Withdrawal of state consent under the Prevention of Money Laundering Act affects CBI's authority; ongoing investigations are subject to jurisdictional approval.

ORDER :

1. As common questions of law and facts arise for consideration in both these petitions, they are heard together and are disposed of by this common order.

2. The petition in W.P. No. 27220/2023 is filed by one Sri Basanagouda R. Patil (Yatnal), praying to declare the impugned order dated 28.11.2023 vide GO No. HD4COD 2023 passed by State Government produced at Annexure “D” as void and non-est and consequently to quash the same; further, for issue of a writ of mandamus to direct Central Bureau of Investigation to investigate and submit a final report; to quash the order dated 22.12.2023 issued by State Government in HD 4 COD 2023 at Annexure-”F” and such other reliefs.

3. The petition in W.P. No. 670/2024 has been preferred by the Central Bureau of Investigation against the respondents, arraigning one Shri D.K. Shivakumar as Respondent No. 6, praying to issue an order in the nature of certiorari quashing the impugned Government Order dated 28.11.2023 vide G.O. No. HD4COD 2023, Bengaluru, passed by the 4th respondent/Deputy Secretary (produced as Annexure-”M” to the writ petition) and also for issue of a writ of certiorari quashing the impugned Government Order dated 28.11.2023 vide GO No. HD4COD 2023, Bengaluru and its Corrigendum dated 26.12.2023 vide GO No. HD4COD 2023, Bengaluru, passed by the 3rd respondent/Under Secretary (produced as Annexures “P” and “Q” to the said writ petition).

4. We have heard the learned Senior Counsel Shri Kapil Sibal and the learned Advocate General Shri K. Shashi Kiran Shetty appearing on behalf of Respondent No. 1/State in W.P. No. 27220/2023 and for Respondent Nos.1 to 4/State in the connected petition in W.P. No. 670/2024. Further, we have heard the learned Senior Counsel Dr. Abhishek Singhvi appearing on behalf of Respondent No. 3 in W.P. No. 27220/2023 and for Respondent No. 6 in W.P. No. 670/2024, namely, Sri. D.K. Shivakumar. Further, we have heard the arguments of Learned counsel Shri Venkatesh P. Dalwai for the petitioner in W.P. No. 27220/2023, namely, Shri Basanagouda R. Patil (Yatnal), learned counsel Shri Venkatesh S. Arabatti for Karnataka-Lokayukta/Respondent No. 4 in W.P. No. 27220/2023 and for Respondent No. 5 in W.P. No. 670/2024 as well as the learned Spl. PP. Shri P. Prasanna Kumar for the CBI in both the petitions and perused the entire material on record.

5. In a nutshell, these petitions have been filed challenging the withdrawal of consent for an investigation against Shri D.K. Shivakumar/respective respondent in both the petitions. The investigation pertains to a case registered under the Prevention of Money Laundering Act, 2002, following an income tax search conducted on 02.08.2017 that revealed a significant amount of unaccounted cash.

6. It transpires from the facts of the cases that the respective respondent in both the petitions namely Shri D.K. Shivakumar, the Deputy Chief Minister and President of the Karnataka Pradesh Congress Party, was subjected to an Income Tax Department search on August 2, 2017. During the search, Income Tax officials are said to have recovered Rs.8,59,69,100/-, including Rs. 41.00 lakhs from various premises. Consequently, a case was filed against the said respondent under the INCOME TAX ACT , 1961, before the Special Court for Economic Offences. The Directorate of Enforcement (ED) also registered a case (ECIR/HQ/4/2018). On September 9, 2019, the ED sent a letter to the Karnataka State Government under Section 6 6(2) of the Prevention of Money Laundering Act, 2002, seeking consent for investigation. The State Government consented on September 25, 2019, leading to the registration of an FIR against the said respondent. Against the FIR, the said respondent