Karnataka HC Shields Advocate from ED, Questions Scope of PMLA Summons Pending Supreme Court Ruling

BENGALURU – In a significant ruling with wide-ranging implications for the legal profession, the Karnataka High Court on Tuesday granted interim protection to an advocate, staying a summons issued by the Enforcement Directorate (ED) in a money laundering investigation. The court's decision underscores the mounting judicial scrutiny over the extent of the ED's powers to summon legal practitioners under the Prevention of Money Laundering Act, 2002 (PMLA).

Justice Sachin Shankar Magadum, presiding over the single-judge bench, restrained the central agency from taking any coercive action against advocate Anil Gowda. The court's order effectively pauses the ED's proceedings against Gowda until the Supreme Court provides definitive guidelines on this contentious issue. The case, Anil Gowda v. The Directorate Of Enforcement (WP 26157/2025), is linked to a money laundering probe into an alleged betting racket involving Congress MLA K.C. Veerendra.

In its prima facie observation, the High Court articulated the core issue at stake: the delicate balance between the ED's investigative mandate and the sacrosanct nature of lawyer-client privilege. The bench noted, “This court is of the prima facie opinion that until the Honourable Supreme Court adjudicates the matter and lays down authoritative guidelines as to whether and to what extent the Enforcement Directorate can invoke Section 50 of the PMLA Act to summon a practising advocate, no coercive steps can be permitted against a legal practitioner merely on the basis of power of summons.”

The court emphasized the potential for prejudice against the petitioner if coercive measures were allowed to proceed, leading to the decision to stay the impugned summons and restrain the ED from invoking Section 50 of the PMLA against Gowda.

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The Petitioner's Challenge: A Triad of Arguments

The writ petition filed by Anil Gowda mounted a multi-pronged challenge against the ED's actions, attacking the proceedings on grounds of jurisdictional error, malafide intent, and the absence of a predicate offense.

1. Political Vendetta and Violation of Fundamental Rights: The plea strongly contended that the entire investigation, including the registration of the Enforcement Case Information Report (ECIR), was driven by "political vendetta." It alleged that Gowda and his client, a sitting MLA, were being selectively targeted to suppress opposition voices. This, the petition argued, constitutes a flagrant violation of the principles of equality and non-arbitrariness enshrined in Article 14 and the right to life and liberty under Article 21 of the Constitution. The advocate claimed his role was strictly that of a legal consultant to Veerendra, making the ED's actions an overreach.

2. Absence of "Proceeds of Crime": A crucial legal argument advanced by the petitioner revolved around the very foundation of a PMLA case: the existence of "proceeds of crime." The plea highlighted that the ED's case is built upon four FIRs related to alleged cricket betting and gambling, dating back 10-15 years. Citing the Supreme Court's landmark judgment in Vijay Madanlal Choudhary v. Union of India (2023) , the petition asserted that no "proceeds of crime" as defined under Section 2(1)(u) of the PMLA exist.

Furthermore, it was pointed out that these predicate offenses, primarily under Section 420 of the IPC (Cheating), have either been quashed, resulted in acquittals, or seen key individuals (including Gowda himself) being neither named nor chargesheeted. The plea argued that allegations of betting alone do not constitute a scheduled offense under the PMLA, rendering the entire money laundering investigation void ab initio.

3. Jurisdictional Overreach and Testimonial Compulsion: The petition accused the ED of impermissibly venturing into the investigation of the predicate offense itself, a domain outside its statutory jurisdiction. This claim was substantiated by referring to the ED's Remand Application dated 24.08.2025, which allegedly revealed a "fishing and roving inquiry" that infringes upon the federal structure of investigation.

As an alternative prayer, Gowda sought a directive to restrain the ED from compelling him to provide a statement under Section 50 of the PMLA, arguing that such an act would amount to testimonial compulsion and violate his fundamental right against self-incrimination under Article 20(3) of the Constitution.

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Courtroom Arguments: Privilege vs. Partnership

The hearing saw a sharp divide in legal arguments, pitting the principle of attorney-client privilege against the ED's right to investigate individuals in their personal capacity.

Appearing for the petitioner, Senior Advocate Vikas Pahwa drew the court's attention to a suo-motu case currently pending before the Supreme Court, which was initiated to address the very issue of investigative agencies summoning advocates for legal advice rendered to their clients. Pahwa argued that the legal counsel provided by Gowda to Veerendra is a protected communication and cannot be the subject of an ED inquiry under Section 50.

In rebuttal, Additional Solicitor General Aravind Kamath, representing the ED, contended that the summons was not issued to Gowda in his capacity as a lawyer. Instead, Kamath submitted that Gowda is a partner in several commercial enterprises, including one owned by K.C. Veerendra. From the ED's perspective, the summons was directed at an individual who happens to be a lawyer, seeking his assistance to investigate a crime based on his business associations, not his legal advice.

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Broader Implications for the Legal Fraternity

This interim order from the Karnataka High Court is a significant development for legal professionals across the country. It provides a crucial, albeit temporary, bulwark against what many in the legal community perceive as an increasingly expansive use of Section 50 of the PMLA. The section grants ED officers powers akin to a civil court, including the ability to summon any person and record their statement on oath, which is admissible as evidence.

The court's decision to link the stay to the outcome of the Supreme Court's deliberation on the matter highlights a nationwide judicial acknowledgment of the need for clarity. The central question remains: Where does the line between a lawyer's professional duty and their potential involvement in a client's alleged illegal activities lie? And how can investigative agencies probe one without infringing upon the other?

Until the Apex Court lays down authoritative guidelines, this ruling from Karnataka will likely serve as a persuasive precedent for advocates facing similar summons, reinforcing the judiciary's role in safeguarding the foundational principles of attorney-client privilege and protection against coercive state action.