New Delhi: In a setback to jailed Congress legislator K.C. Veerendra, the Karnataka High Court Wednesday junked a plea challenging his arrest by the Enforcement Directorate (ED) on charges of running an inter-state betting syndicate.
Accepting the ED’s arguments that a preliminary probe indicated his involvement with illegal betting apps, the court gave its nod for Veerendra’s custodial interrogation.
The high court was hearing a plea filed by Veerendra’s wife, R.D. Chaitra.
His arrest as part of a probe into alleged money laundering was upheld despite the high court noting that six of the seven cases comprising the predicate offence were closed and that the closure report for the seventh and final case was pending before the trial court.
A predicate offence is a case registered by investigative agencies such as the CBI and state police, based on which ED can initiate money laundering proceedings under the Prevention of Money Laundering Act, 2002.
ED, Bengaluru has conducted search operation on 22-08-2025 and 23.08.2025 at 31 locations across India including Gangtok, Chitradurga District, Bangalore City, Hubli, Jodhpur, Mumbai and Goa (including 5 casinos viz. Puppy’s Casino Gold, Ocean Rivers Casino, Puppy’s Casino Pride,… pic.twitter.com/v2tvjapkdE
— ED (@dir_ed) August 23, 2025
The ED arrested Veerendra from Gangtok on 23 August and seized assets worth more than Rs 150 crore, including more than 60 kg of gold, besides Indian and foreign currency notes.
The ED’s case against the Chitradurga MLA stems from five cases filed by the Karnataka Police, one by the Central Bureau of Investigation (CBI) and another by the Telangana Police between 2011 and 2022 under, among other sections, 420 (cheating) of the erstwhile Indian Penal Code (IPC).
“Perusal of the same (reasons to believe and grounds of arrest) shows that the preliminary investigation reveals involvement of the husband of the petitioner in running of the alleged illegal betting apps and being benefited through them, which requires a detailed investigation.
“The material on hand discloses, cheating people through betting apps and realising proceeds of crime through it and that it requires custodial interrogation of the accused. Thus, in my opinion, the respondent had reason to believe to arrest the husband of the petitioner under Section 19 of the PMLA,” Justice M.I. Arun observed in the order.
The judge noted that there was sufficient reason to believe that Veerendra is guilty of an offence punishable under the Prevention of Money Laundering Act. “It justifies the registration of ECIR and arrest of the husband of the petitioner.”
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Pending closure report
In her petition, Chaitra argued that all five cases against her husband cited as the basis of the Enforcement Complaint Information Report (ECIR) were either quashed or the accused acquitted, including one case from 2022 from which Veerendra’s name was dropped from the chargesheet. Additionally, she argued that Veerendra was acquitted in a case in 2011.
An ECIR is the agency’s equivalent of an FIR.
In the Telangana case, the parties settled with each other, whereas Karnataka Police have closed the case in their jurisdiction.
While the trial court in Karnataka is yet to decide on the police’s closure report, Chaitra argued that the case is civil in nature, involving a measly amount of Rs 30,000.
The ED argued before the court that although these cases registered by the police involved charges of cheating, its probe established Veerendra as the kingpin of a larger network of companies, including some based overseas.
Though the high court agreed with Chaitra’s contention, it justified ED’s anti-money laundering probe based on the opinion that a prima facie case was made out against Veerendra. At the same time, the court gave him the liberty to file a petition seeking quashing of the ED case, in case the trial court accepts Karnataka police’s closure report.
According to past Supreme Court rulings, a predicate offence is mandatory for a money laundering case to survive.
“Thus, existence of a scheduled offence (predicate offence) is foundational for registration of an ECIR under the PMLA, 2002. Without a scheduled offence, there can be no proceeds of crime. The powers of the Enforcement Directorate are derived from the predicate offence and it arises only if there exists a scheduled offence and there are proceeds of crime generated from that offence, and not otherwise,” the court observed.
(Edited by Tony Rai)
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