Karnataka High Court

Sri Ravi Yallappa Kurbett vs Directorate Of Enforcememt on 26 November, 2025

Author: Shivashankar Amarannavar

Bench: Shivashankar Amarannavar

                         1




   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

    DATED THIS THE 26TH DAY OF NOVEMBER, 2025

                      BEFORE

THE HON'BLE Mr. JUSTICE SHIVASHANKAR AMARANNAVAR

        CRIMINAL PETITION No.13026/2025


BETWEEN :

SRI RAVI YALLAPPA KURBETT
AGED 34 YEARS
S/O RAMAPPA GOWDA
LIG 699, 2ND STREET, 4TH CROSS
KHB COLONY, VTC-HIREMALLIGAWAD
CHIKKAMALLIAGAWAD
DHARWAD - 580 007.
                                     ... PETITIONER


(BY SRI KIRAN S JAVALI, SENIOR COUNSEL FOR
 SRI SAMIT PARVATIKAR AND
 SRI SHASHWATH S PRAKASH, ADVOCATES)


AND :


DIRECTORATE OF ENFORCEMENT
MINISTRY OF FINANCE AND
DEPARTMENT OF REVENUE
III FLOOR, "B" BLOCK
BMTC, K.H. ROAD, SHANTINAGAR
                              2




BANGALORE - 560 027.
(REPRESENTED BY: STANDING COUNSEL)
                                             ... RESPONDENT

(BY SRI MADHUKAR DESHPANDE, SENIOR CENTRAL GOVT. STANDING COUNSEL)

THIS CRIMINAL PETITION IS FILED UNDER SECTION 483 OF THE BNSS, 2023 PARYING TO ENLARGE THE PETITIONER ON BAIL IN ECIR/BGZO/40/2023 DATED 30.11.2023 ON THE FILE OF THE III ADDITIONAL DISTRICT AND SESSION JUDGE, D.K., MANGALURU IN SPL. CC No.233/2024 FOR THE OFFENCE PUNISHABLE UNDER SECTION 4 OF THE PREVENTION OF MONEY LAUNDERING ACT, 2002.

THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 06.11.2025, THIS DAY, SHIVASHANKAR AMARANNAVAR J, DELIVERED THE FOLLOWING;

CORAM: HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR

CAV ORDER

This petition is filed by accused No.23 under Section

483 of BNSS praying to grant bail in ECRI/BGZO/40/2023

dated 30.11.2023 pending on the file of III Additional

District and Sessions Judge, D.K., Mangaluru in

Spl.C.C.No.233/2024 for the offence under Section 4 of the

Prevention of Money Laundering Act, 2002 (for short

'PMLA')

2. Heard learned Senior Counsel for the petitioner and

learned standing counsel for respondent.

3. Learned counsel for the petitioner would contend

that petitioner was not accused when the complaint was

filed on the basis of which case in Spl.C.C.No.233/2024 has

been registered and it was filed against accused Nos.1 to

22. In the further investigation the petitioner was inquired

and he was arrested on 08.07.2025 and additional

complaint has been filed against accused Nos.23 to 39

wherein the petitioner has been arraigned as Accused

No.23. The allegation against the petitioner is that he had

received proceeds of crime i.e., money in cash and also

through bank transfers out of fraudulent compensation

siphoned from the Karnataka Industrial Area Development

Board (for short 'KIADB') in connection with other accused.

He is alleged to have withdrawn cash from bank accounts

which were opened with fake identities or bank account of

other accused i.e., cash withdrawal of fraudulent

compensation siphoned from KIADB. There is a hand loan

agreement dated 05.04.2022 where under petitioner has

taken hand loan of Rs.25 lakhs from Smt.Kallava Ramappa

Kamdoli. There is an explanation for the amount received

by the petitioner in a sum of Rs.25 lakhs which he received

as a hand loan and has not received any proceeds of crime.

The documents pertaining to payment of compensation to

original owners, land acquired have not been produced.

The said owners statement are not recorded. The petitioner

is not accused in predicate offence. The trial is not

commenced. He placed reliance on the judgment of

Hon'ble Apex Court in the case of Manish Sisodia v.

Directorate of Enforcement (2024 INSC 595) wherein

it is held as under:

53. The Court further observed that, over a period of time, the trial courts and the High Courts have forgotten a very well-settled principle of law that bail is not to be withheld as a punishment. From our experience, we can say that it appears that the trial courts and the High Courts attempt to play safe in matters of grant of bail. The principle that bail is a rule and refusal is an exception is, at times, followed in breach. On account of non-grant of bail even in straight forward open and shut cases, this Court is flooded with huge number of bail petitions thereby adding to the huge pendency. It is high time that the trial courts and the High Courts should recognize the principle that "bail is rule and jail is exception".

54. In the present case, in the ED matter as well as the CBI matter, 493 witnesses have been named. The case involves thousands of pages of documents and over a lakh pages of digitized documents. It is thus clear that there is not even the remotest possibility of the trial being concluded in the near future. In our view,

keeping the appellant behind the bars for an unlimited period of time in the hope of speedy completion of trial would deprive his fundamental right to liberty under Article 21 of the Constitution. As observed time and again, the prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial.

4. He submits that in Spl.CC.233/2024 there are 14

witnesses and 128 documents and in additional complaint

there are 14 witnesses and 174 documents and the trial

cannot be completed in a reasonable time. He further

contends that the existence of the schedule offence is a

sine qua non for alleging the existence of proceeds of

crime. The offence under Section 3 of PMLA can be proved

only if the scheduled offence is established in the

prosecution of scheduled offence. The trial of the case

under PMLA proceeds cannot be finally decided unless the

trial of scheduled offences concludes. On that point he

placed reliance on a decision of Hon'ble Apex Court in the

case of V.Senthil Balaji vs. The Deputy Director,

Directorate of Enforcement (2024 INSC 739) wherein

it is held as under:

"21. Hence, the existence of a scheduled offence is sine qua non for alleging the existence of proceeds of crime. A property derived or obtained, directly or indirectly, by a person as a result of the criminal activity relating to a scheduled offence constitutes proceeds of crime. The existence of proceeds of crime at the time of the trial of the offence under Section 3 of PMLA can be proved only if the scheduled offence is established in the prosecution of the scheduled offence. Therefore, even if the trial of the case under the PMLA proceeds, it cannot be finally decided unless the trial of scheduled offences concludes. In the facts of the case, there is no possibility of the trial of the scheduled offences commencing in the near future. Therefore, we see no possibility of both trials concluding within a few years."

5. On these grounds he prayed to allow the petition

and grant bail to the petitioner.

6. Per contra, learned counsel for the respondent

submits that in the additional complaint the petitioner has

been arraigned as accused No.23. The petitioner is real

estate broker and he is acquainted with the officers of

KIADB. The petitioner in conclusion with other accused has

changed credentials of Aadhar Card and got payment made

by KIADB authorities of the land acquired second time and

caused huge loss to KIADB. The petitioner is not accused in

four cases. 19 Aadhar credentials have been changed and

the case involves Rs.119 Crores scam. The petitioner has

withdrawn Rs.28 lakhs, transferred Rs.25 lakhs to his wife

and transferred Rs.45 lakhs and Rs.25 lakhs to his

associates. The role of this petitioner has been stated in

supplementary complaint at para 12.1. The petitioner has

purchased 10 properties in his name and in the name of his

wife and in benami name by utilizing the proceeds of crime.

The investigating officer at the time of filing complaint has

reserved to file his supplementary complaint. After further

investigation supplementary complaint has been filed

against the petitioner and other accused. As per Section 45

of PMLA Act, the accused is supposed to explain that he is

guilty or not. The said agreement wherein the petitioner is

stated to have availed hand loan in respect of one person

and he has not explained with regard to other five persons.

The petitioner frauded the KIADB by utilizing the KYC

credentials. It is not necessary that a person against whom

the offence under Section 3 of PMLA is alleged, must have

been shown as the accused in scheduled offence and the

same has been considered by the Hon'ble Apex Court in

Pavana Dibbur vs. Directorate of Enforcement (2023)

15 SCC 91. In the case relied upon by the petitioner in the

case of Manish Sisodia and V.Senthil Balaji (supra), the

accused persons were in custody for 17 months and 20

months and in the present case, the petitioner is in judicial

custody since last four months. The non-arrest of other

accused is not fatal and on that ground bail cannot be

granted to the arrested accused persons. The offence

alleged against the petitioner is a serious type of offence

and bail cannot granted in such a case. On that point, he

placed reliance on the decision of the Hon'ble Apex Court in

the case of Union of India v. Kanhaiya Prasad (2025)

SCC Online SC 306 wherein it is held as under:

21. As well settled, the offence of money laundering is not an ordinary offence. The PMLA has been enacted to deal with the subject of money laundering activities having transnational impact on financial systems including sovereignty and integrity of the countries. The offence of money laundering has been regarded as an aggravated form of crime world over and the offenders involved in the activity connected with the Proceeds of Crime are treated as a separate class from ordinary criminals. Any casual or cursory approach by the Courts while considering the bail application of the offender

involved in the offence of money laundering and granting him bail by passing cryptic orders without considering the seriousness of the crime and without considering the rigours of Section 45, cannot be vindicated.

7. The limitation for grant of bail has been provided

under Section 45 of the PMLA Act. If the petitioner is

granted bail, he may hamper the investigation and tamper

the prosecution witnesses and commit similar offence. On

these grounds, he prayed to reject the petition.

8. Having heard the learned counsels, the Court has

perused the complaint and other materials placed on

record.

9. In the complaint lodged by Smt. Mamatha

Hosagoudar, an Officer of KIADB Office, Dharwad Hubballi,

Karnataka, alleging that Shri Vasantkumar Durgappa

Sajjan, Retired Special Land Acquisition Officer, KIADB

office with a dishonest intention of earning wrongful profit

and causing wrongful loss to the Government exchequer,

had entered into criminal conspiracy with other accused

persons and with a common object, had allegedly

sanctioned a total amount of Rs.19,99,55,000/- as relief

funds to Accused persons in the year 2021-22, to whom

compensation had already been paid consequent to

acquisition of their lands in the year 2011-12. The said

officials of KIADB Office, Dharwad Hubballi City, Karnataka,

misused their posts and powers vested in them and through

criminal breach of trust, the Accused persons earned illegal

profit and caused loss to the Government exchequer to the

tune of Rs. 19,99,55,000/-.

10. Based on the said Complaint an FIR No.0251/2022

dated 20.12.2022 by Vidyagiri Police Station, Hubballi

Dharwad, came to be registered for the offences punishable

under Sections 406, 409, 420 & 34 of IPC, 1860. Thereafter

various other complaints came to be filed and in all five

FIRs came to be registered on various dates against public

servants, bank officials, agents and other persons. In brief

each of those FIRs are set out hereunder:

(a) FIR No.251/2022 dated 20.12.2022:

This FIR is based on a Complaint by Smt.Mamtha

Hosagoudar, an Officer of the KIADB office,

alleging that the Accused persons had sanctioned

compensation with respect to persons had

sanctioned compensation with respect to persons

in the year 2021 and 2022 with respect to lands

already acquired in the year 2012-2013 and 2018.

After investigation a Charge Sheet No.1/2023 has

been filed in C.C.No.1072/2023 and the same is

pending consideration.

(b) FIR No.72/2023 dated 19.4.2023:

This FIR was registered based on a Complaint of

Smt.Rajeshwari Yaragatti, wherein it has been

stated that the lands belonging to her husband had

been acquired for Hubli Airport Development and

the compensation accorded had been disbursed

and taken away by someone who had created fake

and forged documents of ownership.

This FIR has since been Charge Sheeted on

4.11.2023 in C.C.No.3619/2023 and the same is

pending.

(c) FIR No.150/2023 dated 11.8.2023.

This FIR was registered based on a Complaint of

Kareppa Pujar, alleging that his land had been

divided amongst brothers and had 4 acres and 39

guntas of land, which had been already taken over

by Karnataka Land Reforms Board and had

obtained an Award. This land had again been

misused and caused financial loss.

The Investigation is concluded by the police

authorities by filing 'B' Final Report.

(d) FIR No.0106/2022 dated 3.6.2022.

This FIR was registered based on a Complaint of

Smt.Akkavva Lakkappanavar, alleging that forged

bond papers along with finger prints and photos of

the Complainant had surrendered her right with

respect of her lands. These lands had been issued

with an amount of illegal compensation which had

been taken over by the Accused persons.

The Investigation in these proceedings is still

pending and final report is yet to be submitted in

this matter.

(e) FIR No.164/2024 dated 13.9.2024.

This FIR was registered based on a Complaint of

Ganapathy Bhatt, that the Accused persons had

created false documents in his name, opened fake

Bank Accounts and had obtained land acquisition

compensation, which had been wrongfully

withdrawn.

The Investigation in these proceedings is still

pending and final report is yet to be submitted in

this matter. The petitioner has not been arrayed

as an accused in all these proceedings.

11. In the light of the fact that a predicate offence in

FIR No.251/2022 alleging violation of Section 406, 409, 420

read with Section 34 of the IPC had been registered and as

Section 420 was a schedule offence under PMLA,

Respondent registered an ECIR in ECIR/BGZO/40/2023

dated 30.11.2023.

12. Consequent to the registration of an ECIR the

Department had issued summons and recorded statements

of various persons under Section 50 of the PML Act. Initial

Complaint filed by the Department had been presented

before the Hon'ble Special Court, Mangalore on 21.11.2024

and numbered Spl.C.No.233/2024.

13. In the Complaint and from the list of relied upon

documents, it would reveal that out of the 22 Accused

persons in those proceedings, the Complaint has set out the

statements of all the 22 Accused persons. Further other

statements also have been recorded. In the Complaint filed

in Spl.C.No.233/2024 and in the prayer thereof, the

Respondent had sought liberty to do further investigation in

the matter. Accordingly, further investigation had been

initiated.

14. Consequent to the further investigation initiated

the statement of the Petitioner/Accused, came to be

recorded on various dates. After the recording of the

statements, the Accused came to be arrested on 8.7.2025.

The Accused No.23 came to be produced before the Court

on 9.7.2025 and had been remanded to the custody of the

Department till 15.7.2025. After the remand period, the

Accused was produced before the Court and is presently in

judicial custody.

15. Upon being investigation done by the Respondents

in their custody, on 15.07.2025 they filed application for

Remand to Judicial Custody.

16. The role of this petitioner / accused No.23 has

been stated in para 12.1 of the supplementary complaint

dated 03.09.2025. The petitioner had close association

with KIADB officials in Dharwad and had unhindered access

to files, records of the office as revealed from the statement

of various officials and other persons. He had also admitted

in his statement recorded under Section 50 of PMLA. The

details of the transaction where the petitioner has been

involved are as under:

(i) Fraudulent compensation amounting to Rs.5,22,60,000/- was sanctioned in the case of Smt.Seetha Patil (A-5). It has been revealed from the evidence gathered during the course of search that Shri Ravi Kurbett withdrew the cash (Proceeds of Crime) from IDBI Bank, Hubli in collusion with Smt.Seetha Patil and Shri.Iranna Gouda Patil (A-18).

(ii) Smt.Kallavva Ramappa Kamdoli (A-31) received fraudulent compensation to Rs.1,42,98,047/- on 08.02.2022 against land at Sy.No.623/A/2, Plot No.32 admeasuring 0-17-01.5 in Unakal village and Rs.1,14,76,025/- on 07.03.2022 against land at Sy.No.623/A/2, Plot No.21, 23, 25, 27 in Unakal Village from KIADB. The above land was acquired by

SPQ 2008 dated 28.08.2008 in the year 2010.

17. The utilization of compensation has been narrated

in Para 12.1 (g) and (p). The petitioner stated to have

utilized the proceeds of crime in purchasing 10 (ten)

immovable properties. The details of which are mentioned

in para 12.1 (x) of additional complaint. The said properties

acquired by the petitioner through proceeds of crime have

been attached vide provisional attachment order

No.08/2025 dated 26.03.2025. The alleged scam is of

Rs.119 crores.

18. The Hon'ble Apex Court in Pavana Dibbur vs.

Directorate of Enforcement (2023) 15 SCC 91 has held

as under:

17. Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete

example, the offences under Sections 384 to 389 of the IPC relating to "extortion" are scheduled offences included in Paragraph 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary supports the above conclusion. The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled

offence as defined in clause (u) of subsection (1) of Section 3 of the PMLA.

31.1. It is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence;

19. Therefore, in view of the aforesaid decision, it is

not necessary that a person against whom the offence

under Section 3 of PMLA is alleged, must have been shown

as the accused in the scheduled offence as contended by

learned counsel for the petitioner.

20. The Hon'ble Apex Court in the case of Union of

India through the Assistant Director vs. Kanhaiaya

Prasad (2025) SCC OnLine SC 306 while considering the

challenge to grant of bail in PMLA case has observed thus:

21. As well settled, the offence of money laundering is not an ordinary offence. The PMLA has been enacted to deal with the subject of

money laundering activities having transnational impact on financial systems including sovereignty and integrity of the countries. The offence of money laundering has been regarded as an aggravated form of crime world over and the offenders involved in the activity connected with the Proceeds of Crime are treated as a separate class from ordinary criminals. Any casual or cursory approach by the Courts while considering the bail application of the offender involved in the offence of money laundering and granting him bail by passing cryptic orders without considering the seriousness of the crime and without considering the rigours of Section 45, cannot be vindicated.

21. Section 45 of PMLA provides thus:

Offences to be cognizable and non-bailable.

(1) 1[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence [under this Act] shall be released on bail or on his own bond unless--]

(i) the Public Prosecutor has been given a opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:

Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm,

[or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees] may be released on bail, if the Special Court so directs:

Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by--

(i) the Director; or

(ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government.

[(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and,

subject to such conditions as may be prescribed.]

(2) The limitation on granting of bail specified in sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail.

22. Considering the averments of the complaint and

supplementary complaint and documents enclosed there

with, there are no grounds for believing that petitioner is

not guilty of the offence under Section 3 punishable under

Section 4 of PMLA and that he is not likely to commit any

offence while on bail. On perusal of the supplementary

complaint, the investigating agency has sought permission

to file additional complaint on completion of further

investigation which is still ongoing. The same indicates that

the investigating agency is conducting further investigation

in the matter. If the petitioner is granted bail, there are

chances of he hampering the investigation and tampering

the prosecution witnesses and commit similar offence.

Considering all above aspects, the petitioner has not made

out any grounds for grant of bail.

In the result, the petition is dismissed.

Sd/-

(SHIVASHANKAR AMARANNAVAR) JUDGE

DKB