High Court rejects Shivakumar’s plea against ED summons

A money-laundering case was initiated against Mr. Shivakumar based on a complaint of income tax evasion filed by the Income Tax Department.

BENGALURU - KARNATAKA - 31/03/2019 : Water Resources Minister D K Shivakumar, at the first political joint Congress and JDS rally - 'Parivartana Samavesha', ahead of Lok Sabha election 2019, at Bangalore International Exhibition Centre on Tumkur Road, in Bengaluru on March 31, 2019. Sunday’s rally primarily targeted towards voters and workers of Tumakuru, Ramanagara, Bengaluru Rural and three constituencies of Bengaluru city. Chief Minister H D Kumaraswamy, Deputy CM G Parameshwara, former CM Siddaramaiah, KPCC President Dinesh Gundu Rao also present on dais after a pre-poll alliance for the coming polls. Photo: K Murali Kumar / THE HINDU

In a setback to Congress leader and former Minister D.K. Shivakumar, the High Court of Karnataka on Thursday dismissed his petition challenging the summons issued to him by the Enforcement Directorate (ED) in a money-laundering case. The case was initiated based on a complaint of income tax evasion filed by the Income Tax Department against Mr. Shivakumar.

Justice Aravind Kumar accepted the arguments of the ED that the investigation was at a nascent stage and the court cannot interfere with it at this stage, while observing that a person served with summons under Section 50(2) and (3) of the Prevention of Money Laundering (PML) Act, 2002, may or may not be an offender of any of the “scheduled offences” under the PML Act.

The court declined to accept arguments made on behalf of Mr. Shivakumar that but for I-T Department “intentionally” adding Section 120B (criminal conspiracy) of the Indian Penal Code (which is a “scheduled offence” under PML Act), the ED could not have initiated a probe against him as offences under the I-T Act were not brought under the “scheduled offences” of the PML Act.

The predicate offence could only be a trigger for initiating proceedings under the PML Act and the investigation can be related to predicate offence or for money laundering as defined under the PML Act, the court said, while observing that even a person acquitted from the charges of “scheduled offence” could be prosecuted under the PML Act. “Section 120B of the IPC is a predicate, distinct and standalone offence,” the court said.

Noticing that Section 50(2) of the PML Act does not refer to an accused person at all, the court said mere suspicion of the authority that the proceeds of crime was being ploughed into mainstream of economy as untainted money was sufficient to examine a person and this could be done only by collecting information and recording statements of those who might not be the offenders also.

The question of whether criminal conspiracy under the PML Act was made or not, the court said, would be an issue that could be unearthed only after investigation.

Mr. Shivakumar had moved the court in January after the ED summoned him to appear for questioning on February 8.