'Act Against Corruption, But Within The Law': Karnataka HC Pulls Up ED; Bars Precipitative Action Until July 22

Bengaluru, July 15, 2026: The Karnataka High Court on Wednesday questioned the Enforcement Directorate's (ED) decision to conduct searches against people who are not named in the predicate offence, stressing that the agency's fight against corruption must remain within the limits of the law. The Court also directed the ED not to take any precipitative action against the petitioners until the matter is heard again on July 22.

Justice M. Nagaprasanna made the observations while hearing petitions filed by Karnataka Excise Department Additional Commissioner Y. Manjunath, his wife Mahadevi Manjunath, who is the sister of Minister Satish Jarakiholi, and others.

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The petitioners have challenged search and seizure proceedings initiated against them by the ED in a money laundering case. They argued that they are neither suspects in the bribery case on which the ED's case is based nor linked to any alleged act of money laundering.

Court Questions ED Jurisdiction

Expressing prima facie reservations over the ED's exercise of its search and seizure powers, Justice Nagaprasanna said, "You may be a crusader (against) corruption, but it should be in accordance with law. If you really have the zeal to cut corruption in any department, do it in accordance with law. No court will interfere. But you need not come here and defend an action that is, prima facie, indefensible."

The ED's action stems from a Lokayukta trap case in which Jagadish Nayak was allegedly caught accepting a bribe of Rs 25 lakh and was booked under Section 7A of the Prevention of Corruption Act. According to the petitioners, they have no connection with the alleged offence but were still subjected to searches.

The petition states that the ED issued search authorisations on June 23. Officers searched the Manjunath family's Belagavi residence from around 6.45 am on June 24 for nearly 23 hours. During the search, Mahadevi Manjunath's streedhan jewellery was seized despite it having been disclosed in income tax records.

Simultaneous searches were also carried out at the petitioners' Bengaluru residence for about 17 hours. Mobile phones, electronic devices, around Rs 2 lakh in cash, foreign currency worth nearly Rs 3 lakh, and property documents were seized.

The petition describes the searches as a "fishing and roving inquiry", arguing that the ED failed to establish any nexus between the seized material and the alleged proceeds of crime.

It further contends that without a predicate offence involving the petitioners, there can be no proceeds of crime or offence under Section 3 of the Prevention of Money Laundering Act (PMLA). The petitioners have sought the quashing of the search and seizure proceedings initiated under Section 17 of the PMLA.

Court Seeks Money Trail

During the hearing, Justice Nagaprasanna repeatedly questioned how the ED had proceeded against people who were not suspects in the predicate offence, indicating that the agency must establish a clear legal connection before invoking its powers.

"There should be a money trail. There should be a connection. These are unconnected people. You can't simply draw them in... No predicate offence. Then how did you go? It is unfathomable," the Court observed.

Questioning the ED's jurisdiction further, the Bench remarked, "Absolutely no problem for you to get a right to search a particular house. But first there should be a predicate offence. One should either be an accused in that predicate offence or there should be a money trail connecting that person. Now who are these people, and who is Jagadish Nayak?"

The Court also said, "That is a Prevention of Corruption Act trap case. Is Rs 25 lakh in a trap case itself proceeds of crime? ED can proceed against the person who allegedly accepted the bribe. How do you go against unconnected people?"

The Bench was also critical of the ED's reliance on a press release alleging widespread corruption in the Excise Department. "There is a well-oiled institution in Karnataka in the form of the Lokayukta. Are you doing the Lokayukta's job?" Justice Nagaprasanna asked.

Arguments Before The Court

Senior Advocate Prabhuling Navadagi, along with Advocate Vivek Jain, argued for the petitioners that the ED's own press release could not confer jurisdiction under the PMLA. Senior Advocate K.N. Phanindra submitted that the petitioners had already been subjected to searches and seizures and should be protected from further coercive action pending adjudication. Advocates Gautam S. Bharadwaj and Prashant F. Goudar also appeared for the petitioners.

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Appearing for the ED, Special Public Prosecutor Madhu N. Rao submitted that the agency had acted on the basis of linkages that emerged during the investigation and sought time to obtain instructions on the issues raised by the Court.

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