Supreme Court Clears Karnataka Deputy CM DK Shivakumar in Money Laundering Case     

Ahead of Parliament Elections, Karnataka Deputy CM DK Shivakumar gets Clean Chit in Money Laundering Case.
Supreme Court - DK Shivakumar - Karnataka Deputy CM - taxscan

In a significant ruling today, the Supreme Court granted relief to Karnataka Deputy Chief Minister DK Shivakumar and his associate, Anjaneya Hanumanthaiah, as they successfully challenged criminal proceedings linked to a 2018 money laundering case.

The Two-Judge Bench of Justices Surya Kant and KV Viswanathan permitted their special leave petitions, overturning the 2019 Karnataka High Court verdict, which upheld summonses issued by the Enforcement Directorate.

The High Court’s reliance on Section 120B of the Indian Penal Code as a standalone offense, triggering the Prevention of Money Laundering Act, was deemed ‘unsustainable’ by the Supreme Court, citing its ruling in Pavana Dibbur.

The case originated from allegations of money laundering following income tax raids in 2017, during which unaccounted cash exceeding Rs seven crore was seized. Despite the High Court dismissing appeals in 2019, the Supreme Court protected the appellants from coercive action, eventually allowing their appeals today.

The High Court’s interpretation of Section 120B’s applicability as a distinct offence was challenged in light of the Pavana Dibbur case, where the Supreme Court clarified that Section 120B becomes a scheduled offense only when conspiracies are directed towards a scheduled offense.

Referencing the Pavana Dibbur decision, the Supreme Court quashed proceedings initiated under the PMLA against Shivakumar and his aides, setting aside the High Court’s judgment.

However, the court acknowledged the ED’s filed review petition against the Pavana Dibbur judgment, cautioning that if accepted, the High Court’s view would stand affirmed, allowing the ED to seek a review or recall if necessary.

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