Karnataka High Court dismisses former banker's plea against ED arrest

Bengaluru: The Karnataka High Court has dismissed a petition filed by RM Manjunath Gowda, former president of Shivamogga District Central Co-operative Bank Limited, and his wife HC Asha in a case for money laundering by the Enforcement Directorate (ED). The case pertains to the fake gold loan scheme case at the Shivamogga DCC Bank. Justice M Nagaprasanna while rejecting the petition observed that the case on hand is a mirror held up to systematic corruption.

Manjunath Gowda and his wife challenged the order of arrest issued by the ED, arrest memo, grounds of arrest and reasons depicted to believe that the petitioners are in possession of proceeds of crime. They argued that the offences under IPC sections 409 and 202 are not scheduled offences under the provisions of the Prevention of Money Laundering (PML) Act and hence ED had no jurisdiction.

On the other hand, ED alleged misappropriation of funds and said the wife was the Bank Manager and involved in a large-scale misappropriation to the extent of Rs 62,77,63,560. It was further submitted that 785 fraudulent gold loan accounts were opened without the knowledge of accounts holders using forged documents. The gold ornaments were siphoned off by replacing them with gold coated ornaments. The ED said that the petitioners’ assets have grown tenfold after Manjunath Gowda entered the DCC Bank and hence those assets are indeed proceeds of crime.

Justice Nagaprasanna noted that the modus operandi of amassing wealth or misappropriation of funds is succinctly brought out in the reasons to believe that the petitioners are allegedly in possession of proceeds of crime. Citing the Devinder Kumar Bansal case of the Apex Court, the court said if denial of liberty to an accused is the price to be paid for a corruption free society, the Courts then should not hesitate in denying such liberty.

“The Supreme Court observes that money laundering is not a momentary event, but a continuing and pernicious process as long as illicit gains, possessed, projected as legitimate, and reintroduced into the economy. Enactment of the Prevention of Money Laundering Act, 2002, the Supreme Court, observed, was imperative, aimed at forestalling the transformation of unclean money into clean currency and safeguarding the integrity of the financial system. Money laundering, the Supreme Court notes, inflicts not just isolated instances, but also inflicts grievous injury upon the public exchequer,” Justice Nagaprasanna said.

The court further said, “The case at hand is a mirror held up to systematic corruption. Therefore, upon a meticulous consideration of the facts, the grounds, the elucidation of the law by the Supreme Court and the corpus of the material on record, this Court finds no infirmity that would warrant interference.”