Karnataka High Court Declines Writ Petition Against ED Property Attachment Under PMLA Despite Predicate Offense Quashed

Karnataka High Court Refuses to Entertain PMLA Attachment Challenge Despite Predicate Offense Quashed

The Karnataka High Court has declined to entertain a writ petition challenging an Enforcement Directorate attachment order under the Prevention of Money Laundering Act, even though the predicate criminal offense underlying the money laundering case had been quashed. While petitions under Article 226 of the Constitution are technically maintainable against such orders, the court held that the PMLA operates as a complete code with its own structured hierarchy of remedies. The High Court directed the PMLA Appellate Tribunal to consider the effect of the quashed predicate offense on the attachment order.

Dr. Bhimashankar Bilgundi, former President of the Hyderabad Karnataka Education Society, was accused of siphoning over Rs 81 crore from postgraduate medical students. After the predicate criminal offense was quashed, he approached the High Court seeking to challenge the ED's attachment of his properties. Rather than granting the petition, the Court recognized the PMLA Appellate Tribunal as the appropriate forum for addressing the consequences of the quashed predicate offense.

The complete code doctrine

The Court's reasoning rests on two distinct propositions: Article 226 petitions are not automatically barred in attachment cases, but the PMLA's internal appellate structure must be respected as the primary mechanism for challenging attachment orders. This distinction matters for litigants and their counsel. The constitutional right to petition the High Court remains available, yet the High Court has signaled it will exercise discretion to decline such petitions when statutory remedies exist and remain unutilized.

Dr. Bilgundi's challenge must now proceed through the PMLA Appellate Tribunal. The High Court directed that the Tribunal shall entertain an appeal on its merits if preferred within 30 days, with specific instructions to consider the effect of the predicate offense's obliteration on the attachment order. This represents a procedural reset rather than a substantive dismissal. The Tribunal will examine whether the quashing of the underlying criminal case should lead to the release of attached assets.

The Court's characterization of the PMLA as a complete code draws from established jurisprudence recognizing that certain statutory schemes contain comprehensive frameworks for relief and redressal. When Parliament enacts such a scheme, courts generally respect the hierarchy of remedies embedded within it. In the PMLA framework, this hierarchy includes the Adjudicating Authority as the first instance, the Appellate Tribunal as the appellate forum, and the High Court as the final judicial check through writ jurisdiction. By declining to bypass this structure, the Karnataka High Court reinforced the principle that even where a fundamental premise of a case—the predicate offense—disappears, the statutory process must be followed.

JSW Steel and the abuse of process

This approach aligns with broader judicial practice in recent Karnataka High Court decisions concerning attachment and confiscation orders. In a separate matter involving JSW Steel, the High Court dismissed writ petitions challenging PMLA attachment orders, characterizing the company's attempt to bypass the Appellate Tribunal as a "gross abuse of the process of the Court." That judgment, delivered on September 30, 2026, by Justices D K Singh and T M Nadaf, emphasized that pending statutory appellate proceedings cannot be circumvented through writ petitions.

JSW Steel had sought to quash ED proceedings and provisional attachment orders related to allegations of illegally mined iron ore procurement. The High Court found that JSW Steel had been given an effective opportunity to present its case before the authorities and that the Appellate Tribunal had not violated natural justice principles. The Supreme Court had previously declined to entertain JSW Steel's appeal against the provisional attachment order, further reinforcing the finality of the PMLA process at each stage.

When the predicate offense vanishes

The quashing of a predicate offense does present a genuine legal problem for attachment orders. If the underlying criminal activity never occurred, how can assets be attached for money laundering? This logic is superficially compelling, but the PMLA's structure contemplates such scenarios. The Act distinguishes between the predicate offense and the money laundering offense. While a quashed predicate offense may undermine the case for money laundering, it does not automatically invalidate attachment orders already issued. The Appellate Tribunal has the authority to examine this nexus and determine whether the attachment should be maintained, modified, or discharged.

For practitioners, the judgment carries several practical implications. Filing a writ petition immediately upon attachment, even with colorable arguments about defects in the predicate case, is unlikely to succeed in the Karnataka High Court. The Court will likely direct such petitioners to exhaust the PMLA appellate process. The 30-day window for preferring an appeal to the Tribunal is critical. Missing this deadline could foreclose the opportunity to challenge the attachment order through the statutory process. When preparing arguments before the Tribunal, counsel should gather evidence demonstrating how the quashed predicate offense affects the money laundering allegations.

Criminal and civil attachment

The decision raises questions about the relationship between criminal and civil attachment processes. The ED's authority to attach property derives from the PMLA, which is a civil statute with penal provisions. The predicate offense, by contrast, is a criminal matter. When the criminal matter is quashed, the ED's power to attach is not automatically extinguished because the PMLA operates independently. However, the substantive justification for attachment—that money laundering occurred—may be severely weakened. The Tribunal must weigh these competing considerations.

Dr. Bilgundi's case will now depend on the Tribunal's assessment of whether the quashed predicate offense renders the attachment order unsustainable. If the Tribunal finds that the predicate offense was the essential foundation for the money laundering case, it may order the release of attached assets. Conversely, if evidence exists of money laundering through other channels or if the Tribunal finds that the PMLA case can stand independently, the attachment may be upheld. The outcome will turn on the specific facts and the Tribunal's interpretation of the evidence.

The Karnataka High Court's approach reflects institutional deference to specialized statutory bodies. The PMLA Appellate Tribunal possesses expertise in money laundering law and has examined the case from its inception. The High Court's role is not to substitute its judgment at the first opportunity but to ensure that the Tribunal performs its function fairly and within legal bounds. Only if the Tribunal acts arbitrarily or violates procedural fairness should the High Court intervene through writ jurisdiction.

For the ED, this decision affirms that attachment orders, once issued, retain their force even when predicate offenses are quashed, at least until an appellate body determines otherwise. This protects the agency's enforcement capacity and prevents defendants from easily dismantling attachment orders through collateral criminal proceedings. For Dr. Bilgundi, the path forward is clear: present the best possible case before the Tribunal within the statutory timeframe and hope that the quashing of the predicate offense persuades the Tribunal to discharge the attachment. The Tribunal's decision will determine whether his assets are released or remain frozen.