Karnataka HC Upholds ED Arrest Of Congress MLA Veerendra In High-Profile Money Laundering Case

Last Updated:October 16, 2025, 17:14 IST

The court dismissed a writ petition filed by the MLA's wife, challenging the arrest as illegal, arbitrary, and violative of fundamental rights

The Karnataka High Court’s decision reinforces the ED’s authority to pursue high-profile money-laundering cases, particularly those involving cyber fraud and illegal betting. File image

In a significant development, the Karnataka High Court has upheld the arrest of Chitradurga district legislator KC Veerendra, also known as Puppy, by the Enforcement Directorate’s Bengaluru zonal office, under the Prevention of Money Laundering Act (PMLA), 2002. The court dismissed a writ petition filed by the Congress MLA’s wife, RD Chaitra, challenging the arrest as illegal, arbitrary, and violative of fundamental rights.

The ruling, delivered on October 15, marks a crucial milestone in the ED’s ongoing investigation into a large illegal betting and money-laundering network allegedly masterminded by Veerendra.

Background of the Case

The ED launched its investigation following multiple first information reports (FIRs) alleging cheating through illegal online and offline betting and gambling platforms. The probe focused on operations involving platforms like King567, allegedly operated by KC Veerendra and his associates. Funds from these illicit activities were reportedly funnelled through shell companies and casinos across India, Sri Lanka, Nepal, and Dubai, with the proceeds of crime (POC) estimated to be worth several crore rupees.

Preliminary findings revealed Veerendra as the alleged kingpin of a sophisticated network engaged in illegal betting and money-laundering operations. The ED claims that family-run entities and overseas casinos were used to launder the proceeds. Based on substantial evidence, Veerendra was arrested in Gangtok, Sikkim, on August 23, and subsequently remanded to 15 days of ED custody by the special court for PMLA cases. He remains in judicial custody as the investigation continues to uncover the full extent of the racket.

The Writ Petition and Legal Arguments

RD Chaitra’s writ petition sought to declare Veerendra’s arrest unlawful, arguing that it lacked jurisdiction and violated due process under Section 19 of the PMLA. Her counsel contended that most FIRs against Veerendra had been closed or compromised, with only FIR No. 218/2022, involving a Rs 30,000 dispute, still pending. This FIR, they argued, was treated as a civil matter with a filed ‘B’ report (closure report), and no direct allegations linked Veerendra to betting operations or payment gateways like FonePaisa Payment Solutions Pvt Ltd.

In response, the additional solicitor general (ASG) for Karnataka, representing the ED, presented a robust defence. The ASG argued that the Rs 30,000 complaint was merely “the tip of the iceberg" in a much larger betting racket uncovered by the ED. The agency provided sufficient material to establish a “reason to believe" under Section 19 of the PMLA, justifying Veerendra’s arrest. The ASG emphasised that custodial interrogation was essential to trace the trail of laundered funds and identify foreign links in the operation.

The ED further clarified that under Section 2(1)(u) of the PMLA, the POC encompasses not only property derived directly from the scheduled offence but also any property obtained through related criminal activities. Thus, the POC in this case far exceeds the amount cited in the FIR, as the investigation revealed a sophisticated network luring and cheating numerous individuals through illegal betting apps.

High Court’s Observations and Ruling

The High Court, after reviewing the submissions and evidence, upheld the ED’s actions. The court noted that the existence of a predicate offence under the PMLA was satisfied, as proceedings under the Act can continue until a closure report is judicially accepted. The ED’s justification for custodial interrogation was deemed reasonable, given the material evidence pointing to Veerendra’s involvement in operating illegal betting platforms, cheating individuals, and laundering the resulting proceeds.

The court also reviewed extracts of the ED’s “reasons to believe" and grounds for arrest, finding sufficient grounds to support the agency’s actions. It concluded that there was adequate material to establish Veerendra’s guilt under the PMLA, 2002. Consequently, the writ petition was dismissed, with the court granting liberty to the petitioner to file for bail.

Ongoing Investigation and Seizures

The ED’s investigation has already led to the seizure of over Rs 150 crore in proceeds of crime, with further probes underway to uncover additional assets and international connections.

The agency is working to dismantle the complex web of shell companies and offshore entities allegedly used to launder funds, signalling that more revelations may be forthcoming.

Implications of the Ruling

The Karnataka High Court’s decision reinforces the ED’s authority to pursue high-profile money-laundering cases, particularly those involving cyber fraud and illegal betting. The ruling also underscores the broad scope of the PMLA in addressing proceeds of crime that extend beyond the initial complaint, setting a precedent for similar cases.

As the investigation progresses, all eyes are on the ED’s next steps and whether additional arrests or seizures will follow. The case has sparked widespread attention, given Veerendra’s political stature and the scale of the alleged financial activities.

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