Writ Petition No. 11786 of 2025 · The High Court
Case Details
1 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. (BY SRI JAYAKUMAR S.PATIL, SR.ADVOCATE FOR SRI VARUN JAYAKUMAR PATIL, ADVOCATE) ... PETITIONERS 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. (BY SRI ARVIND KAMATH K., ADDL.SOLICITOR GENERAL OF INDIA A/W SRI MADHUKAR DESHPANDE, SPL.PP) ... RESPONDENTS 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
Legal Reasoning
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 No.22780/2023 FOR THE FINDING IN W.P 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 is so registered with the committed unless 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 it 15 is an internal document for the said document 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. All the persons so summoned shall be bound to (3) 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). Subject to any rules made in this behalf by the (5) Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks in any fit, any records produced before him 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 to be undertaken by the Authorities under the Act. function of “inquiry” the (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 from the vice of amended provision does not suffer 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 regarded as manifestly arbitrary or and cannot be 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 authorised the representative of ED for answering the issue of need for records presented by relevant 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. the petitioner the appellant who was 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, 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.
Decision
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 (cid:13)नदेशक का काया(cid:18)लय, (cid:20)वत(cid:18)न (cid:13)नदेशालय, ब(cid:23)गल(cid:25)ु आंच(cid:28)लक काया(cid:18)लय, संय(cid:11)ु OFFICE OF THE ADDITIONAL DIRECTOR, DIRECTORATE OF ENFORCEMENT, BENGALURU ZONAL OFFICE तीसरा तल, ख.(cid:31)लॉक, बी.एम.ट$.सी., शां(cid:13)तनगर–ट$.ट$.एम.सी, के .एच.रोड, शां(cid:13)तनगर, बंगलौर – 560 027. 3rd Floor, B Block, BMTC, Shantinagar – TTMC, K.H.Road, Shantinagar, Bengaluru – 560 027. ______________________________________________________________ (cid:2) 080-2253 7807 (cid:1) 080-2253 7883 (cid:3) [email protected] F.No: ECIR/BGZO/05/2021 Date:09.04.2025 ARREST MEMO Sr 1 Particular Details Name and Parentage of Arrestee Mr. R. M. Manjunatha Gowda S/o Late Shri Ramappa Gowda 2 Address Mr. R. M. Manjunatha Gowda, #153, Village Karakuchhi, Post Shrigere, Taluq Shimoga, Dist. Shimoga, Karnataka-577211 Office of the Directorate of Enforcement, 3rd Floor, 3 Place of Arrest B Block, BMTC, Shantinagar – TTMC, K. H. Road, Shantinagar, Bengaluru – 560 027 4 ECIR No and ECIR/BGZO/05/2021 and offence under Section 3 28 Offences of PMLA, 2002 5 Date of Arrest 09.04.2025 6 Time of Arrest 02:48 Hours Name of the Officer 7 along with Sh, Ajay Choudhary, Assistant Director Designation Name and 8 Telephone Number to whom informed 1. Somanna Sagara (09986354990) 2. Nagaraja Kuruvalli (09481736222) From mobile number 9845805599 of Mr. R.M. Manjunatha Gowda Sd/- Sd/- Signature of the arrestee Signature of the arresting officer Witness: Sd/- …. THE INTIMATION OF ARREST: “भारत सरकार GOVERNMENT OF INDIA संय(cid:11)ु (cid:13)नदेशक का काया(cid:18)लय, (cid:20)वत(cid:18)न (cid:13)नदेशालय, ब(cid:23)गल(cid:25)ु आंच(cid:28)लक काया(cid:18)लय, OFFICE OF THE ADDITIONAL DIRECTOR, DIRECTORATE OF ENFORCEMENT, BENGALURU ZONAL OFFICE तीसरा तल, ख.(cid:31)लॉक, बी.एम.ट$.सी., शां(cid:13)तनगर–ट$.ट$.एम.सी, के .एच.रोड, शां(cid:13)तनगर, बंगलौर – 560 027. 3rd Floor, B Block, BMTC, Shantinagar – TTMC, K.H.Road, Shantinagar, Bengaluru – 560 027. (cid:2) 080-2253 7807 (cid:1) 080-2253 7883 (cid:3) [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: 1) 2) 30 “GROUNDS OF ARREST OF SRI R.M.MANJUNATHA GOWDA 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. 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 the family members, misappropriated funds for his services and for purchase a Rs.16,00,000 received from 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 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 indicating a misappropriation of Rs. cash available, 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. sites using land and 3) 4) 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). 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. 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/-. 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. 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. 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 5) 6) 7) 8) 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. 35 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 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 in money laundering. involved the is 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. Witness: 1. Sd/- (Gowramma V) 9/4/25 2. Sd/- (Gourab Das) 09/04/25 Sd/- 9/4/2025 3.15 A.M. Signature of Arrestee 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. 37 (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 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 transactions of gold and silver using 39 ill-gotten gains. Accused No.11 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 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 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. the physical indicating available, cash 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 Mr. R.M ManjunathaGowda, President the Shimoga District Co- 40 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 from his election on Bank 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 in Bengaluru, starting 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 totaling Rs. incurred expenses 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 conceal instructing bank officials input and irregularities. He failed to take disciplinary action against to 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 fake jewellery accounts relatives. She misappropriated over Rs. 62-63 Crore of the bank's funds. fraudulent the names of her loans and establishing for in 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. 43 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 as her husband, Shri. R.M. properties, Manjunatha Gowda, handled all financial matters, including filing her ITRs. Thus, lacking income sources herself, any corresponding in Smt. Asha disproportionate assets found Manjunatha Gowda's name can be directly attributed to Sri R.M. Manjunatha Gowda. funding sources the for 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 for investigation, filed the W.P. 22780/2023 before the Hon’ble High Court of Karnataka seeking to quash the ECIR/BGZO/05/2021. instead of appearing proceedings initiated all in to dismiss iii. That vide order dated 20.02.2024 the Hon’ble High Court was pleased 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 that Shri instructed by Shri Manjunath Gowda; 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. ii. 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. 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. asked end use of On being the about 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 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. that some portions of 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 finally fake gold ornaments as mortgage and 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 NO PROPERTY DETAILS 1 10 Acre land in Sy.No.1 Maleshankara S.F. Grama, Shivamogga Taluk. PROPERTY HOLDER NAME Smt. H.C. Asha W/o Accused. DATE OF EARNING VALUE IN RS WITNESS COLLECTED 25.07.1984 86,000-00 SRO Shivamogga No. letter SROS/210/2015-16 25.07.2015 dated the sale produced deed No.1017/1984- 85 dated 19.07.1984 this that certified SmtAshaManjunatha Gowda purchased 10 Acre land in Sy.No.1 Maleshankara S.F. Grama Shivamogga Taluk for Rs.86,000/- No.5. (Document Page No 126-134). S L N O 1 Total 86,000-00 2. 3. IMMOVABLE AND MOVABLE PROPERTIES DETAILS OF ACCUSED AND HIS FAMILY MEMBERS AT THE END OF CHECK PERIOD. PROPERTY DETAILS PROPERTY HOLDER NAME DATE OF EARNING VALUE IN RS WITNESS COLLECTED 2 Acre 20 Guntaland in Sy.No.186, KonandaruGrama, AgraharaHobli, ThirthahalliTaluk Shivamogga District. A.G.O. (Accused Governmen t Officer). 27.10.2006 75,000-00 SRO Thirthahalli letter No. SROT/other/ 07/ 2014-15 dated 09.06. 2014 (Document No.5. Page No 19-33). 2 10 Gunta land in Sy No 10/5, Kashi pura grama, Shivamogga Taluk. AGO 23.07.2008 3,00,000-00 Senior SRO Shivamogga letter No. SROS/98/ 2013- 14 dated 07.06. 2014 (Document No.5. Page No 49 3 5 Acre agricultural land in Sy No.69/1, Sominakoppagrama, Shivamogga Taluk. Smt H.C. Asha, w/o AGO 07.11.2011 45,40,000-00 Senior SRO 83-87). 4 21 Acre 07 Gunta land out of 24 Acre 27 gunta land in Sy.No. 155 /2, Konandurugrama, Thirthahalli Taluk. AGO 28.06.2006 5 4 Acre 36 Gunta land in Sy.No.10/1, KasabaHobligrama, Thirthahalli taluk. AGO 18.02.2012 BUILDINGS. 6 Site No.37 measuring 60*30 +22/2 with newly constructed RCC house, Property No 33/86, Bettamakki new extension, Thirthahalli town panchayat limits. 2007-08 Smt H.C. Asha w/o AGO 7 Hall adjacent to Farm House, KarakuchiGrama, Sirigere post, Shivamogga Taluk. (Ground floor constructed in the year 1995-1997 adjacent to this big hall has been constructed in the year 2005. 2005 Smt H.C. Asha, W/o AGO 8 R.C.C. house constructed in site No.12 Municipal Katha No 1548 and Site No 13 Municipal Katha AGO 20.06.2008 Shivamogga letter No. SROS/98/ 2013- 14 dated 07.06. 2014 (Document No.5. Page No 88-94). 10,50,000-00 SRO Thirthahalli letter No. SROT/other/ 07/ 2014-15 dated 09.06. 2014 (Document No.5. Page No 01-08). 19,11,000-00 SRO Thirthahalli letter No. SROT/other/ 07/ 2014-15 dated 09.06. 2014 (Document No.5. Page No 45-55). 41,06,237-00 PWD Port and inland water transport depart ment No.1 sub- division Shivamogga office No.AEE/PWD/No .1/UVS 2015-16 dated /104/4, 19.05.2015. (Document No.5. Page 138- 157). letter 9,94,818-00 PWD Port and water inland transport depart ment No.1 sub- division Shivamogga office No.AEE/PWD/No .1/UVS 2015-16 /104/4, dated 19.05.2015. (Document No.5. Page 135- 137 and 158- 168). 29,62,000-00 Senior letter SRO Shivamogga letter No. 10 11 12 50 No.1549, Malleswara Nagar Extension Ward No.8 Shivamogga city. 9 Flat total built up area 3456 Sq feet with two car parking area No 1002A and 1002 B in basement and ground floor at BBMP assess ment No.2/4, Municipal Katha No.8, 1st Main, 6th cross, Lottegollahalli, Kasabahobli, Bengaluru North BBMP ward No. 100. SmtDeepa. A.V. Relative of AGO SITES: Site No.37 measuring 60*30 +22/2, Property No 33/86, Bettamakki new extension, Thirthahalli town panchayat limits. 23.05.2007 Smt H.C. Asha w/o AGO SROS/98/ 2013- 14 dated 07.06. 2014 (Document No.5. Page No 73-82). 02.08.2013 80,00,000-00 Senior SRO Hebbala Bengaluru letter No. SRO/Hebbal/112 /2014- 15 dated 30.07.2014 (Document No.5. Page No 95-125). 75,000-00 SRO Thirthahalli letter No. SROT/other/ 07/ 2014-15 dated 2014 09.06. (Document No.5. Page No 34-44). Vacant site No’s 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22 total 81,737 Sq feet in Sy.No.69, 74, 75/1, and 76 of AnupinakatteGrama, PuradaluGramapanchayat, Kasabahobli Shivamogga Taluk. Site No.36 measuring 60*37 +30/2, Property Assessment No 527/3385, Bettamakki new extension, Thirthahallitown panchayat limits. AGO 09.03.2009 81,73,700-00 Senior SRO AGO 2000-01 No. Shivamogga letter SROS/176/ 2014-15 dated 21.07. 2014 (Document No.5. Page No 56-72). 92,000-00 SRO Thirthahalli letter No. SROT/other/ 67/ 2015-16 dated 05.01. 2016 (Document No.5. Page No 164-168). 13 BANK AND POSTAL ACCOUNTS. Karnataka Bank APMC Yard branch, Shiva mogga Fixed deposit A/c No. 3420, 3421, 3422 and 3423 MOVABLE ASSETS AGO 22.04.2014 20,00,000-00 14 Karnataka Bank APMC Yard branch, Shiva mogga ACC A/c No. 796501. AGO 08.09.2009 3,00,000-00 15 Karnataka Bank APMC Yard AGO 11.05.2014 4,19,459-00 Senior branch manager, Karnataka Bank, A.P.M.C yard branch, Shivamogga letter No. OR:158/2014-15 dated 04.06.2014. ( Document No.6. Page 32-34). Senior branch manager, Karnataka Bank, A.P.M.C yard branch, Shivamogga letter No. OR:158/2014-15 dated 04.06.2014. ( Document No.6. Page 32-34). Senior branch manager, 51 branch, Shiva mogga S.B. A/c No. 5023. 16 Karnataka Bank APMC Yard branch, Shiva mogga ACC A/c No. 796401. SmtAsha. H.C, W/o AGO 08.09.2009 3,00,000-00 17 Karnataka Bank APMC Yard branch, Shiva mogga ACC A/c No.10494. Smt. Asha. H.C., w/o AGO 22.04.2014 1,00,000-00 Karnataka Bank, A.P.M.C yard branch, Shivamogga letter No. OR:158/2014-15 dated 04.06.2014. ( Document No.6. Page 32-41). Senior branch manager, Karnataka Bank, A.P.M.C yard branch, Shivamogga letter No. OR:158/2014-15 dated 04.06.2014. ( Document No.6. Page 32-34). Senior branch manager, Karnataka Bank, A.P.M.C yard branch, Shivamogga letter No. OR:158/2014-15 dated 04.06.2014. ( Document No.6. Page 32-34). 18 19 20 21 PragathiGrameena bank, Kannangi branch, Shiva moggaTaluk SB A/c No.1068910 0005096. PragathiGrameena bank, Kannangi branch, Shiva moggaTaluk SB A/c No.1068910 0005096. PragathiGrameena bank, Kannangi branch, Shiva moggaTaluk SB A/c No. 10689201100141. PragathiGrameena bank, Kannangi branch, Shiva moggaTaluk SB A/c No. 10689201100142. AGO 01.02.2014 463-00 Manager, Pragathi Gram eena bank, Kannangi branch, Shivamogga Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48-55). AGO SmtAsha H.C. w/o AGO SmtAsha H.C. w/o AGO 01.02.2014 1,04,090-00 Manager, Pragathi Gram eena bank, Kannangi branch, Shivamogga Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48, 49 & 51). 20.06.2011 5,00,000-00 Manager, Pragathi Gram eena bank, Kannangi branch, Shivamogga Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48, 49, 54 & 55). 20.06.2011 5,00,000-00 Manager, Pragathi Gram eena bank, Kannangi branch, Shivamogga Taluk letter No.Lok/11/ 14-15, dated 11.06.2014 (Document No.6, Page No.48, 49, 54 & 55). 22 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No. 9. AGO 29.03.2014 23 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No.208. SmtAsha. H.C W/o AGO 29.03.2014 32,627-00 Chief Executive Officer, KodachadriPattinaSouhar dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 6, 9 and 10). 1,377-00 Chief Executive Officer, KodachadriPattinaSouhar Ltd dhaSahakari 52 24 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No. 243. SmtAsha. H.C W/o AGO 25 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No. 244. SmtAsha. H.C W/o AGO 26 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No. 245. SmtAsha. H.C W/o AGO Shivamogga District Co-Opera tive Central Bank Limited, Shivamogga S.B A/c No. 020201100006935 Shivamogga District Co-Opera tive Central Bank Limited, Head Office Shivamogga S.B A/c No. 6041/C-4826. AGO AGO 27 28 29 Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 6, 13 and 14). 22.05.2013 6,00,000-00 Chief Executive Officer, KodachadriPattinaSouhar dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 7, 13 and 14). 22.05.2013 7,00,000-00 Chief Executive Officer, KodachadriPattinaSouhar dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 7, 13 and 14). 22.05.2013 7,00,000-00 Chief Executive Officer, KodachadriPattinaSouhar Ltd dhaSahakari Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 7, 13 and 14). 07.05.2014 3,57,646-00 Manager, Shivamogga District Co-Operative Central Bank Limited Shivamogga letter No. 337/14-15 dated 04.06. 2014 (Document No.6, Page No. 99-104). 30.05.2014 1,20,661-00 Manager, Shivamogga District Co-Operative Central Bank Limited Shivamogga letter No. 335/14-15 dated 04.06. 2014 (Document No.6, Page No. 72-98). Shivamogga District Co-Opera tive Central Bank Limited, Konanduru branch, Thirthahalli Shivamogga S.B A/c No.1048. AGO 29.03.2014 83,248-00 Branch Manager, Shivamogga District Co- Operative Central Bank Konanduru Limited, branch, Thirthahalli Shivamogga letter No. 70/2014-15 dated 03.06. 2014 (Document No.6, Page No. 105- 108). 30 Shivamogga District Co-Opera tive Central Bank Limited, Thuduru branch, Thirthahalli Shivamogga F.D. A/c No.04531210 000834. Smt H.C. Asha, W/o AGO 07.12.2013 1,00,000-00 Branch Manager, Shivamogga District Co- Operative Central Bank Limited, Thuduru branch, Thirthahalli Shivamogga letter No. 96/2014-15 dated 31.05. 2014 (Document No.6, Page No. 168- 53 31 Shivamogga District Co-Opera tive Central Bank Limited, Thuduru branch, Thirthahalli Shivamogga F.D. A/c No.04531210 000835. Smt H.C. Asha, W/o AGO 184). 07.12.2013 1,00,000-00 Branch Manager, Shivamogga District Co- Operative Central Bank Thuduru Limited, branch, Thirthahalli Shivamogga letter No. 96/2014-15 dated 31.05. 2014 (Document No.6, Page No. 168- 184). 32 Shivamogga District Co-Opera tive Central Bank Limited, Thirthahalli Shivamogga F.D. A/c No.04521100 005760. AGO 29.03.2014 33 Shivamogga District Co-Opera tive Central Bank Limited, Thirthahalli Shivamogga F.D. A/c No.04521100 002266. Smt H.C. Asha, W/o AGO 29.03.2014 17,223-00 Branch Manager, Shivamogga District Co- Operative Central Bank Thirthahalli Limited, Shivamogga letter dated. 02/06/2014 (Document No.6, Page No. 109-112). 923-00 Branch Manager, Shivamogga District Co- Operative Central Bank Thirthahalli Limited, Shivamogga letter dated. 02/06/2014 (Document No.6, Page No. 109, 110, 112). 34 Karnataka State Co-Operative Apex Bank Limited, Uttunga No.1, Pampa Mahakavi road, Chamaraja pet, Bengaluru 560 018, S.B. A/c No.1016/10/201/ 0008067. AGO 35 PragathiGrameena Bank Shimoga Fixed Deposit No.10804 200900334, AGO 36 PragathiGrameena Bank Shimoga Fixed Deposit No.10804 200900330, SmtAsha, W/o AGO Bank 29.03.2014 3,33,945-00 Branch Manager, Karna taka State Co-Operative Limited, Apex No.1 Uttanga Pampamahaka vi road, Chamarajapet, city letter Bengaluru dated 06.06.2014 (Document No.6, Page No. 70 & 71). 18.06.2011 6,00,000-00 Chief Manager, PragathiGrameena Bank, Shiva mogga letter No.PKGB/ SMGR & LCR 04/2014-15/NSR. Dated 06.06. 2014 (Document No.6, Page No.42, 43 & 46). 18.06.2011 6,00,000-00 Chief 37 PragathiGrameena Bank Shimoga Fixed Deposit No.10804 10013703. AGO 01.02.2014 17,791-00 Chief Manager, PragathiGrameena Bank, Shiva mogga letter No.PKGB/ SMGR & LCR 04/2014-15/NSR. Dated 06.06. 2014 (Document No.6, Page No.188-190). Manager, PragathiGrameena Bank, Shiva mogga letter No.PKGB/ SMGR & LCR 04/2014-15/NSR. Dated 06.06. 2014 (Document 54 38 PragathiGrameena Bank Shimoga Fixed Deposit No.10804 10002096. SmtAsha, W/o AGO 01.02.2014 39 V.S.S.N. Male shankara, S.F. Shimoga fixed deposit. SmtAsha, W/o AGO 31.08.2010 No.6, Page No.42, 43 & 46). 15,951-00 Chief Manager, PragathiGrameena Bank, Shiva mogga letter No.PKGB/ SMGR & LCR 04/2014-15/NSR. Dated 06.06. 2014 (Document No.6, Page No.42, & 44). 50,000-00 Chief Manager, V.S.S.N Maleshankara, S.F. Shivamogga letter Dated 05.07.2014 (Document No.6, Page No.185-187). 40 SharavathiPattinaSahakaraSan ghaThirthahalli bond No.675 & 676 invested amount. SmtAsha, W/o AGO 41 SahayadriMulti purpose Ark nut producers sales Co-Operative SanghaThirthahalli Bond No. 690 Fixed amount. SmtAsha, W/o AGO 24.01.2005 2,00,000-00 Secretary 11.05.2009 1,00,000-00 Secretary, ,SharavathiPattinaSahak Limited araSangha Thirthahalli, letter No.S.S.C.S.T /09/2014- 03. Dated 15 06.2014(Document No.6, Page No.197-204). Sahayadri Multipurpose Ark nut sales Co- producers 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 producers sales Co-Operative SanghaThirthahalli Bond No. 708 Fixed amount. AGO 17.12.2008 43 Corporation Bank Azad road, Thirthahalli branch, S.B. A/c No.23371. AGO 23.04.2014 50,000-00 Secretary, Sahayadri Multipurpose Ark nut producers sales Co- Operative SanghaThirthahalli letter No. Sahaydri- TTH/84/2014 15 dated 03.06.2014 (Document No.6, Page No.191, 193 & 196). 96,821-00 Branch Manager, Corpo ration Bank, Azad road, 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 Apex Bank Limited, Uttunga No.1, Pampa Mahakavi road, Chamaraja pet, Bengaluru 560 018, S.B. A/c No.201-14506. AGO 28.05.2014 7,34,895-00 Branch Manager, Karna taka State Co-Operative Limited, Apex Uttanga No.1 Pampamahaka vi road, Chamarajapet, Bengaluru city letter No. SACY/LY/1075/2014-15 dated 10.06.2014 Bank 55 45 Syndicate Bank, No.2920/A, Chord Road, R.P.C. Lay out branch, Benga luru-40 S.B. A/c No. 06561010002225 AGO (Document No.6, Page No. 56 & 67). 30.05.2014 11,34,492-00 Incharge Manager, Syndicate Bank, No.2920/A, Chord road, R.P.C. Lay out branch, Bengaluru letter dated 05.09.2014 ( Document No.6, Page No. 156 & 157). 46 Shivamogga District Co-Opera tive Central Bank Limited, Thirthahalli Shivamogga C/A A/c No.0202113 0000273. Smt H.C. Asha, W/o AGO 29.03.2014 47 48 49 50 51 Kuduvalli Krishna Prasad Ark Nut Mandi, S.C.G.5 A.P.M.C. Yard Shivamogga Ledger Polio No 169, 123, 183, 190, 187, 178, 180, 201, 494 balance amount Kuduvalli Krishna Prasad Ark Nut Mandi, S.C.G.5 A.P.M.C. Yard Shivamogga Ledger Polio No 180, 201, 494 balance amount Kuduvalli Krishna Prasad Ark Nut Mandi, S.C.G.5 A.P.M.C. Yard Shivamogga Ledger Polio No 169, 123, 183, 190, 187, 178, 180, 201, 494 balance amount Shivamogga TalukKarakuchi Farm House tractor accessories such as leveler, Disk, Cultivator etc., Shivamogga TalukKarakuchi Farm House. Green Company Diesel Generator. Its running time is 282044 hours. AGO 2000-01 to 23.04.2014 SmtAsha. H.G W/o AGO 2007-08 to 23.04.2014 SmtAsha. H.G W/o AGO 2007-08 to 23.04.2014 AGO AGO 52 Shivamogga TalukKarakuchi Farm House. 22 Steel Drums. AGO 53 Shivamogga TalukKarakuchi Farm House. 2 Ton barbed wire rolls. AGO 10,610-00 Branch Manager, Shivamogga District Co- Operative Central Bank Head office Limited, Shivamogga letter No. 595/15-16 dated. 30/07/2015 (Document No.6, Page No. 158 to 167). 10,00,000-00 Proprietor Kuduvalli Krishna Prasad Ark nut mandi dated letter 30.05. 2014. (Document No.6 Page No.113, 114 to 123 and 132 to 144). 10,00,471-00 Proprietor Kuduvalli Krishna Prasad Ark nut mandi dated letter 30.05. 2014. (Document No.6 Page No.113, 114 to 123 and 132 to 144). 10,00,471-00 Proprietor Kuduvalli Krishna Prasad Ark nut mandi dated letter 30.05. 2014. (Document No.6 Page No.113, 114 to 123 and 132 to 144). 1,00,000-00 Karakuchi Farm house search seizure dated mahazar 30.05.2014. ( Document No.2, Page 34 to 43). and 2,00,000-00 Karakuchi Farm house seizure search dated mahazar 30.05.2014. ( Document No.2, Page 34 to 43). and 11,000-00 Karakuchi Farm house seizure search dated mahazar 30.05.2014. ( Document No.2, Page 34 to 43). and 10,000-00 Karakuchi Farm house seizure search mahazar dated 30.05.2014. ( Document No.2, Page 34 to 43). and 56 VEHICLES ( Car and Two wheelers etc.,). AGO 21.04.2011 10,89,694-88 R.T.O. TOYOTA INNOVA car No.KA-04- MJ 3409 purchased from VIVA Magna Wheelers Private Limited, Bellary Main road, Hebbala, Bengaluru. 54 55 TOYOTA Fortuner car No.KA- 04-MH 0739 purchased from Ravindu Toyota Private Limited, No.23, Chord road, Bengaluru. AGO 56 Honda CRV Car No. KA-14-M- 6729 AGO Yeshawanthpur letter 2014 21.04.2011 19,15,510-00 Bengaluru North No.ARTO/BN/Regn/Tran dated sport/14-15 23.07. and 22.01.2015 ( Document No.7. Page No 52 to 69). Yeshawanthpur R.T.O. letter Bengaluru North No.ARTO/BN/Regn/Tran dated sport/14-15 23.07. and 22.01.2015 ( Document No.7. Page No 70 to 81). 15.02.2006 14,70,025-00 RTO Shivamogga letter RTO.S/2014-15 No dated ( 06.06.2014 Document No.7 Page No. 01-18). 2014 57 Messi Ferguson Company Tractor and Trailer No. KA-14T- 9088 and 9089. SmtAsha.H. GW/o AGO 58 Maruthi Zen Estilo Car No.KA- 14-N- 2295. SmtAsha.H. G W/o AGO 59 MaruthiVagnor Car No.KA-14- M- 7394. SmtAsha.H. G W/o AGO 29.09.2006 5,30,000-00 RTO Shivamogga letter RTO.S/2014-15 No dated ( 06.06.2014 Document No.7 Page No. 03-06 and 26-41). 17.03.2010 3,57,887-00 RTO Shivamogga letter RTO.S/2014-15 No dated ( 06.06.2014 Document No.7 Page No. 01-6 nd 19-25). 29.09.2006 3,72,982-00 RTO Shivamogga letter RTO.S/2014-15 No dated ( 06.06.2014 Document No.7 Page No. 01-6 nd 82-94). 60 Bajaj Platinum Motor Cycle No. KA-14-W-1480. SmtAsha.H. G W/o AGO 30.01.2007 30,620-00 RTO Shivamogga letter RTO.S/2014-15 No 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 search and seizure of Karakuchi farm house, Shivamogga Taluk AGO 30.05.2014 25,000-00 Karakuchi and farm house seizure search 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 ornaments as Sri Manjunatha Gowda and his wife SmtAsha, the were declared during election. SILVER ARTICLES:- 63 8154.00 Grams weighing silver articles as Sri Manjunatha Gowda and his wife SmtAsha, the were declared during AGO Check period 50,47,200-00 TahasildarThirthahalliTalu k letter No. Election Details15/2013-14 dated 18.07.2014. ( Document No.4, Page No. 01 to 07). AGO Check period 4,58,000-00 TahasildarThirthahalliTalu k letter No. Election Details15/2013-14 dated 18.07.2014. ( Document 57 election. No.4, Page No. 01 to 07). 64 INVENTORY OF HOUSE HOLD GOODS:- House hold articles found in the Karakuchi House, Shivamogga. Farm AGO Check period 65 House hold articles found in the BettamakkiGrama House, Thirthahall I Taluk. AGO Check period 66 House hold articles found in the guest house room AGO Check period 7,65,680-00 Karakuchi Farm house search seizure dated panchanama 30.05.2014 ( Document No.2, page No. 34 to 43). house 9,02,650-00 KarakuchiNilaya and 2,51,764-00 Search BettamakkiGrama, Thirthahalli search and seizure panchanamadated 30.05.2014 ( Document No.2, page No. 62 to 72). seizure and dated panchanama 30.05.2014 room No.304 Varada, Room No.305 Thunga, Apex Bank house, guest Chamarajapet, Bengaluru. (Document No.2, Page 74 to 82). at SHARE CERTIFICATES :- 67 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No. 155. AGO ------- 46,000-00 Chief Executive Officer, KodachadriPattinaSouhar Ltd dhaSahakari Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 6, and 8). ------- 1,000-00 Chief Executive Officer, 68 KodachadriPattinaSouhardaSah akari Bank Limited, Shivamogga, S.B. A/c No. 87. SmtAsha.H. G W/o AGO 69 Malenadu Ark Nut sellers co- AGO 30.05.2014 operative Society Limited, Shivamogga, share A/c No. 18366. 70 Malenadu Ark Nut sellers co- operative Society Limited, Shivamogga, share A/c No. 18516. SmtAsha.H. C. W/o AGO 30.05.2014 71 V.S.S.S.N Male shankara S.F. Shivamogga Taluk share A/c No. 74/1. AGO - KodachadriPattinaSouhar dhaSahakari Ltd Shivamogga letter dated 02.06.2014. ( Document No.6, Page No. 5, 6, and12). 500-00 Deputy Registrar, K.C.S. Co-Operative Societies, Malenadu Ark nut sellers co-operative society, letter No Shivamogga 1035/2014-15 dated 10.06.2014 ( Document No.6, Page No.24-31). 500-00 Deputy Registrar, K.C.S. Societies, Co-Operative Malenadu Ark nut sellers co-operative society, letter No Shivamogga 1035/2014-15 dated 10.06.2014 ( Document No.6, Page No.24-31). 10,500-00 Secretary V.S.S.S.N Male shankara S.F. Shivamogga Taluk letter 07.08.2015. dated (Document No.6, Page 58 72 V.S.S.S.N Male shankara S.F. Shivamogga Taluk share A/c No. 32/1. SmtAsha.H. G. W/o AGO - 73 Multipurpose Ark Nut producers and sales Co-operative society, Thirthahalli share A/c No. 3666. AGO - 74 Multipurpose Ark Nut producers and sales Co-operative society, Thirthahalli share A/c No. 691. SmtAsha.H. G. W/o AGO - 75 Bank S.D.C.C. Konanduru amount invested. branch Limited share AGO 29.09.2006 to 30.05.2014 ELECTRICITY DEPOSITS:- 76 77 Thirthahalli town, Bettamakki colony karakuchiNilaya house Electric meter No.AEH 11598 fixed deposit. Shivamogga TalukSirigere post, Kara Rohini kuchigrama“ Nilaya” Farm house electric meter No. KPAEH3. R.R. No. 4/430, Fixed deposit. 78 Domestic Gas consumer No. 621050 deposit. connection fixed 79 Domestic Gas consumer No. 618016 deposit. connection fixed AGO 02.06.2003 SmtAsha H.G. w/o AGO Check period AGO 03.09.2011 AGO 29.05.2005 18-19). 20,500-00 Secretary V.S.S.S.N Male shankara S.F. Shivamogga Taluk letter 07.08.2015. dated (Document No.6, Page 18-19). 95,000-00 Multipurpose Ark Nut producers and sales Co- society, operative Thirthahalli secretary letter No. Sahyadri/61/ 2014 -15 dated 30.07. 2015. ( Document No.6, Page No.22 and 23). 1,000-00 Multipurpose Ark Nut producers and sales Co- operative society, Thirthahalli secretary letter No. Sahyadri/61/ 2014 -15 dated 30.07. 2015. ( Document No.6, Page No.22 and 23). 80,100-00 Chief Manager Admin, S.D.C.C. Bank Limited Shivamogga Letter No. A & C/3612/2015-16 dated 30.12.2015 ( Document No., 6. Page No 216- 222). 7,260-00 AEE(V) MESCOM, Thirthahalli letter No.AEE/ HS/1151, dated 27.06. 2014 ( Document No.8, Page No.21 to 30). 2,496-00 AEE(V) Rural sub-division, MESCOM, Shivamogga letter No. AEE/HS/2472, dated ( Document No.8, Page No.07 to 20). 22.08.2014 2,250-00 Manager Bhandari Gas Agencies, Shivamogga letter dated 28.07.2015. (Document No.8, Page No. 05 and 06). 950-00 Manager Shivamogga Gas and General Agencies, Shivamogga letter dated 11.06.2014 (Document No.8, Page No. 01 and 04). 80 ThirthahalliBettamakki New extension property No. 33/86, site No. 37 R.C.C.house water collection deposit amount paid. AGO 09.04.2002 2,050-00 Chief Officer, PattanaPanchayat, Thirthahalli letter No.CO.P.P.T. CR 01 /14- 04.07.2014 15 dated 59 TOTAL 5,91,06,417-55 (Document No.8 Page No.112-117). of the income sources 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 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 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. 20.03.2018 dated filed for 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 time, Shri. that Durgappagowda had told him that he was going to give that parcel to Shri. Krishnegowda, who was a member of i.e. a Zilla Panchayat and hailed from his village Umblebailu; that in his understanding, the source of the funds for investments and payments made by Smt. Shobha funds from SDCC Bank under misappropriated by her in collusion with Shri R M instructions from and for acquiring properties were you: that the at 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/- 61 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. 62 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:- 64 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 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 the name of in 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 inter-alia stated that Mr. R.M. wherein he Manjunatha Gowda was in misappropriating the funds by adopting the loan modus operandi of opening fake gold accomplice 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 from which to explain the source of funds properties were required, he had no plausible explanation to offer. He along with his wife were also in disproportionate to their known sources of income. immovable properties are These movable and in possession of assets found to 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 in rules and accordance with his whims and fancies. the administration was 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. the identification of disproportionate assets valued at 3,41,07,842.72/-. resulted This in 67 legal Rs. 3,95,07,298.83, which is 115.83% more than his 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; 68 (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. twenty-four hours, be (3) Every person arrested under sub-section (1) shall within 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. taken 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. 70 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 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).] introducing …. …. …. 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.” 73 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. 74 …. …. …. regarding the nature of 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 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 for Civil Service would have arrived at Union v. Minister of Civil Service, 1985 AC 374 : (1984) 3 WLR 1174 (HL).] it. See Council 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. 75 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. in this regard was made 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 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 for proper offence, or investigation of the offence, etc. The grounds mentioned is necessary the arrest 77 the from in Section 41 are different 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. the this Court judgment of 46. The same reasoning will apply to the contention raised by DoE relying upon the provisions of Section 437 of the Code and 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 imprisonment for life. Section punishable with death or 437(1)(ii) imposes certain fetters on the power of granting bail in specified cases when the offence is cognizable and the convicted with death, accused has been previously 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. …. …. …. it is each 19(1), case. Under Section 50. In our opinion, the key distinction between Section 19(1) and Section 45 is the authority undertaking the exercise, in 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).] facts and circumstances exist. Secondly, 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 is that the 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.” it (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: 83 “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. 84 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. a even 26. If 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.