamogga Taluk. No.5. Page No 56-72).

12 Site No.36 measuring 60*37 AGO 2000-01 92,000-00 SRO Thirthahalli +30/2, Property Assessment No letter No. 527/3385, Bettamakki new SROT/other/ 67/ extension, Thirthahallitown 2015-16 dated panchayat limits. 05.01. 2016 (Document No.5. Page No 164-168).

MOVABLE ASSETS BANK AND POSTAL ACCOUNTS.

13   Karnataka Bank APMC Yard               AGO         22.04.2014    20,00,000-00   Senior branch manager,
     branch, Shiva mogga Fixed                                                       Karnataka Bank, A.P.M.C
     deposit A/c No. 3420, 3421,                                                     yard            branch,
     3422 and 3423                                                                   Shivamogga letter No.
                                                                                     OR:158/2014-15 dated
                                                                                     04.06.2014. ( Document
                                                                                     No.6. Page 32-34).
14   Karnataka Bank APMC Yard               AGO         08.09.2009    3,00,000-00    Senior branch manager,
     branch, Shiva mogga ACC A/c                                                     Karnataka Bank, A.P.M.C
     No. 796501.                                                                     yard            branch,
                                                                                     Shivamogga letter No.
                                                                                     OR:158/2014-15 dated
                                                                                     04.06.2014. ( Document
                                                                                     No.6. Page 32-34).
15   Karnataka Bank APMC Yard               AGO         11.05.2014    4,19,459-00    Senior branch manager,
                                           51



     branch, Shiva mogga S.B. A/c                                           Karnataka Bank, A.P.M.C
     No. 5023.                                                              yard             branch,
                                                                            Shivamogga letter No.
                                                                            OR:158/2014-15 dated
                                                                            04.06.2014. ( Document
                                                                            No.6. Page 32-41).
16   Karnataka Bank APMC Yard       SmtAsha.     08.09.2009   3,00,000-00   Senior branch manager,
     branch, Shiva mogga ACC A/c    H.C, W/o                                Karnataka Bank, A.P.M.C
     No. 796401.                      AGO                                   yard             branch,
                                                                            Shivamogga letter No.
                                                                            OR:158/2014-15 dated
                                                                            04.06.2014. ( Document
                                                                            No.6. Page 32-34).
17   Karnataka Bank APMC Yard       Smt. Asha.   22.04.2014   1,00,000-00   Senior branch manager,
     branch, Shiva mogga ACC A/c     H.C., w/o                              Karnataka Bank, A.P.M.C
     No.10494.                         AGO                                  yard             branch,
                                                                            Shivamogga letter No.
                                                                            OR:158/2014-15 dated
                                                                            04.06.2014. ( Document
                                                                            No.6. Page 32-34).
18   PragathiGrameena bank,            AGO       01.02.2014       463-00    Manager, Pragathi Gram
     Kannangi branch, Shiva                                                 eena bank, Kannangi
     moggaTaluk SB A/c                                                      branch,     Shivamogga

No.1068910 0005096. Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48-55).

19   PragathiGrameena bank,            AGO       01.02.2014   1,04,090-00   Manager, Pragathi Gram
     Kannangi branch, Shiva                                                 eena bank, Kannangi
     moggaTaluk SB A/c                                                      branch,     Shivamogga

No.1068910 0005096. Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48, 49 & 51).

20 PragathiGrameena bank, SmtAsha 20.06.2011 5,00,000-00 Manager, Pragathi Gram Kannangi branch, Shiva H.C. w/o eena bank, Kannangi moggaTaluk SB A/c No. AGO branch, Shivamogga 10689201100141. Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48, 49, 54 & 55).

21 PragathiGrameena bank, SmtAsha 20.06.2011 5,00,000-00 Manager, Pragathi Gram Kannangi branch, Shiva H.C. w/o eena bank, Kannangi moggaTaluk SB A/c No. AGO branch, Shivamogga 10689201100142. Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48, 49, 54 & 55).

22 KodachadriPattinaSouhardaSah AGO 29.03.2014 32,627-00 Chief Executive Officer, akari Bank Limited, KodachadriPattinaSouhar Shivamogga, S.B. A/c No. 9. dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 6, 9 and 10).

23 KodachadriPattinaSouhardaSah SmtAsha. 29.03.2014 1,377-00 Chief Executive Officer, akari Bank Limited, H.C W/o KodachadriPattinaSouhar Shivamogga, S.B. A/c No.208. AGO dhaSahakari Ltd 52 Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 6, 13 and 14).

24 KodachadriPattinaSouhardaSah SmtAsha. 22.05.2013 6,00,000-00 Chief Executive Officer, akari Bank Limited, H.C W/o KodachadriPattinaSouhar Shivamogga, S.B. A/c No. 243. AGO dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 7, 13 and 14).

25 KodachadriPattinaSouhardaSah SmtAsha. 22.05.2013 7,00,000-00 Chief Executive Officer, akari Bank Limited, H.C W/o KodachadriPattinaSouhar Shivamogga, S.B. A/c No. 244. AGO dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 7, 13 and 14).

26 KodachadriPattinaSouhardaSah SmtAsha. 22.05.2013 7,00,000-00 Chief Executive Officer, akari Bank Limited, H.C W/o KodachadriPattinaSouhar Shivamogga, S.B. A/c No. 245. AGO dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 7, 13 and 14).

27 Shivamogga District Co-Opera AGO 07.05.2014 3,57,646-00 Manager, Shivamogga tive Central Bank Limited, District Co-Operative Shivamogga S.B A/c No. Central Bank Limited 020201100006935 Shivamogga letter No. 337/14-15 dated 04.06.

2014 (Document No.6, Page No. 99-104).

28 Shivamogga District Co-Opera AGO 30.05.2014 1,20,661-00 Manager, Shivamogga tive Central Bank Limited, Head District Co-Operative Office Shivamogga S.B A/c No. Central Bank Limited 6041/C-4826. Shivamogga letter No. 335/14-15 dated 04.06.

2014 (Document No.6, Page No. 72-98).

29 Shivamogga District Co-Opera AGO 29.03.2014 83,248-00 Branch Manager, tive Central Bank Limited, Shivamogga District Co-

     Konanduru branch, Thirthahalli                                           Operative Central Bank
     Shivamogga S.B A/c No.1048.                                              Limited,     Konanduru
                                                                              branch,      Thirthahalli
                                                                              Shivamogga letter No.
                                                                              70/2014-15         dated
                                                                              03.06. 2014 (Document
                                                                              No.6, Page No. 105-
                                                                              108).
30   Shivamogga District Co-Opera      Smt H.C.    07.12.2013   1,00,000-00   Branch         Manager,
     tive Central Bank Limited,        Asha, W/o                              Shivamogga District Co-
     Thuduru branch, Thirthahalli        AGO                                  Operative Central Bank
     Shivamogga F.D. A/c                                                      Limited,        Thuduru
     No.04531210 000834.                                                      branch,      Thirthahalli
                                                                              Shivamogga letter No.
                                                                              96/2014-15         dated
                                                                              31.05. 2014 (Document
                                                                              No.6, Page No. 168-
                                            53



                                                                            184).
31   Shivamogga District Co-Opera    Smt H.C.    07.12.2013   1,00,000-00   Branch          Manager,
     tive Central Bank Limited,      Asha, W/o                              Shivamogga District Co-
     Thuduru branch, Thirthahalli      AGO                                  Operative Central Bank
     Shivamogga F.D. A/c                                                    Limited,          Thuduru
     No.04531210 000835.                                                    branch,       Thirthahalli
                                                                            Shivamogga letter No.
                                                                            96/2014-15          dated
                                                                            31.05. 2014 (Document
                                                                            No.6, Page No. 168-
                                                                            184).
32   Shivamogga District Co-Opera      AGO       29.03.2014    17,223-00    Branch          Manager,
     tive Central Bank Limited,                                             Shivamogga District Co-
     Thirthahalli Shivamogga F.D.                                           Operative Central Bank
     A/c No.04521100 005760.                                                Limited,      Thirthahalli
                                                                            Shivamogga           letter
                                                                            dated.       02/06/2014
                                                                            (Document No.6, Page
                                                                            No. 109-112).
33   Shivamogga District Co-Opera    Smt H.C.    29.03.2014       923-00    Branch          Manager,
     tive Central Bank Limited,      Asha, W/o                              Shivamogga District Co-
     Thirthahalli Shivamogga F.D.      AGO                                  Operative Central Bank
     A/c No.04521100 002266.                                                Limited,      Thirthahalli
                                                                            Shivamogga           letter
                                                                            dated.       02/06/2014
                                                                            (Document No.6, Page
                                                                            No. 109, 110, 112).
34   Karnataka State Co-Operative      AGO       29.03.2014   3,33,945-00   Branch Manager, Karna
     Apex Bank Limited, Uttunga                                             taka State Co-Operative
     No.1, Pampa Mahakavi road,                                             Apex     Bank     Limited,
     Chamaraja pet, Bengaluru 560                                           Uttanga               No.1
     018, S.B. A/c No.1016/10/201/                                          Pampamahaka vi road,
     0008067.                                                               Chamarajapet,
                                                                            Bengaluru    city    letter
                                                                            dated         06.06.2014
                                                                            (Document No.6, Page
                                                                            No. 70 & 71).
35   PragathiGrameena Bank             AGO       18.06.2011   6,00,000-00   Chief           Manager,
     Shimoga Fixed Deposit                                                  PragathiGrameena Bank,
     No.10804 200900334,                                                    Shiva     mogga      letter
                                                                            No.PKGB/ SMGR & LCR
                                                                            04/2014-15/NSR. Dated
                                                                            06.06. 2014 (Document
                                                                            No.6, Page No.42, 43 &
                                                                            46).
36   PragathiGrameena Bank           SmtAsha,    18.06.2011   6,00,000-00   Chief           Manager,
     Shimoga Fixed Deposit           W/o AGO                                PragathiGrameena Bank,
     No.10804 200900330,                                                    Shiva     mogga      letter
                                                                            No.PKGB/ SMGR & LCR
                                                                            04/2014-15/NSR. Dated
                                                                            06.06. 2014 (Document
                                                                            No.6, Page No.188-190).
37   PragathiGrameena Bank             AGO       01.02.2014    17,791-00    Chief           Manager,
     Shimoga Fixed Deposit                                                  PragathiGrameena Bank,
     No.10804 10013703.                                                     Shiva     mogga      letter
                                                                            No.PKGB/ SMGR & LCR
                                                                            04/2014-15/NSR. Dated
                                                                            06.06. 2014 (Document
                                            54



                                                                            No.6, Page No.42, 43 &
                                                                            46).
38   PragathiGrameena Bank            SmtAsha,   01.02.2014    15,951-00    Chief             Manager,
     Shimoga Fixed Deposit            W/o AGO                               PragathiGrameena Bank,
     No.10804 10002096.                                                     Shiva    mogga        letter
                                                                            No.PKGB/ SMGR & LCR
                                                                            04/2014-15/NSR. Dated
                                                                            06.06. 2014 (Document
                                                                            No.6, Page No.42, & 44).
39   V.S.S.N. Male shankara, S.F.     SmtAsha,   31.08.2010    50,000-00    Chief Manager, V.S.S.N
     Shimoga fixed deposit.           W/o AGO                               Maleshankara,           S.F.
                                                                            Shivamogga letter Dated
                                                                            05.07.2014 (Document
                                                                            No.6, Page No.185-187).
40   SharavathiPattinaSahakaraSan     SmtAsha,   24.01.2005   2,00,000-00   Secretary
     ghaThirthahalli bond No.675 &    W/o AGO                               ,SharavathiPattinaSahak
     676 invested amount.                                                   araSangha           Limited
                                                                            Thirthahalli,         letter
                                                                            No.S.S.C.S.T /09/2014-
                                                                            15       Dated           03.
                                                                            06.2014(Document
                                                                            No.6, Page No.197-204).
41   SahayadriMulti purpose Ark nut   SmtAsha,   11.05.2009   1,00,000-00   Secretary,       Sahayadri
     producers sales Co-Operative     W/o AGO                               Multipurpose Ark nut
     SanghaThirthahalli Bond No.                                            producers      sales    Co-
     690 Fixed amount.                                                      Operative
                                                                            SanghaThirthahalli letter
                                                                            No.              Sahaydri-
                                                                            TTH/84/2014 15 dated
                                                                            03.06.2014
                                                                            (Document No.6, Page
                                                                            No.191-195).
42   SahayadriMulti purpose Ark nut     AGO      17.12.2008    50,000-00    Secretary,       Sahayadri
     producers sales Co-Operative                                           Multipurpose Ark nut
     SanghaThirthahalli Bond No.                                            producers      sales    Co-
     708 Fixed amount.                                                      Operative
                                                                            SanghaThirthahalli letter
                                                                            No.              Sahaydri-
                                                                            TTH/84/2014 15 dated
                                                                            03.06.2014
                                                                            (Document No.6, Page
                                                                            No.191, 193 & 196).
43   Corporation Bank Azad road,        AGO      23.04.2014    96,821-00    Branch Manager, Corpo
     Thirthahalli branch, S.B. A/c                                          ration Bank, Azad road,
     No.23371.                                                              Thirthahalli letter No. OR
                                                                            TTH/Lokayukta:01:2014
                                                                            -15 dated 02.06.2014 (
                                                                            Document No.6, Page No
                                                                            145-155).
44   Karnataka State Co-Operative       AGO      28.05.2014   7,34,895-00   Branch Manager, Karna
     Apex Bank Limited, Uttunga                                             taka State Co-Operative
     No.1, Pampa Mahakavi road,                                             Apex    Bank       Limited,
     Chamaraja pet, Bengaluru 560                                           Uttanga                No.1

018, S.B. A/c No.201-14506. Pampamahaka vi road, Chamarajapet, Bengaluru city letter No. SACY/LY/1075/2014-15 dated 10.06.2014 55 (Document No.6, Page No. 56 & 67).



45   Syndicate Bank, No.2920/A,            AGO       30.05.2014   11,34,492-00
                                                                             Incharge          Manager,
     Chord Road, R.P.C. Lay out                                              Syndicate             Bank,
     branch, Benga luru-40 S.B. A/c                                          No.2920/A, Chord road,
     No. 06561010002225                                                      R.P.C. Lay out branch,
                                                                             Bengaluru letter dated
                                                                             05.09.2014 ( Document
                                                                             No.6, Page No. 156 &
                                                                             157).
46   Shivamogga District Co-Opera        Smt H.C.    29.03.2014   10,610-00  Branch            Manager,
     tive Central Bank Limited,          Asha, W/o                           Shivamogga District Co-
     Thirthahalli Shivamogga C/A           AGO                               Operative Central Bank
     A/c No.0202113 0000273.                                                 Limited,      Head office
                                                                             Shivamogga letter No.
                                                                             595/15-16            dated.
                                                                             30/07/2015 (Document
                                                                             No.6, Page No. 158 to
                                                                             167).
47   Kuduvalli Krishna Prasad Ark          AGO       2000-01 to 10,00,000-00 Proprietor        Kuduvalli
     Nut Mandi, S.C.G.5 A.P.M.C.                     23.04.2014              Krishna Prasad Ark nut
     Yard Shivamogga Ledger Polio                                            mandi      letter     dated

No 169, 123, 183, 190, 187, 30.05. 2014. (Document 178, 180, 201, 494 balance No.6 Page No.113, 114 amount to 123 and 132 to 144).

48 Kuduvalli Krishna Prasad Ark SmtAsha. 2007-08 to 10,00,471-00 Proprietor Kuduvalli Nut Mandi, S.C.G.5 A.P.M.C. H.G W/o 23.04.2014 Krishna Prasad Ark nut Yard Shivamogga Ledger Polio AGO mandi letter dated No 180, 201, 494 balance 30.05. 2014. (Document amount No.6 Page No.113, 114 to 123 and 132 to 144).

49 Kuduvalli Krishna Prasad Ark SmtAsha. 2007-08 10,00,471-00 Proprietor Kuduvalli Nut Mandi, S.C.G.5 A.P.M.C. H.G W/o to Krishna Prasad Ark nut 23.04.2014 Yard Shivamogga Ledger Polio AGO mandi letter dated No 169, 123, 183, 190, 187, 30.05. 2014. (Document 178, 180, 201, 494 balance No.6 Page No.113, 114 amount to 123 and 132 to 144).

50 Shivamogga TalukKarakuchi AGO 1,00,000-00 Karakuchi Farm house Farm House tractor accessories search and seizure such as leveler, Disk, Cultivator mahazar dated etc., 30.05.2014. ( Document No.2, Page 34 to 43).

51 Shivamogga TalukKarakuchi AGO 2,00,000-00 Karakuchi Farm house Farm House. Green Company search and seizure Diesel Generator. Its running mahazar dated time is 282044 hours. 30.05.2014. ( Document No.2, Page 34 to 43).

52   Shivamogga TalukKarakuchi             AGO                    11,000-00  Karakuchi Farm house
     Farm House. 22 Steel Drums.                                             search      and     seizure
                                                                             mahazar               dated
                                                                             30.05.2014. ( Document
                                                                             No.2, Page 34 to 43).
53   Shivamogga TalukKarakuchi             AGO                    10,000-00  Karakuchi Farm house
     Farm House. 2 Ton barbed wire                                           search      and     seizure
     rolls.                                                                  mahazar               dated
                                                                             30.05.2014. ( Document
                                                                             No.2, Page 34 to 43).
                                              56

VEHICLES ( Car and Two wheelers etc.,).

54   TOYOTA INNOVA car No.KA-04-          AGO      21.04.2011 10,89,694-88      R.T.O.    Yeshawanthpur
     MJ 3409 purchased from VIVA                                                Bengaluru North letter
     Magna Wheelers Private                                                     No.ARTO/BN/Regn/Tran
     Limited, Bellary Main road,                                                sport/14-15       dated
     Hebbala, Bengaluru.                                                        23.07.     2014     and
                                                                                22.01.2015 ( Document
                                                                                No.7. Page No 52 to 69).
55   TOYOTA Fortuner car No.KA-           AGO       21.04.2011 19,15,510-00     R.T.O.    Yeshawanthpur
     04-MH 0739 purchased from                                                  Bengaluru North letter
     Ravindu Toyota Private Limited,                                            No.ARTO/BN/Regn/Tran
     No.23, Chord road, Bengaluru.                                              sport/14-15       dated
                                                                                23.07.     2014     and
                                                                                22.01.2015 ( Document
                                                                                No.7. Page No 70 to 81).
56   Honda CRV Car No. KA-14-M-           AGO       15.02.2006 14,70,025-00     RTO Shivamogga letter
     6729                                                                       No       RTO.S/2014-15
                                                                                dated    06.06.2014    (
                                                                                Document No.7 Page No.
                                                                                01-18).
57   Messi Ferguson Company            SmtAsha.H. 29.09.2006     5,30,000-00    RTO Shivamogga letter
     Tractor and Trailer No. KA-14T-   GW/o AGO                                 No       RTO.S/2014-15
     9088 and 9089.                                                             dated    06.06.2014    (
                                                                                Document No.7 Page No.
                                                                                03-06 and 26-41).
58   Maruthi Zen Estilo Car No.KA-     SmtAsha.H. 17.03.2010     3,57,887-00    RTO Shivamogga letter
     14-N- 2295.                       G W/o AGO                                No       RTO.S/2014-15
                                                                                dated    06.06.2014    (
                                                                                Document No.7 Page No.
                                                                                01-6 nd 19-25).
59   MaruthiVagnor Car No.KA-14-       SmtAsha.H. 29.09.2006     3,72,982-00    RTO Shivamogga letter
     M- 7394.                          G W/o AGO                                No       RTO.S/2014-15
                                                                                dated    06.06.2014    (
                                                                                Document No.7 Page No.
                                                                                01-6 nd 82-94).
60   Bajaj Platinum Motor Cycle No.    SmtAsha.H.   30.01.2007     30,620-00    RTO Shivamogga letter
     KA-14-W-1480.                     G W/o AGO                                No       RTO.S/2014-15
                                                                                dated    06.06.2014    (
                                                                                Document No.7 Page No.
                                                                                01-6 nd 42-51).
LIQUID CASH FOUND DURING THE RAID:-
61   Liquid cash found during the         AGO       30.05.2014    25,000-00    Karakuchi farm house
     search and seizure of Karakuchi                                           search    and     seizure
     farm house, Shivamogga Taluk                                              panchanama         dated
                                                                               30.05.2014 ( Document
                                                                               No.2, Page No.34-43).

JEWELLERY (GOLD AND SILVER) AND OTHER VALUABLES FOUND:-

GOLD ORNAMENTS 62 1934.00 Grams weighing gold AGO Check 50,47,200-00 TahasildarThirthahalliTalu ornaments as Sri Manjunatha period k letter No. Election Gowda and his wife SmtAsha, Details15/2013-14 dated were declared during the 18.07.2014. ( Document election. No.4, Page No. 01 to 07).

SILVER ARTICLES:-

63 8154.00 Grams weighing silver AGO Check 4,58,000-00 TahasildarThirthahalliTalu articles as Sri Manjunatha period k letter No. Election Gowda and his wife SmtAsha, Details15/2013-14 dated were declared during the 18.07.2014. ( Document 57 election. No.4, Page No. 01 to 07).

INVENTORY OF HOUSE HOLD GOODS:-

64   House hold articles found in the      AGO        Check       7,65,680-00 Karakuchi Farm house
     Karakuchi     Farm       House,                  period                  search      and    seizure
     Shivamogga.                                                              panchanama          dated
                                                                              30.05.2014 ( Document
                                                                              No.2, page No. 34 to 43).
65   House hold articles found in the      AGO        Check       9,02,650-00 KarakuchiNilaya     house
     BettamakkiGrama          House,                  period                  BettamakkiGrama,
     Thirthahall I Taluk.                                                     Thirthahalli search and
                                                                              seizure panchanamadated
                                                                              30.05.2014 ( Document
                                                                              No.2, page No. 62 to 72).
66   House hold articles found in the      AGO        Check       2,51,764-00 Search      and    seizure
     guest house room                                 period                  panchanama          dated
                                                                              30.05.2014      at   room
                                                                              No.304 Varada, Room
                                                                              No.305    Thunga,    Apex
                                                                              Bank     guest     house,
                                                                              Chamarajapet, Bengaluru.
                                                                              (Document No.2, Page 74
                                                                              to 82).
SHARE CERTIFICATES :-
67   KodachadriPattinaSouhardaSah          AGO        -------     46,000-00     Chief Executive Officer,
     akari Bank Limited,                                                        KodachadriPattinaSouhar
     Shivamogga, S.B. A/c No. 155.                                              dhaSahakari             Ltd
                                                                                Shivamogga letter dated
                                                                                02.06.2014. ( Document
                                                                                No.6, Page No. 5, 6, and
                                                                                8).
68   KodachadriPattinaSouhardaSah       SmtAsha.H.    -------      1,000-00     Chief Executive Officer,
     akari Bank Limited,                G W/o AGO                               KodachadriPattinaSouhar
     Shivamogga, S.B. A/c No. 87.                                               dhaSahakari             Ltd
                                                                                Shivamogga letter dated
                                                                                02.06.2014. ( Document
                                                                                No.6, Page No. 5, 6,
                                                                                and12).
69   Malenadu Ark Nut sellers co-          AGO       30.05.2014      500-00     Deputy Registrar, K.C.S.
     operative Society Limited,                                                 Co-Operative     Societies,
     Shivamogga, share A/c No.                                                  Malenadu Ark nut sellers
     18366.                                                                     co-operative       society,
                                                                                Shivamogga     letter    No
                                                                                1035/2014-15          dated
                                                                                10.06.2014 ( Document
                                                                                No.6, Page No.24-31).
70   Malenadu Ark Nut sellers co-       SmtAsha.H. 30.05.2014        500-00     Deputy Registrar, K.C.S.
     operative Society Limited,         C. W/o AGO                              Co-Operative     Societies,
     Shivamogga, share A/c No.                                                  Malenadu Ark nut sellers
     18516.                                                                     co-operative       society,
                                                                                Shivamogga     letter    No
                                                                                1035/2014-15          dated
                                                                                10.06.2014 ( Document
                                                                                No.6, Page No.24-31).
71   V.S.S.S.N Male shankara S.F.          AGO        -           10,500-00     Secretary V.S.S.S.N Male
     Shivamogga Taluk share A/c                                                 shankara               S.F.
     No. 74/1.                                                                  Shivamogga Taluk letter
                                                                                dated        07.08.2015.
                                                                                (Document No.6, Page
                                               58



                                                                              18-19).
72   V.S.S.S.N Male shankara S.F.       SmtAsha.H.    -           20,500-00   Secretary V.S.S.S.N Male
     Shivamogga Taluk share A/c         G. W/o AGO                            shankara             S.F.
     No. 32/1.                                                                Shivamogga Taluk letter
                                                                              dated        07.08.2015.
                                                                              (Document No.6, Page
                                                                              18-19).
73   Multipurpose Ark Nut producers        AGO        -           95,000-00   Multipurpose   Ark    Nut
     and sales Co-operative society,                                          producers and sales Co-
     Thirthahalli share A/c No. 3666.                                         operative        society,
                                                                              Thirthahalli    secretary
                                                                              letter No. Sahyadri/61/
                                                                              2014 -15 dated 30.07.
                                                                              2015. ( Document No.6,
                                                                              Page No.22 and 23).
74   Multipurpose Ark Nut producers     SmtAsha.H.    -            1,000-00   Multipurpose   Ark    Nut
     and sales Co-operative society,    G. W/o AGO                            producers and sales Co-
     Thirthahalli share A/c No. 691.                                          operative        society,
                                                                              Thirthahalli    secretary
                                                                              letter No. Sahyadri/61/
                                                                              2014 -15 dated 30.07.
                                                                              2015. ( Document No.6,
                                                                              Page No.22 and 23).
75   S.D.C.C.     Bank       Limited       AGO       29.09.2006   80,100-00   Chief Manager Admin,
     Konanduru     branch      share                 to                       S.D.C.C. Bank Limited
                                                     30.05.2014
     amount invested.                                                         Shivamogga Letter No. A
                                                                              & C/3612/2015-16 dated
                                                                              30.12.2015 ( Document
                                                                              No., 6. Page No 216-
                                                                              222).
 ELECTRICITY DEPOSITS:-
76   Thirthahalli town, Bettamakki         AGO       02.06.2003    7,260-00   AEE(V)             MESCOM,
     colony karakuchiNilaya house                                             Thirthahalli letter No.AEE/
     Electric meter No.AEH 11598                                              HS/1151, dated 27.06.
     fixed deposit.                                                           2014 ( Document No.8,
                                                                              Page No.21 to 30).
77   Shivamogga TalukSirigere post,      SmtAsha      Check        2,496-00   AEE(V) Rural sub-division,
     Kara     kuchigrama"    Rohini      H.G. w/o     period                  MESCOM,         Shivamogga
     Nilaya" Farm house electric           AGO                                letter No. AEE/HS/2472,
     meter No. KPAEH3. R.R. No.                                               dated     22.08.2014        (
     4/430, Fixed deposit.                                                    Document       No.8,    Page
                                                                              No.07 to 20).
78   Domestic    Gas   connection          AGO       03.09.2011    2,250-00   Manager Bhandari Gas
     consumer   No. 621050 fixed                                              Agencies,       Shivamogga
     deposit.                                                                 letter dated 28.07.2015.
                                                                              (Document No.8, Page
                                                                              No. 05 and 06).
79   Domestic    Gas   connection          AGO       29.05.2005     950-00    Manager Shivamogga Gas
     consumer   No. 618016 fixed                                              and General Agencies,
     deposit.                                                                 Shivamogga letter dated
                                                                              11.06.2014
                                                                              (Document No.8, Page
                                                                              No. 01 and 04).
80   ThirthahalliBettamakki     New        AGO       09.04.2002    2,050-00   Chief                Officer,
     extension property No. 33/86,                                            PattanaPanchayat,
     site No. 37 R.C.C.house water                                            Thirthahalli           letter
     collection deposit amount paid.                                          No.CO.P.P.T. CR 01 /14-
                                                                              15    dated      04.07.2014
                            59



                                                    (Document No.8   Page
                                                    No.112-117).
                        TOTAL      5,91,06,417-55

17) In response to summons dated 08.04.2025, issued under section 50 of PMLA, 2002, Statement of Mr. R M Manjunatha Gowda was recorded wherein he was asked about the sources of income for the purchase/acquisition of his assets which were attributed to him and his wife's name during the check in period from 11.01.1997 to 30.05.2014 for Rs.

5,91,06,417/- as per Chargesheet bearing no.

02/2018 dated 20.03.2018 filed by KarnatakaLokayukta before the Ld. Principal District and Sessions Judge, Shivamogga to which he stated that the same shall be provided by his Chartered Accountant Shri. Madhu Navada.

Further, with regard to misappropriation of the bank funds and its utilization by him, he gave evasive replies. Relevant portion of the same is reproduced as under:

Q4. You are being shown the statement dated 08.04.2025 of Shri Shivakumar S A, S/o Appu Rangappa recorded u/s 17 of PMLA. It was inter-alia stated by him that He used to transport parcels containing cash on the basis of directions given to him by you. He also used to deliver parcels containing cash for the bank from which he came to know that the loan amounts being sanctioned by the City Branch were exceeding the limit of Rs. 10 lakhs per day; that around the time of 2013 Karnataka Assembly Elections, he transported money contained in a parcel given by Smt. Shobha to ShriDurgappagowda on the instruction of you: that at that time, Shri. Durgappagowda had told him that he was going to give that parcel to Shri. Krishnegowda, who was a member of a Zilla Panchayat and hailed from his village i.e. Umblebailu; that in his understanding, the source of the funds for investments and payments made by Smt. Shobha for acquiring properties were the funds misappropriated by her from SDCC Bank under instructions from and in collusion with Shri R M 60 Manjunath Gowda, Shri. T. Manjappa and others. Please offer your comment.

Ans. I have seen statement dated 08.04.2025 of Shri Shivakumar S A, S/o Appu Rangappa recorded u/s 17 of PMLA running into 11 pages and put my dated signatures on the same as a token of having read the same. I state that whatever he has stated is baseless allegations against me.

Q.5 You are being shown the statement dated 08.04.2025 of Shri V.Raveendra S/o Shri K.B.Venkatesh, then cashier at City branch of Shimoga District Co-operative Central bank recorded u/s 17 of PMLA.

(i) On being asked about the amount misappropriated from the SDCC Bank, City Branch which lead to filing of FIR No. 325/2014, he stated that Smt.B. Shobha, the then Branch Manager of SDCC Bank, City Branch handed him 38 cheques amounting to Rs.1,71,89,326/- of different customers. The payments of the said cheques were handed over to respective customers at that time. However, before making entry in Scroll Book, Mr. Santhosh Kumar, the then Managing Director of SDCC, City Branch, at the instructions of Mr. Manjunath Gowda, came to the bank and took over the said 38 cheques. Thereafter Smt. B.Shobha made deposit of Rs.50 lakhs against the deficit amount of Rs.

1,71,89,326/- and the remaining deficit amount is still pending in the Scroll Book.

In addition to the above, around Rs.62.23 Crores were sanctioned by Smt. B.Shobha with the consent of Shri. Manjunath Gowda, Chairman of SDCC against spurious gold (silver ornaments coated with gold). The said of amount of Rs.62.23 Crores was disbursed into the bank accounts opened in the name of 34 different persons, who are relatives of Smt. B. Shobha.

(ii) On being asked why the deposit of Rs.50 lakhs against the deficit amount of Rs. 1,71,89,326/-

was made by Smt. B. Shobha, the then Branch Manager and also about the source of the said Rs.50 lakhs, he stated that in order to cover the deficit amount of Rs. 1,71,89,326/-, Smt. B.Shobha availed a loan of Rs.50 lakhs against gold from Main branch of SDCC; that A total of 38 cheques for an amount of Rs 1,71,89,326/- were given to him by Mrs. Shobha B. and the cash of the said amount was handed over to Mr. Maltesh who handed over the same to Mrs. Shobha B. Further, the driver of Mr. Manjunath Gowda , Mr. Shiv Kumar, visited the branch and the said cash amount was handed over to him for the delivery of same to Mr. Manjunath Gowda; that Mr. Santosh Kumar, MD physically visited the branch and stated that as per the direction of the Chairman, Mr. R.M. Manjunath Gowda, he asked for handing over the 38 number of cheques and took away the same.

(iii) He further stated that as and when funds were required by Mr. Manjunath Gowda, he used to communicate through phone with Smt. Shobha B. In response, she used to issue cheques for withdrawal of money or cash from the accounts of the said 34 persons and would hand over the money to persons whose names were instructed by Shri Manjunath Gowda; that Shri Manjunath Gowda also knew about the spurious gold pledged against Rs.62.23 misappropriated from the DCC Bank, City Branch; further, internal auditors namely Shri. Mahabalgiri, Shri. K G Krishnamurthy and Gold appraiser (Shri. Sunder Shet for DCC Bank, City Branch) were under direct control of Shri Manjunath Gowda and used to manipulate record/data stored in the bank.

(iv) Mr. S A Shivakumar, the driver of Shri Manjunath Gowda used to go to Smt. Shobha B. at the DCC Bank for collecting money/cash on behalf of Shri Manjunath Gowda.

Please offer your comment.

Ans. I have seen statement dated 08.04.2025 of Shri V.Raveendra S/o Shri K.B.Venkatesh, then cashier at City branch of Shimoga District Co-operative Central bank running into 17 pages recorded u/s 17 of PMLA and put my dated signatures on the same as a token of having read the same. I state that I state he has made baseless allegations against me. He was cashier and we attached his and his family's properties long back for recovery. I state that he colluded with others to cheat the bank.

Q.6 You are being shown the statement dated 08.04.2025 of Shri Mahadevappa G S/o Shri Kendappa, currently working as Deputy General Manager of SDCC Bank, City Branch vide which he inter-alia stated that Smt. B. Shobha had not complied with the bank's prescribed limit and sanctioned gold loans beyond the prescribed limit; that being president of the bank, Shri R M Manjunatha Gowda had say in the transfer of the bank officials. Please offer your comments.

Ans. I have seen statement dated 08.04.2025 of Shri Mahadevappa G S/o Shri Kendappa, currently working as Deputy General Manager of SDCC Bank, City Branch running into 13 pages recorded u/s 17 of PMLA and put my dated signatures on the same as a token of having read the same. I state that transfers are made by the CEO/MD of the respective branches. Board of Directors and I never in interfered with the transfers of bank officials.

Q.7 You are being shown the statement dated 08.04.2025 of N Shashidhara, S/o Nanjappa, then custodian at City branch of Shimoga District Co-operative Central bank recorded u/s 17 of PMLA.

(i) In reply to Question no. 12, he stated that Smt. Shobha B has indeed made several gold loan entries in the books of the bank, but no gold has actually been mortgaged to the bank. These entries were made in the books of the bank to 63 account for the funds misappropriated by Smt. Shobha B and Shri R M Manjunath Gowda.

(ii) Further in response to Question no. 13, it is stated that, Shri Majunanth Gowda, the then Chairman of Shimoga DCC Bank gave instructions to B. Shobha regarding sanction of several gold loans using fake gold ornaments.

(iii) Further in response to Question no. 14, he stated that he made entries in respect of the 795 fraud gold loan accounts in the gold custodian book as per the instructions of B. Shobha, along with entries pertaining to genuine gold loans. These gold loan entries were made in the books to cover the funds misappropriated by B. Shobha and Shri Manjunath Gowda; that it was common knowledge among the city branch staff of the bank that the fraud gold loans which were facilitated by Smt. Shobha B were done as per the instructions of Shri RM Manjunatha Gowda.

Please offer your comments on the above.

Ans. I have seen statement dated 08.04.2025 of N Shashidhara, S/o Nanjappa, then custodian at City branch of Shimoga District Co-operative Central bank running into 13 pages recorded u/s 17 of PMLA and put my dated signatures on the same as a token of having read the same. I state that whatever he has stated is baseless allegations against me. If, he had some faith in the bank, he should have informed all this to CEO, GM, DGM and other heads of the office. However, he did not inform anyone. Until the statutory auditors informed, no information was given to me. Q.8 You are being shown the statement dated 08.04.2025 of Shri Jagadisha C S, S/o Shri. Chowdaplara Kenchappa Siddappa, and husband of Smt. B. Shobha at City branch of Shimoga District Co-operative Central bank recorded u/s 17 of PMLA wherein he inter-alia stated that:-

i. On being asked about end use of the misappropriated loan amount, he stated that total amount of Rs. 75 Lakhs (approx.) were given to Shri. R M Manjunath Gowda (President of District Co-Operative Central Bank) during the 2013 state assembly elections and he helped Shobha in arranging the cash amounts by way of withdrawing the amounts from the fake bank accounts opened in the name of their relatives/known persons. Further, he also stated that some portions of the misappropriated amounts were also given to Shri. Durgappa Gowda (Director of District Co-Operative Central Bank), Shri. Krishne Gowda (politician and agriculturist) and amount of Rs. 45 to 50 Lakhs was given to Shri. Shivakumar (Driver of Shri. R M Manjunath Gowda) by his wife ii. that Mr. R. M. Manjunath Gowda used to exert pressure on my wife through his driver Shri. Shivakumar as he was in need of money during the 2013 State Assembly Elections.

Please offer your comments on the above.

Ans. I have seen statement dated 08.04.2025 of Shri Jagadisha C S, S/o Shri. Chowdaplara Kenchappa Siddappa, and husband of Smt. B. Shobha at City branch of Shimoga District Co-operative Central bank recorded u/s 17 of PMLA running into 13 pages and put my dated signatures on the same as a token of having read the same. I state that he is husband of Shobha B and they both were misappropriating funds as all the investments from misappropriated funds were made in their names. I state that he has made baseless allegations against me.

Q.9 You are being shown the statement dated 08.04.2025 of Shri Chandrahasa M B, S/o Late Shri. B Basappa recorded u/s 17 of PMLA wherein he inter-alia stated that Mr. R.M. Manjunatha Gowda was accomplice in misappropriating the funds by adopting the modus operandi of opening fake gold loan 65 accounts using fake gold ornaments as mortgage and finally withdrawing in cash of sanctioned gold loan amount. In the process he also shared the booty on several occasions, however on one instance, Mr. R.M. Manjunatha Gowda received an amount of Rs. 40 Lakhs for his 2013 MLA election campaign from Smt B. Shobha. Smt. B. Shobha also purchased one property in the name of her father which in turn transferred to brother of Mr. R.M. Manjunatha Gowda - Shri. Nageshan without any consideration. The said property comprises of a plot of 20 guntes in Bommana Katte village, Kasaba 2nd Hobli, Shimoga Taluk, survey no. 149/3.

Please offer your comments on the above.

Ans. I have seen statement dated 08.04.2025 of Shri Chandrahasa M B, S/o Late Shri. B Basappa recorded u/s 17 of PMLA running into 15 pages and put my dated signatures on the same as a token of having read the same. I state that he is brother of Shobha B and they were misappropriating funds as all the investments from misappropriated funds were made in their names. I state that he has made baseless allegations against me.

18) From the investigation carried out under PMLA as detailed above, it is clearly noticeable that PoC generated by Ms Sobha from the commissioning of schedule offense of diversion of funds from the bank by opening fake gold loan accounts, were laundered and handed over to Shri. R MManjunatha Gowda. He had acquired various movable and immovable properties and was found to be in possession of various such properties acquired from PoC generated from schedule offense. When asked to explain the source of funds from which properties were required, he had no plausible explanation to offer. He along with his wife were also found to in possession of assets in disproportionate to their known sources of income. These movable and immovable properties are 66 nothing but the properties acquired from the proceeds of crime. Thus on the basis of information discussed above, I have reason to believe that Mr. R M Manjunatha Gowda is guilty of offense of money laundering.

19) It is established that the then President of DCC Bank Shimmoga i.e Mr. R M Manjunatha Gowda had assisted Smt. Shobha B. the then Branch Manager of City Branch of SDCC Bank in committing the misappropriation/fraud against the public money with all the prior arrangements by not transferring her even after completion of her statutory period in the same branch. Further Shobha B. was discharging the duty of branch manager at said branch, even though she was promoted as AGM, DGM and General Manager of DCC Bank, Shimoga. As the president of the bank, R M Manjunatha Gowda was the incharge of the administration of the bank and during the relevant period he violated the procedural aspect of cooperative rules and the administration was in accordance with his whims and fancies.

20) Therefore, based on the investigations conducted so far, it has been revealed that Smt. Shobha B. embezzled funds totaling Rs. 62,77,63,560/- by opening 785 fraudulent gold loan accounts which was only possible due to the protection provided by the top management, specifically R M Manjunatha Gowda, the Chairman.

21) Further, Mr. R M Manjunatha Gowda has directly and indirectly received the "proceeds of crime" from Mrs. B. Shobha through cash and also got many properties transferred from close relatives of Mrs. B. Shobha to the close relatives of Mr. R M Manjunatha Gowda.

22) Further, during his tenure as Chairman of the DCC Bank Shimoga from 1997 to 2014, R M Manjunatha Gowda acquired assets and incurred expenses amounting to Rs. 7,36,15,141.55/-, while his calculated legal income was Rs. 3,41,07,842.72/-. This resulted in the identification of disproportionate assets valued at 67 Rs. 3,95,07,298.83, which is 115.83% more than his legal income, as he failed to provide a satisfactory explanation for the excess wealth. Additionally, investigations revealed that his wife, Smt. H.C. Asha, possessed movable and immovable properties worth Rs. 5 crores (Approx.)at the time when raids were conducted by the LEA. From the investigation proceedings done under PMLA, 2002, i.e, from the statements of persons recorded as mentioned above, it can also be concluded that he also received funds misappropriated by Shobha B. from the DCC Bank's coffers on multiple occasions. Further investigations to trace the total quantum of funds received by R M Manjunatha Gowda and its subsequent utilization are underway.

Kind attention is invited to Section 3 and Section 19 of PMLA, 2002 Section 3 : Whosoever directly or indirectly attempt to indulge or knowingly assists or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering.

Explanation- For removal of doubts, it is hereby clarified that -

(i) A person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely: -

(a) Concealment; or

(b) Possession; or

(c) Acquisition; or

(d) Use; or

(e) Projecting as untainted property; or

(f) Claiming as untainted property, In any manner whatsoever;

(ii) The process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever Section 19

19. Power to arrest.--

(1) If the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

(2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.

(3) Every person arrested under sub-section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's Court.

In view of the above, I have reasons to believe that the said Sh. R M Manjunatha Gowda is guilty of offence of money laundering as per Section 3 punishable under Section 4 of the PMLA as Sh. R 69 M ManjunathaGowda was directly or indirectly indulging in or knowingly assisted in and was actually involved in all or any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property.

Further, there are reasons to believe that Sh.R M Manjunatha Gowda is in possession of material evidence and information relating to the offence of money laundering, which is subject matter of investigation in the instant case and custodial interrogation of Sh. R M Manjunatha Gowda is necessary to establish money trail of proceeds of crime and to gather crucial evidence. Further, for furtherance of investigation, custodial interrogation of Sh.R M Manjunatha Gowda is essential for identification of Proceeds of Crime, related activities/financial transactions, layering, confrontation of various persons/documents and to unearth the deep-rooted conspiracy hatched by her in association with other suspects."

(Emphasis supplied) The reasons so drawn to believe that the petitioners are in possession of proceeds of crime narrates vivid details of identification of disproportionate assets more than the income and inter alia several aspects. Going into every aspect of the reasons drawn to believe that the petitioner is in possession of proceeds of crime and answering them or analysing them would prejudice the case of the petitioner.

16. The learned senior counsel appearing for the petitioner is now wanting this Court to sit as an Appellate Authority to assess every ground in the grounds of arrest or every reason found in the document of reason to believe. The grounds of arrest are quoted hereinabove. The drawing up of reasons to believe is also quoted hereinabove. The sufficiency of grounds or efficiency of grounds of arrest or reasons to believe is not amenable to judicial review. What is necessary is that, it should bear application of mind. None of these traits of an order being contrary to law is present in the case at hand. The grounds of arrest are in elaboration. The petitioner and his wife are alleged of amassing huge wealth by misappropriation of funds. The modus operandi of both these petitioners is narrated in vivid details in the proceedings drawn up on reasons to believe. The chart of movable and immovable properties of the family members before the check period and at the end of check period also forms part of the documents which depict reasons to believe. The Directorate of Enforcement holds at the end of the documents that it has all the reasons to believe that the petitioner is guilty of offence of money laundering as per Section 3 of the Act, which becomes punishable under Section 4 of 71 the Act. The finding, prima facie, is that the petitioner is directly or indirectly indulging in concealment, possession, acquisition or use and projecting or claiming the money as untainted. The money trail runs to several crores.

17. Heavy reliance is placed by the learned senior counsel on the judgment in the case of ARVIND KEJRIWAL (supra). The paragraphs so relied on, read as follows:

".... .... ....

2. At the outset, we must clarify that this is not an appeal against refusal or grant of bail. Instead, this appeal impugns the validity of arrest under Section 19 of the PML Act. It raises a pivotal question regarding the scope and ambit of the trial court/courts to examine the legality of the arrest under Section

19. The issue is legal in nature, and with the ratio being propounded in detail, the decision becomes complex and legalistic. [ While introducing the Prevention of Money Laundering (Amendment) Bill, 2012 in the Rajya Sabha on 17- 12-2012, the then Finance Minister, Mr P. Chidambaram, stated, "Firstly, we must remember that money laundering is a very technically-defined offence. It is not the way we understand "money laundering" in a colloquial sense." This has been quoted with approval in Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1, at para 118 : (2023) 21 ITR-OL 1 (SC).] .... .... ....

27. In the present case, we are examining Section 19(1) of the PML Act and the rights of the accused. We are not concerned with the ECIR. The relevant question arising is -- Whether the arrestee is entitled to be supplied with a copy of the "reasons to believe"? Paras 215 and 216 in Vijay Madanlal 72 Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] refers to the importance of recording the "reasons to believe" in writing, and states this is mandatory. Further, both Pankaj Bansal [Pankaj Bansal v. Union of India, (2024) 7 SCC 576 : (2024) 3 SCC (Cri) 450] and Prabir Purkayastha [Prabir Purkayastha v. State (NCT of Delhi), (2024) 8 SCC 254 : (2024) 3 SCC (Cri) 573] hold that the failure to record "reasons to believe" in writing will result in the arrest being rendered illegal and invalid. Paras 302 and 303 of Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] , which has been quoted subsequently, states that Section 19(1) requires in-depth scrutiny by the designated officer. A higher threshold is required for making an arrest, necessitating a review of the material available to demonstrate the person's guilt. Production of the "reasons to believe" before the Special Court/Magistrate, cannot be construed and is not the same as furnishing or providing the "reasons to believe" to the arrestee who has a right to challenge his arrest in violation of Section 19(1) of the PML Act. [ The arrestee may also challenge his arrest under Section 19(1) of the PML Act on the basis of the "grounds of arrest".] .... .... ....

29. We will reproduce what has been held in Gifford [Gifford v. Kelson, (1943) 51 Man. R 120] :

"A suspicion or belief may be entertained, but suspicion and belief cannot exist together. Suspicion is much less than belief; belief includes or absorbs suspicion.

* * * When, we speak of "reason to believe" we mean a conclusion arrived at as to the existence of a fact. Of course "reason to believe" does not amount to positive knowledge nor does it mean absolute certainty but it does convey conviction of the mind founded on evidence regarding the existence of a fact or the doing of an act. Suspicion, on the other hand, rings uncertainty. It lives in imagination. It is inkling. It is mistrust. It is chalk. "Reason to believe" is not. It is cheese."

30.Gifford [Gifford v. Kelson, (1943) 51 Man. R 120] accurately explains the difference between the "reasons to believe" and "suspicion". "Suspicion" requires lower degree of satisfaction, and does not amount to belief. Belief is beyond speculation or doubt, and the threshold of belief "conveys conviction founded on evidence regarding existence of a fact or doing of an act". Given that the power of arrest is drastic and violates Article 21 of the Constitution, we must give meaningful, true and full play to the legislative intent. [ We would subsequently examine the expressions "reason to believe", "guilty of an offence punishable under this Act" and "material" in some detail.]

31. Providing the written "grounds of arrest", though a must, does not in itself satisfy the compliance requirement. The authorised officer's genuine belief and reasoning based on the evidence that establishes the arrestee's guilt is also the legal necessity. As the "reasons to believe" are accorded by the authorised officer, the onus to establish satisfaction of the said condition will be on DoE and not on the arrestee.

32. On the necessity to satisfy the preconditions mentioned in Section 19(1) of the PML Act, we have quoted from the judgment of this Court in Padam Narain Aggarwal [Union of India v. Padam Narain Aggarwal, (2008) 13 SCC 305 :

(2009) 1 SCC (Cri) 1] and also referred to and quoted from the Canadian judgment in Gifford [Gifford v. Kelson, (1943) 51 Man.

R 120] . Existence and validity of the "reasons to believe" goes to the root of the power to arrest. The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material, as available with them on the date of arrest. On the reading of the "reasons to believe"

the court must form the "secondary opinion" on the validity of the exercise undertaken for compliance of Section 19(1) of the PML Act when the arrest was made. The "reasons to believe"

that the person is guilty of an offence under the PML Act should be founded on the material in the form of documents and oral statements.

.... .... ....

40. As explained in A.S. Krishnan v. State of Kerala [A.S. Krishnan v. State of Kerala, (2004) 11 SCC 576 : 2005 SCC (Cri) 612] , Section 26IPC in substance means that the person must have "reason to believe" if the circumstances are such that a reasonable man would, by probable reasoning, conclude or infer regarding the nature of things concerned. Such circumstances need not necessarily be capable of absolute conviction or inference; but it is sufficient if the circumstances are such that it creates a chain of probable reasoning leading to the conclusion or inference about the nature of the thing. [ Wednesbury unreasonableness [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] strikes at irrationality when a decision is so outrageous in its defiance of logic or of accepted standards that no sensible person who had applied his mind to the question to be decided would have arrived at it. See Council for Civil Service Union v. Minister of Civil Service, 1985 AC 374 : (1984) 3 WLR 1174 (HL).]

41. Once we hold that the accused is entitled to challenge his arrest under Section 19(1) of the PML Act, the court to examine the validity of arrest must catechise both the existence and soundness of the "reasons to believe", based upon the material available with the authorised officer. It is difficult to accept that the "reasons to believe", as recorded in writing, are not to be furnished. As observed above, the requirements in Section 19(1) are the jurisdictional conditions to be satisfied for arrest, the validity of which can be challenged by the accused and examined by the court. Consequently, it would be incongruous, if not wrong, to hold that the accused can be denied and not furnished a copy of the "reasons to believe". In reality, this would effectively prevent the accused from challenging their arrest, questioning the "reasons to believe". We are concerned with violation of personal liberty, and the exercise of the power to arrest in accordance with law. Scrutiny of the action to arrest, whether in accordance with law, is amenable to judicial review. It follows that the "reasons to believe" should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest.

42. We would accept that in a one-off case, it may not be feasible to reveal all material, including names of witnesses and details of documents, when the investigation is in progress. This will not be the position in most cases. DoE may claim redaction and exclusion of specific particulars and details. However, the onus to justify redaction would be on DoE. The officers of DoE are the authors of the "reasons to believe" and can use appropriate wordings, with details of the material, as are necessary in a particular case. As there may only be a small number of cases where redaction is justified for good cause, this reason is not a good ground to deny the accused's access to a copy of the "reasons to believe" in most cases. Where the non- disclosure of the "reasons to believe" with redaction is justified and claimed, the court must be informed. The file, including the documents, must be produced before the court. Thereupon, the court should examine the request and if they find justification, a portion of the "reasons to believe" and the document may be withheld. This requires consideration and decision by the court. DoE is not the sole judge.

43. Section 173(6) of the Code, permits the police officer not to furnish statements or make disclosures to the accused when it is inexpedient in public interest. In such an event, the police officer is to indicate the specific part of the statement and append a note requesting the Magistrate to exclude that part from the copy given to the accused. He has to state the reasons for making such request. The same principle will apply.

44. We now turn to the scope and ambit of judicial review to be exercised by the court. Judicial review does not amount to a mini-trial or a merit review. The exercise is confined to ascertain whether the "reasons to believe"

are based upon material which "establish" that the arrestee is guilty of an offence under the PML Act. The exercise is to ensure that DoE has acted in accordance with the law. The courts scrutinise the validity of the arrest in exercise of power of judicial review. If adequate and due care is taken by DoE to ensure that the "reasons to believe" justify the arrest in terms of Section 19(1) of the PML Act, the exercise of power of judicial review would not be a cause of concern. Doubts will only arise when the reasons recorded by the authority are not clear and lucid, and therefore a deeper and in-depth scrutiny is 76 required. Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid "reasons to believe", meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violated.

45. At this stage, we must consider the arguments presented by DoE, which rely on judgments regarding the scope of judicial interference in investigations, including the power of arrest. Reference in this regard was made to King Emperor v. Khwaja Nazir Ahmad [King Emperor v. Khwaja Nazir Ahmad, 1944 SCC OnLine PC 29 : AIR 1945 PC 18] , DukhishyamBenupani v. Arun Kumar Bajoria [DukhishyamBenupani v. Arun Kumar Bajoria, (1998) 1 SCC 52 : 1998 SCC (Cri) 261 : (1998) 91 Comp Cas 413] , State of Bihar v. J.A.C. Saldanha [State of Bihar v. J.A.C. Saldanha, (1980) 1 SCC 554 : 1980 SCC (Cri) 272] , and M.C. Abraham v. State of Maharashtra [M.C. Abraham v. State of Maharashtra, (2003) 2 SCC 649 : 2003 SCC (Cri) 628] . In our opinion, these decisions do not apply to the present controversy, as the power of arrest in this case is governed by Section 19(1) of the PML Act. These decisions restrict the courts from interfering with the statutory right of the police to investigate, provided that no legal provisions are violated. Investigation and crime detection vests in the authorities by statute, albeit, these powers differ from the court's authority to adjudicate and determine whether an arrest complies with constitutional and statutory provisions. As indicated above, the power to arrest without a warrant for cognizable offences is exercised by the police officer in terms of Section 41 of the Code. [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] Arrest under Section 41 can be made on the grounds mentioned in clauses (a) to (i) of Section 41(1) of the Code, which include a reasonable complaint, credible information or reasonable suspicion that a person has committed an offence, or the arrest is necessary for proper investigation of the offence, etc. The grounds mentioned 77 in Section 41 are different from the juridical preconditions for exercise of power of arrest under Section 19(1) of the PML Act. Section 19(1) conditions are more rigid and restrictive. As such, the two provisions cannot be equated. The legislature has deliberately avoided reference to the grounds mentioned in Section 41 and considered it appropriate to impose strict and stringent conditions that act as a safeguard.

46. The same reasoning will apply to the contention raised by DoE relying upon the provisions of Section 437 of the Code and the judgment of this Court in Gurcharan Singh v. State (Delhi Admn.) [Gurcharan Singh v. State (Delhi Admn.), (1978) 1 SCC 118 : 1978 SCC (Cri) 41] . Section 437 of the Code applies when an accused suspected of committing a non-bailable offence is arrested or detained without warrant by a police officer in charge of a police station or is brought before a court, other than the High Court or the Court of Session. It is observed that the accused would be released on bail, except for in cases specified in clauses (i) and (ii) of Section 437(1) of the Code. Section 437(1)(i) applies at the stage of initial investigation where a person has been arrested for an offence punishable with death or imprisonment for life. Section 437(1)(ii) imposes certain fetters on the power of granting bail in specified cases when the offence is cognizable and the accused has been previously convicted with death, imprisonment for life, or 7 years or more, or has previously been convicted on two or more occasions for non-bailable and cognizable offences. The power under Section 437(1) of the Code is exercised by the court, other than the High Court or the Sessions Court. In other cases, Section 437(3) of the Code will apply. Gurcharan Singh [Gurcharan Singh v. State (Delhi Admn.), (1978) 1 SCC 118 : 1978 SCC (Cri) 41] distinguishes between the language of two sub-sections of Section 437 -- Sections 437(1) and 437(7). It is observed that 437(7) does not apply at the investigation stage, but rather after the conclusion of trial and before the court delivers its judgment. Thus, the use of the expression "not guilty" pertains to releasing the accused who is in custody, on a bond without surety, for appearance to hear the judgment delivered. Notably, Section 437(6) states that if the trial of a person accused of a non-bailable offence is not completed within sixty days from the first date fixed for taking evidence, the Magistrate to their satisfaction shall release 78 such person on bail, provided they have been in custody throughout this period. The Magistrate may direct otherwise only for reasons recorded in writing. Section 439 of the Code, which relates to the power of the High Court or the Sessions Court to grant bail, remains free from the legislative constraints applicable in cases covered by Section 437(1) of the Code. However, Section 437(3) of the Code when applicable applies.

47. DoE has drawn our attention to the use of the expression "material in possession" in Section 19(1) of the PML Act instead of "evidence in possession". Though etymologically correct, this argument overlooks the requirement that the designated officer should and must, based on the material, reach and form an opinion that the arrestee is guilty of the offence under the PML Act. Guilt can only be established on admissible evidence to be led before the court, and cannot be based on inadmissible evidence. While there is an element of hypothesis, as oral evidence has not been led and the documents are to be proven, the decision to arrest should be rational, fair and as per law. Power to arrest under Section 19(1) is not for the purpose of investigation. Arrest can and should wait, and the power in terms of Section 19(1) of the PML Act can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing that the arrestee is guilty.

.... .... ....

50. In our opinion, the key distinction between Section 19(1) and Section 45 is the authority undertaking the exercise, in each case. Under Section 19(1), it is the designated/authorised officer who records in writing, their "reasons to believe" that the arrestee is "guilty" of an offence under the PML Act. Thus, the arrest is based on the opinion of such officer, which opinion is open to judicial review, however not merits review, in terms of the well-settled principles of law. Contrastingly, under Section 45, it is the Special Court which undertakes the exercise. The Special Court independently examines pleas and contentions of both the accused and DoE, and arrives at an objective opinion. The Special Court is not bound by the opinion of the designated/authorised officer 79 recorded in the "reasons to believe". A court's opinion is different and cannot be equated to an officer's opinion. While the Special Court's opinion is determinative, and is only subject to appeal before the higher courts, DoE's opinion is not in the same category as it is open to judicial review.

.... .... ....

61. The legality of the "reasons to believe" has to be examined based on what is mentioned and recorded therein and the material on record. However, the officer acting under Section 19(1) of the PML Act cannot ignore or not consider the material which exonerates the arrestee. Any such non- consideration would lead to difficult and unacceptable results. First, it would negate the legislative intent which imposes stringent conditions. As a general rule of interpretation, penal provisions must be interpreted strictly. [ See Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 at para 106 :

(2023) 21 ITR-OL 1 (SC) : (SCC pp. 164-65)"106. The "proceeds of crime" being the core of the ingredients constituting the offence of money laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within themeaning of Section 2(1)(u) of the 2002 Act--so long as the whole or some portion of the property has been derived or obtained by any person "as a result of"

criminal activity relating to the stated scheduled offence."Also see M. Ravindran v. Directorate of Revenue Intelligence, (2021) 2 SCC 485 : (2021) 1 SCC (Cri) 876 at para 17.9 : (SCC p.

505)"17. ... 17.9. Additionally, it is well settled that in case of any ambiguity in the construction of a penal statute, the courts must favour the interpretation which leans towards protecting the rights of the accused, given the ubiquitous power disparity between the individual accused and the State machinery. This is applicable not only in the case of substantive penal statutes but also in the case of procedures providing for the curtailment of the liberty of the accused."] Secondly, any undue indulgence 80 and latitude to DoE will be deleterious to the constitutional values of rule of law and life and liberty of persons. An officer cannot be allowed to selectively pick and choose material implicating the person to be arrested. They have to equally apply their mind to other material which absolves and exculpates the arrestee. The power to arrest under Section 19(1) of the PML Act cannot be exercised as per the whims and fancies of the officer.

62. Undoubtedly, the opinion of the officer is subjective, but formation of opinion should be in accordance with the law. Subjectivity of the opinion is not a carte blanche to ignore relevant absolving material without an explanation. In such a situation, the officer commits an error in law which goes to the root of the decision-making process, and amounts to legal malice.

63. A contention raised by DoE, and accepted in Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 : (2023) 21 ITR-OL 1 (SC)] , was that the order of arrest under Section 19(1) of the PML Act is a decision taken by a high-ranking officer. Thus, it is expected that the high-ranking officer is conscious of the obligation imposed by Section 19(1) of the PML Act before passing an order of arrest. We are of the opinion that it would be incongruous to argue that the high-ranking officer should not objectively consider all material, including exculpatory material.

64. A wrong application of law or arbitrary exercise of duty leads to illegality in the process. The court can exercise their judicial review to strike down such a decision. This would not amount to judicial overreach or interference with the investigation, as has been argued by DoE. The court only ensures that the enforcement of law is in accordance with the statute and the Constitution. An adverse decision would only help in ensuring better compliance with the statute and the principles of the Constitution.

65. Having said so, we accept that a question would arise

-- Does judicial review mean a detailed merits review? We have already referred to the contours of judicial review expounded in Padam Narain Aggarwal [Union of India v. Padam Narain 81 Aggarwal, (2008) 13 SCC 305 : (2009) 1 SCC (Cri) 1] , and Partap Singh [Partap Singh v. Enforcement Directorate, (1985) 3 SCC 72 : 1985 SCC (Cri) 312 : (1985) 58 Comp Cas 477] . We have also referred to the principles of Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] reasonableness. [ Wednesbury unreasonableness [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] strikes at irrationality when a decision is so outrageous in its defiance of logic or of accepted standards that no sensible person who had applied his mind to the question to be decided would have arrived at it. See Council for Civil Service Union v. Minister of Civil Service, 1985 AC 374 : (1984) 3 WLR 1174 (HL).]

66. In Amarendra Kumar Pandey v. Union of India [Amarendra Kumar Pandey v. Union of India, (2024) 15 SCC 401 : 2022 SCC OnLine SC 881] , this Court elaborated on the different facets of judicial review regarding subjective opinion or satisfaction. It was held that the courts should not inquire into correctness or otherwise of the facts found except where the facts found existing are not supported by any evidence at all or the finding is so perverse that no reasonable man would say that the facts and circumstances exist. Secondly, it is permissible to inquire whether the facts and circumstances so found to exist have a reasonable nexus with the purpose for which the power is to be exercised. In simple words, the conclusion has to logically flow from the facts. If it does not, then the courts can interfere, treating the lack of reasonable nexus as an error of law. Thirdly, jurisdictional review permits review of errors of law when constitutional or statutory terms, essential for the exercise of power, are misapplied or misconstrued. Fourthly, judicial review is permissible to check improper exercise of power. For instance, it is an improper exercise of power when the power is not exercised genuinely, but rather to avoid embarrassment or for wreaking personal vengeance. Lastly, judicial review can be exercised when the authorities have not considered grounds which are relevant or has accounted for grounds which are not relevant."

(Emphasis supplied) 82 The finding is at paragraph-47. The Apex Court holds that in Section 19(1) of the Act, the guilt can be established only on admissible evidence to be led before the Court and cannot be on inadmissible evidence. The learned senior counsel is wanting to draw cue from the said words of the Apex Court contending that the Directorate of Enforcement has now drawn findings for reasons to believe on inadmissible evidence. A perusal at the reasons to believe proceedings drawn by the Directorate of Enforcement no where indicates that it is based on inadmissible evidence. The evidence as found in the predicate offences particularly of the offence under the Prevention of Corruption Act, though the sanction is stayed by the coordinate Bench of this Court, would not mean that the evidence becomes inadmissible for proceeding under the ECIR by the Directorate of Enforcement.

18. Reliance is also placed on VIJAY MADANLAL CHOUDHARY (supra) by the learned senior counsel for the petitioner referring to paragraph 253. The said paragraph reads as follows:

"253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. 256 The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now."

The afore-quoted paragraph on which the learned senior counsel places heavy reliance does not take the petitioner anywhere. The circumstance in which the said paragraph is rendered is entirely different. The expression, derived or obtained should be indicative of criminal activity, relating to a scheduled offence already accomplished. Why the finding is rendered is found in the subsequent paragraphs. Picking few lines from there putting it into these proceedings, is neither here nor there.

19. The case at hand is one, which projects huge corruption by the petitioners. The modus operandi with regard to misappropriation, amassing of wealth and consequent generation of proceeds of crime is succinctly brought out in the reasons to believe, that the 1st petitioner is allegedly in possession of proceeds of crime. What is called in question is the arrest of the petitioner foundationed upon the grounds, in the grounds of arrest and the reasons, in the reasons to believe. This Court, is ever mindful of the twin imperatives. The inviolable sanctity of individual liberty and the mandate of the rule of the law. In cases governed by the Act and kindered statutes, like the UAPA, the statutory scheme mandates disclosure of grounds of arrest. Yet, while such disclosure is indispensable, the constitutional Courts cannot transmute themselves into Appellate Tribunals, examining the probative worth of each ground or dissecting every syllable of the reasons, in the reasons to believe, or the grounds, in the grounds of arrest, so long as the two reflect a demonstrable application of mind and the fact that the arrest Page No.84 is retyped and replaced vide chamber order dated 23.04.2025 85 is not predicated upon whim or conjecture, this Court cannot intrude into the domain of investigative discretion.

20. Therefore, I do not find any warrant to interfere with the proceedings of arrest to hold that the arrest of the 1st petitioner is contrary to Section 19 of the Act. The case at hand is a case of corruption. It becomes germane to notice what the Apex Court observes with regard to cases of corruption even while considering grant of anticipatory or regular bail, as the case would be. The Apex Court in the case of DEVINDER KUMAR BANSAL v. STATE OF PUNJAB4, has held as follows:

"24. If liberty is to be denied to an accused to ensure corruption free society, then the courts should not hesitate in denying such liberty. Where overwhelming considerations in the nature aforesaid require denial of anticipatory bail, it has to be denied. It is altogether a different thing to say that once the investigation is over and charge-sheet is filed, the court may consider to grant regular bail to a public servant - accused of indulging in corruption.

25. Avarice is a common frailty of mankind and Robert Walpole's famous pronouncement that all men have their price, notwithstanding the unsavoury cynicism that it suggests, is not very far from truth. As far back as more than two centuries ago, it was Burke who cautioned:"Among a people generally corrupt, liberty cannot last long". In more recent years, Romain Rolland lamented that France fell because there was corruption without indignation. Corruption has, in it, very dangerous potentialities. Corruption, a word of wide connotation has, in respect of almost 4 2025 SCC OnLine SC 488 Page No.85 is retyped and replaced vide chamber order dated 23.04.2025 86 all the spheres of our day to day life, all the world over, the limited meaning of allowing decisions and actions to be influenced not by the rights or wrongs of a case but by the prospects of monetary gains or other selfish considerations.

26. If even a fraction of what was thevoxpupuli about the magnitude of corruption to be true, then it would not be far removed from the truth, that it is the rampant corruption indulged in with impunity by highly placed persons that has led to economic unrest in this country. If one is asked to name one sole factor that effectively arrested the progress of our society to prosperity, undeniably it is corruption. If the society in a developing country faces a menace greater than even the one from the hired assassins to its law and order, then that is from the corrupt elements at the higher echelons of the Government and of the political parties.

27. In Manoj Narula v. Union of India, (2014) 9 SCC 1, this Court held that corruption erodes the fundamental tenets of the rule of law and quoted with approval its judgment in Niranjan HemchandraSashittal v. State of Maharashtra, (2013) 4 SCC 642 & held as under:--

"16......'26. It can be stated without any fear of contradiction that corruption is not to be judged by degree, for corruption mothers disorder, destroys societal will to progress, accelerates undeserved ambitions, kills the conscience, jettisons the glory of the institutions, paralyses the economic health of a country, corrodes the sense of civility and mars the marrows of governance."

(Emphasis supplied)

28. In Subramanian Swamy v. Manmohan Singh,(2012) 3 SCC 64, this Court held as under:--

"68. Today, corruption in our country not only poses a grave danger to the concept of constitutional governance, it also threatens the very foundation of Indian democracy and the Rule of Law. The magnitude of corruption in our public life is incompatible with the concept of a socialist, secular democratic republic. It cannot be disputed that where corruption begins all rights end. Corruption devalues human rights, chokes Page No.86 is retyped and replaced vide chamber order dated 23.04.2025 87 development and undermines justice, liberty, equality, fraternity which are the core values in our preambular vision. Therefore, the duty of the Court is that any anti-corruption law has to be interpreted and worked out in such a fashion as to strengthen the fight against corruption...."

(Emphasis supplied)

29. In K.C. Sareen v. C.B.I., Chandigarh, (2001) 6 SCC 584, this Court observed thus:--

"12. Corruption by public servants has now reached a monstrous dimension in India. Its tentacles have started grappling even the institutions created for the protection of the republic. Unless those tentacles are intercepted and impeded from gripping the normal and orderly functioning of the public offices, through strong legislative, executive as well as judicial exercises the corrupt public servants could even paralyse the functioning of such institutions and thereby hinder the democratic polity...."

(Emphasis supplied)

30. While approving the judgment of Subramanian Swamy v. Director, Central Bureau of Investigation, (2014) 8 SCC 682, rendered by another Constitution Bench in Manoj Narula's case, a Constitution Bench of this Court, dealing with rampant corruption, observed as under:--

"17 Recently, in Subramanian Swamy v. CBI, (2014) 8 SCC 682, the Constitution Bench, speaking through R.M. Lodha, C.J., while declaring Section 6-A of the Delhi Special Police Establishment Act, 1946, which was inserted by Act 45 of 2003, as unconstitutional, has opined that : (SCC pp. 725-26, para 59) "59. It seems to us that classification which is made in Section 6-A on the basis of status in the government service is not permissible under Article 14 as it defeats the purpose of finding prima facie truth into the allegations of graft, which amount to an offence under the PC Act, 1988. Can there be sound differentiation between corrupt public servants based on their status? Surely not, because irrespective of their status or position, corrupt public servants are corrupters of public power. The corrupt public servants, whether high or low, are birds of the same feather and must be confronted with the Page No.87 is retyped and replaced vide chamber order dated 23.04.2025 88 process of investigation and inquiry equally. Based on the position or status in service, no distinction can be made between public servants against whom there are allegations amounting to an offence under the PC Act, 1988."

And thereafter, the larger Bench further said:(SCC p. 726, para 60) "60. Corruption is an enemy of the nation and tracking down corrupt public servants and punishing such persons is a necessary mandate of the PC Act, 1988. It is difficult to justify the classification which has been made in Section 6-A because the goal of law in the PC Act, 1988 is to meet corruption cases with a very strong hand and all public servants are warned through such a legislative measure that corrupt public servants have to face very serious consequences."

And again : (SCC pp. 730-31, paras 71-72) "71. Office of public power cannot be the workshop of personal gain. The probity in public life is of great importance. How can two public servants against whom there are allegations of corruption of graft or bribe-taking or criminal misconduct under the PC Act, 1988 can be made to be treated differently because one happens to be a junior officer and the other, a senior decision maker.

72. Corruption is an enemy of nation and tracking down corrupt public servant, howsoever high he may be, and punishing such person is a necessary mandate under the PC Act, 1988. The status or position of public servant does not qualify such public servant from exemption from equal treatment. The decision-making power does not segregate corrupt officers into two classes as they are common crime-doers and have to be tracked down by the same process of inquiry and investigation."

18. From the aforesaid authorities, it is clear as noonday that corruption has the potentiality to destroy many a progressive aspect and it has acted as the formidable enemy of the nation."

(Emphasis supplied)

31. In Neera Yadavv. Central Bureau of Investigation, (2017) 8 SCC 757, this Court observed thus:

"59. Every country feels a constant longing for good governance, righteous use of power and transparency in administration. Corruption is no longer a moral issue as it is linked with the search of wholesome governance and the society's need for re-assurance that the system functions fairly, free from corruption and nepotism. Corruption has spread its tentacles almost on all the key areas of the State and it is an impediment to the growth of investment and development of the country. If the conduct of administrative authorities is righteous and duties are performed in good faith with the vigilance and awareness that they are public trustees of people's rights, the issue of lack of accountability would themselves fade into insignificance.

60. To state the ubiquity of corruption, we may refer to the oft-quoted words of Kautilya, which reads as under:--

"Just as it is impossible not to taste the honey or the poison that finds itself at the tip of the tongue, so it is impossible for a government servant not to eat up, at least, a bit of the king's revenue. Just as fish moving under water cannot possibly be found out either as drinking or not drinking water, so government servants employed in the government work cannot be found out (while) taking money for themselves).

It is possible to mark the movements of birds flying high up in the sky; but not so is it possible to ascertain the movement of government servants of hidden purpose."

[Ref: Kautilya'sArthasastra by R. Shamasastry, Second Edition, Page 77] As pointed out by Paul H. Douglas in his book on "Ethics of Government", "corruption was rife in British public life till a hundred years ago and in USA till the beginning of this century. Nor can it be claimed that it has been altogether eliminated anywhere."

(Ref : Santhanam Committee Report, 1962 : Para 2.3).

61. Tackling corruption is going to be a priority task for the Government. The Government has been making constant efforts to deal with the problem of corruption. However, the constant legislative reforms and strict judicial actions have still not been able to completely uproot the deeply rooted evil of corruption. This is the area where the Government needs to be seen taking unrelenting, stern and uncompromising steps. Leaders should think of introducing good and effective leadership at the helm of affairs; only then benefits of liberalization and various programmes, welfare schemes and programmes would reach the masses. Lack of awareness and supine attitude of the public has all along been found to be to the advantage of the corrupt. Due to the uncontrolled spread of consumerism and fall in moral values, corruption has taken deep roots in the society. What is needed is a reawakening and recommitment to the basic values of tradition rooted in ancient and external wisdom. Unless people rise against bribery and corruption, society can never be rid of this disease. The people can collectively put off this evil by resisting corruption by any person, howsoever high he or she may be."

(Emphasis supplied) The Apex Court observes that, if denial of liberty to an accused, is the price to be paid for a corruption free society, the Courts then should not hesitate in denying such liberty.

The Apex Court holds that the High Court had rightly denied anticipatory bail for the petitioner therein who had been alleged of offence punishable under Section 7 of the Prevention of Corruption Act.

21. In its elucidation on the scourge of money laundering and the role of the Directorate of Enforcement in checking corruption, the Apex Court in a very recent judgment in the case of PRADEEP NIRANKARNATH SHARMA v. DIRECTORATE OF ENFORCEMENT5, has held as follows:

".... .... ....

25. The law recognizes that money laundering is not a static event but an ongoing activity, as long as illicit gains are possessed, projected as legitimate, or reintroduced into the economy. Thus, the argument that the offence is not continuing does not hold good in law or on facts, and therefore, the judgment of the High Court cannot be set aside on this ground. Even if examined in the context of the present case, the appellant's contention does not hold water. The material on record indicates the continued and repeated misuse of power and position by the appellant, resulting in the generation and utilization of proceeds of crime over an extended period. The respondent has successfully demonstrated prima facie that the appellant remained involved in financial transactions linked to proceeds of crime beyond the initial point of commission. The utilization of such proceeds, the alleged layering and integration, and the efforts to project such funds as untainted all constitute elements of a continuing offence under the PMLA. Thus, the proceedings initiated against the appellant are well within the legal framework and cannot be assailed on this ground.

26. Another ground urged by the appellant is that the amount involved does not meet the statutory threshold for initiating proceedings under the PMLA as it stood prior to the amendment. The appellant has relied upon the monetary threshold of Rs. 30 lakhs to argue that at the relevant time, the offence did not attract the provisions of the PMLA. This argument is equally devoid of merit.

2025 SCC OnLine SC 560 92

27. The respondent has placed substantial material on record to demonstrate that the quantum of proceeds of crime significantly exceeds the statutory threshold. The financial trail indicates that the aggregated value of assets derived from the alleged criminal activity is well beyond the prescribed limit. It is settled law that the determination of the threshold value must be based on the entirety of the transaction and not an isolated instance or a narrow interpretation of specific amounts at any given time.

28. The respondent has categorically established that the amount in question far exceeds the threshold of Rs. 30 lakhs, even under the unamended provisions of the PMLA. The allegations against the appellant involve alleged land allotment transactions facilitated through forgery, cheating, and fraud, resulting in an alleged loss of over Rs. 1 crore to the government, along with hawala transactions of crores of rupees, and illegal gratification through his wife of around Rs. 22 Lakhs. The financial transactions in the alleged acts, as evidenced from the record, reveal a considerably higher amount of proceeds of crime, rendering the appellant's reliance on the threshold limit baseless.

29. Furthermore, it is settled law that the determination of the amount involved in a money laundering offence is not to be viewed in isolation but in the context of the overall financial trail and associated transactions. The totality of the evidence must be assessed, which is a matter of trial; but even on a prima facie assessment, it is clear that the proceeds of crime in the present case are significantly higher than the statutory threshold. The appellant has failed to substantiate his claim with any material that contradicts the respondent's submissions in this regard. Therefore, this ground also does not aid the appellant in any manner.

30. The PMLA was enacted with the primary objective of preventing money laundering and confiscating the proceeds of crime, thereby ensuring that such illicit funds do not undermine the financial system. Money laundering has far-reaching consequences, not only in terms of individual acts of corruption but also in causing significant loss to the public exchequer. The 93 laundering of proceeds of crime results in a significant loss to the economy, disrupts lawful financial transactions, and erodes public trust in the system. The alleged offences in the present case have a direct bearing on the economy, as illicit financial transactions deprive the state of legitimate revenue, distort market integrity, and contribute to economic instability. Such acts, when committed by persons in positions of power, erode public confidence in governance and lead to systemic vulnerabilities within financial institutions.

31. The illegal diversion and layering of funds have a cascading effect, leading to revenue losses for the state and depriving legitimate sectors of investment and financial resources. It is settled law that in cases involving serious economic offences, judicial intervention at a preliminary stage must be exercised with caution, and proceedings should not be quashed in the absence of compelling legal grounds. The respondent has rightly argued that in cases involving allegations of such magnitude, a trial is imperative to establish the full extent of wrongdoing and to ensure accountability.

32. The PMLA was enacted to combat the menace of money laundering and to curb the use of proceeds of crime in the formal economy. Given the evolving complexity of financial crimes, courts must adopt a strict approach in matters concerning economic offences to ensure that perpetrators do not exploit procedural loopholes to evade justice.

33. The present case involves grave and serious allegations of financial misconduct, misuse of position, and involvement in transactions constituting money laundering. The appellant seeks an end to the proceedings at a preliminary stage, effectively preventing the full adjudication of facts and evidence before the competent forum. However, as established in multiple judicial pronouncements, cases involving economic offences necessitate a thorough trial to unearth the complete chain of events, financial transactions, and culpability of the accused.

34. The material submitted by the respondent, coupled with the broad legislative framework of the PMLA, indicates the 94 necessity of allowing the trial to proceed and not discharging the appellant at the nascent stage of charge framing. The argument that the proceedings are unwarranted is devoid of substance in light of the statutory objectives, the continuing nature of the offence, and the significant financial implications arising from the alleged acts. Discharging the appellant at this stage would be premature and contrary to the principles governing the prosecution in money laundering cases.

35. Given the severe and grave nature of the allegations against the appellant, it is imperative that he must undergo thorough judicial scrutiny during trial. A proper trial is necessary to unearth the full extent of the offence, to evaluate the evidence produced by the appellant, to analyze the complete chain of final transactions, and find out the veracity of the severe allegations and the amount of proceeds of crime. The legal framework under the PMLA serves as a crucial mechanism to ensure that individuals involved in laundering proceeds of crime are brought to justice and that economic offences do not go unpunished."

(Emphasis supplied) The Apex Court observes that money laundering is not a momentary event, but a continuing and pernicious process as long as illicit gains, possessed, projected as legitimate, and reintroduced into the economy. Enactment of the Prevention of Money Laundering Act, 2002, the Apex Court, observes, was imperative, aimed at forestalling the transformation of unclean money into clean currency and safeguarding the integrity of the financial system. Money 95 laundering, the Apex Court notes, inflicts not just isolated instances, but also inflicts grievous injury upon the public exchequer.

22. The case at hand, is a mirror held up to, systematic corruption. Therefore, upon a meticulous consideration of the facts, the grounds, the elucidation of the law by the Apex Court and the corpus of the material on record, this Court finds no infirmity that would warrant interference.

Wherefore, the petition should necessarily meet its dismissal. It so does.

Accordingly, petition stands dismissed.

Sd/-

(M.NAGAPRASANNA) JUDGE bkp CT:MJ

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Karnataka High Court