MLA's PMLA Arrest Challenged Over Lack of Summons, 'Non-Application of Mind'

BENGALURU – The Karnataka High Court is currently scrutinizing the arrest of Congress MLA KC Veerendra by the Enforcement Directorate (ED) in a case that brings the agency's arrest procedures under the stringent Prevention of Money Laundering Act, 2002 (PMLA) into sharp focus. In a habeas corpus petition filed by the MLA's wife, R.D. Chaitra, senior advocate Siddharth Dave argued that the arrest was a product of "complete non-application of mind," executed without a single summons being issued and based on predicate offences that have either been quashed, resulted in acquittal, or did not lead to a chargesheet against Veerendra.

The plea, heard before Justice M.I. Arun, seeks to declare the MLA's arrest illegal and violative of his fundamental rights under Articles 19 and 21 of the Constitution, demanding his immediate release from custody.

The Core Challenge: Arrest Without Summons

The central pillar of the petitioner's argument is the ED's failure to issue any summons under Section 50 of the PMLA before effecting the arrest. Section 50 grants the ED powers to summon individuals to give evidence or produce records, a step often seen as a precursor to more coercive measures. Mr. Dave emphasized the gravity of this omission, particularly as the grounds for arrest cited non-cooperation.

"In my limited experience, ordinarily ED issues notice under section 50 asking me to appear and give details," Dave submitted before the court. "In the present case not one summons is issued. This has very serious consequences. If arrest powers are vested with them it has to be exercised properly and reasons to believe has to be present. When was I called? How am I being uncooperative or misleading? Nothing of that at all."

This line of reasoning directly confronts the ED's justification for the arrest. The counsel argued that the "reasons to believe," a statutory prerequisite for any PMLA arrest under Section 19, were fundamentally flawed. By arresting Veerendra, a sitting MLA with known addresses and publicly disclosed assets, from Sikkim and citing non-cooperation without ever providing him an opportunity to cooperate, the ED's actions, Dave contended, displayed a clear lack of due process.

Predicate Offences on Shaky Ground

Further dissecting the ED's case, the petitioner's counsel launched a meticulous attack on the very foundation of the Enforcement Case Information Report (ECIR)—the predicate offences. A PMLA investigation can only be initiated if there is a "scheduled offence" (predicate offence) registered by another law enforcement agency. Mr. Dave systematically dismantled the basis of the four FIRs relied upon by the ED.

He detailed the history of the predicate cases, highlighting significant legal outcomes that he argued the ED conveniently overlooked:

• 2011 FIR: An FIR for cheating under Section 420 of the IPC, related to cricket betting, went to trial. However, no charge was ever framed under Section 420, and the accused were ultimately acquitted in 2014. "ED does not mention that no charges came to be framed under section 420 of IPC and acquittal in 2014," Dave pointed out, suggesting the agency had an obligation to be aware of the case's final disposition.
• 2015 FIR: A second case containing similar allegations was quashed by the High Court in 2016.
• 2016 & 2022 FIRs: In a third case from 2016, the MLA was not named as an accused. In a fourth FIR from 2022, while Veerendra was named, he was not chargesheeted.

The counsel also noted that two other FIRs referenced by the ED were formally closed earlier this year. "ED surely has wherewithal to find out what happened in the FIRs," Dave asserted. "There is not one FIR of illegal betting against me where I am convicted."

This raises a critical legal question: can the ED proceed with a money laundering investigation and exercise its drastic power of arrest when the underlying criminal cases, which are supposed to evidence the "proceeds of crime," have collapsed or do not implicate the accused?

Legal Implications and the Power of Arrest

This case has significant implications for the interpretation and application of the PMLA, a statute that has been the subject of intense legal debate over its stringent bail conditions and the wide-ranging powers it confers upon the ED.

The Supreme Court, in cases like Vijay Madanlal Choudhary v. Union of India , has upheld the constitutionality of the PMLA's provisions, including the high threshold for bail. However, the judiciary has also consistently emphasized that the powers of arrest must be exercised with caution, fairness, and adherence to procedural safeguards. The requirement for the arresting officer to record "reasons to believe" in writing that the person is guilty of a PMLA offence is a cornerstone of this safeguard.

The arguments in the Veerendra case directly test this safeguard. The petitioner contends that the "reasons to believe" cannot be a mere formality but must be based on credible material and a thorough application of mind, which includes considering the status of the predicate offences. If an arrest is made based on a predicate FIR where the accused has been acquitted, it calls into question the very existence of a scheduled offence and, by extension, the proceeds of crime.

Furthermore, the "non-cooperation" argument is pivotal. While non-cooperation can be a valid ground contributing to the necessity of an arrest, the petitioner’s argument posits that such a conclusion is untenable if the accused was never summoned or given a chance to cooperate in the first place.

The hearing is set to continue, with the Assistant Solicitor General representing the Enforcement Directorate expected to present the agency's counter-arguments. The court's eventual decision will be keenly watched by the legal community, as it could provide crucial guidance on the procedural prerequisites for a PMLA arrest, the weight to be given to the status of predicate offences, and the threshold for establishing "reasons to believe" in the absence of prior summons.