The Karnataka High Court Tuesday stayed an Enforcement Directorate (ED) investigation against Anil Gowda H, an advocate identified as a business associate of arrested Congress MLA K C Veerendra Puppy, since a matter of investigation of advocates is pending before the Supreme Court.
The central agency issued a summons on August 24 to Gowda in a money laundering case linked to online betting apps and gaming companies of Veerendra, who was arrested on August 23 for alleged laundering of funds acquired from illegal online betting and gaming apps. Gowda challenged the summons in the high court as a violation of his rights as a professional advocate, as endorsed by the Supreme Court.
“This court is of the considered view that the petitioner is entitled to interim protection. The summons issued are stayed. The respondent agency is restrained from invoking the purview of the PMLA against the petitioner until the Hon’ble apex court finally decides the issue pending before it,” a single-judge bench of Justice Sachin Shankar Magadum noted in the petition filed by Gowda.
“Specifically, the core issue that requires determination is whether the Enforcement Directorate can exercise its powers under Section 50 of the Prevention of Money Laundering Act, 2002, in relation to a legal practitioner, particularly when the matter is already pending before the Hon’ble Supreme Court,” the HC had stated earlier during the arguments.
The central agency earlier argued against the plea for protection from investigation filed by the advocate on the grounds that the advocate was not being summoned over legal services provided to firms of the arrested MLA, but his role as a business partner.
“During the course of a search, certain mobile phones of the petitioner were seized, and the examination of these phones has disclosed extensive correspondence with betting app service providers based abroad and in India. This requires investigation,” Additional Solicitor General Arvind Kamath told the HC on behalf of the central agency last month.
“We have already started an investigation based on a predicate offence which indicates the existence of a very large-scale betting app operation,” the ASG said, arguing that the agency has the power to seek information regarding a crime registered in accordance with the law.
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“Prima facie, it has been found that the petitioner is connected with the proceeds of the crime generated by the principal accused (Veerendra) and others. Ultimately, the proceeds of crime have been traced to the accounts of ABH Infrastructure and AVSVA Enterprises,” the agency stated by citing links between Gowda and the Congress MLA’s firms.
It said that Gowda was paid 25,000 Euros through the account of AVSVA Enterprises to explore gaming business opportunities in Europe.
Senior counsel Vikas Pahwa, who appeared for Gowda, argued that the correspondence by Gowda with betting firms abroad was part of his legal services to the firms of Veerendra and his family members who were involved in the betting business.
“You don’t have the power under section 50 (of the PMLA) to call a lawyer for investigation. That is a larger question pending before the Supreme Court,” Pahwa argued. All the questions raised by the agency “are pertaining to the role as a lawyer, an adviser to the co-accused company”, he claimed.
Summons violation of Supreme Court directives, Gowda argues
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Gowda, whose properties were also searched by the central agency on August 22 and 23 in the crackdown on the casino and gaming businesses of Veerendra, claimed that the summons issued to him is a violation of Supreme Court directives against allowing criminal proceedings against lawyers without judicial oversight.
Gowda is the brother of Kusuma H, the losing Congress MLA candidate from the R R Nagar Assembly seat in Bengaluru in the 2023 state polls, and the son of Congress leader Hanumantharayappa.
On August 22 and 23, the central agency carried out searches at 31 locations linked to Veerendra, the Chitradurga MLA of the Congress, as well as his brothers and associates. It arrested Veerendra from Gangtok in Sikkim, where he was on a business visit. Veerendra is considered to be a close associate of Karnataka Deputy Chief Minister Shivakumar.