MUDA case: Karnataka High Court admits ED appeal over quashing of action against former chief DB Natesh

Bengaluru: The Karnataka High Court on Monday admitted a writ appeal filed by the Enforcement Directorate (ED), challenging the order passed by a single bench quashing the action initiated against D B Natesh, former Commissioner of Mysuru Urban Development Authority (MUDA) in the alternative sites allotment case involving Chief Minister Siddaramaiah, his wife and others.

A division bench comprising Chief Justice NV Anjaria and Justice MI Arun posted the matter to April 8 for further consideration. On January 27, 2025, the single bench had quashed the search and seizure conducted at the residence of Natesh on October 28 to October 29, 2024 and the subsequent statement recorded under Section 17(1)(f) of Prevention of Money Laundering Act (PMLA). The single bench held that the action initiated by the ED was vitiated on the grounds of absence of ‘reason to believe’, and the same was declared invalid and illegal.

Appearing for the appellant ED, Additional Solicitor General (ASG) SV Raju submitted that the single bench order is being cited in a number of cases and that the agency is being prejudiced by the order. The ASG also prayed for an interim order of stay of the single bench order. On the other hand, senior advocate Dushyant Dave, appearing for Natesh, said that there is no prayer seeking interim order in the writ appeal filed by the ED.

During the hearing, the division bench noted clause 5 of the operative portion of the single bench order. The clause said, “Liberty is reserved with the petitioner (Natesh) to initiate action under Section 62 of the PMLA, 2002 against the officer concerned before the appropriate forum, as whether the impugned search and seizure is vexatious or not is matter of trial.” The division bench orally observed that this clause runs contrary to the earlier direction.

To this, ASG submitted that the single bench was all confused about section 19 and section 17 of the PMLA. "The parameters of section 19 are different from section 17. This order cannot stand for a day,” he said. At this stage, Dushyant Dave took an undertaking that his client will not proceed with it.

Meanwhile, the division bench said that the ED may file an IA seeking an interim order provided it comes up with a specific instance wherein their searches are affected due to the single bench order. “Prima facie we believe that it is inter parte (clause 5),” the bench said.

The single bench had said that Natesh is not an accused in the predicate offence, being investigated by the Lokayukta police. The single bench further said that unless Natesh were to be informed that the investigation conducted is in relation to the particular predicate offence and that the impugned search and seizure and the subsequent issuance of summons were in relation to his purported role in the illegal allotment of 14 sites to an accused in the predicate offence, Natesh cannot be expected to disclose past fact of having discharged any duties of such nature.

Subsequent to this order, in two other petitions filed by Parvathy BM, wife of Chief Minister Siddaramaiah, and Byrathi Suresha, Minister for Urban Development, a different single bench had quashed summons issued by the ED following the order passed in Natesh’s petition.