Can proceeds of crime in PMLA case exceed total sum in predicate offence? Karnataka HC asks ED in K C Veerendra Puppy arrest case

Justice M I Arun of the Karnataka High Court posed the question to the ED during the hearing of a plea filed by the Chitradurga MLA’s wife, R D Chaitra, against her husband’s arrest.

“Admittedly, there has to be a predicate offence without which there cannot be a PMLA case. The entire structure of PMLA is parasitic in nature. It cannot sustain itself independently. There has to be a predicate offence. The pendency of which is sufficient for you to investigate,” Justice Arun said.

“In this FIR, the sum alleged is the cheating of ₹ 30,000. Proceeds of crime is money derived from the criminal activity which is made out as the predicate offence. If you quantify the amount as ₹ 30,000 in the FIR that is alive then can there be criminal proceeds that exceed ₹30,000? This is required to be answered,” the judge said.

“Nothing prevents you from filing a fresh FIR for cheating with the name of the accused and continuing your proceedings? Can you sustain allegations beyond ₹ 30,000?” the court said.

‘How did ED add my name to case?’

Siddharth Dave, the senior counsel for Puppy, argued that he was not named in the FIR for the predicate offence, and not called for investigations in the FIR.

“The money alleged to have been cheated has not percolated to me. When I am not there at all, how did ED at the stage of investigation add my name to the case? How do they know that I am involved? Have they collected all the gambling FIRs and are now trying to connect me to these FIRs?” Dave argued.

Additional Solicitor General of India (ASG) Arvind Kamath, who appeared on behalf of the ED, argued that an individual need not be named in the predicate FIR for PMLA proceedings.

“He need not be the recipient of proceeds. Receipt of proceeds of crime is one of the elements by which an offence is committed. The language used in the law is directly or indirectly he is involved in the process or activity in respect of generation. If I can show links to a crime in which the proceeds of crime are generated that is sufficient,” the ASG argued.

“There cannot be a mathematical precision between the crime amount and proceeds of crime. For me, the predicate offence need only be the tip of the iceberg for me, and when I see the tip, I can go down and find out how big is the iceberg,” Kamath said.

Justice Arun said the PMLA proceedings have “to be linked to the predicate criminal case and not be independent of it. There has to be material regarding this. Otherwise a separate scheduled offence can be registered by the regular police and you can proceed”.

Another senior counsel, H S Chandramouli, appearing for Puppy, stated that it had been 48 days since the MLA’s arrest in a case where he had not been directly linked.

The matter was adjourned to October 13 by the high court bench to allow a full-fledged response by the ED to its query regarding the linkage between the quantum of funds involved in the predicate offence and the PMLA case.

ED seizures in K C Veerendra Puppy case cross ₹ 150 crore mark

The arguments in the Karnataka High Court came a day after the ED announced the further seizure of ₹ 50 crore worth of gold linked to the arrested Congress MLA.

“Directorate of Enforcement (ED), Bengaluru Zonal Office, has carried out search operations on 09.10.2025 under the provisions of PMLA, 2002 in the case of K C Veerendra and others related to cheating the public in illegal online betting. During the search, 24 24-carat gold bullion weighing 40 kgs (approx.) worth Rs. 50.33 Crore were seized from two lockers in Challakere,” the agency said in an official statement.

“Earlier, ED has seized assets worth Rs 103 crore in the form of around 21 kgs of gold bars, cash, gold and silver jewellery, bank accounts and high-end vehicles. Total seizure in the case is more than Rs 150 crore till date,” the ED added.

The ED stated that its investigation had revealed that Puppy, in association with other friends and family members, was allegedly involved in operations of many illegal online betting websites, viz. King567, Raja567, etc, and was “cheating innocent players through the same”. The funds collected from players have been routed using several gateways like FonePaisa, etc, the agency added.

“The money collected is routed through several mule accounts, which are sourced by these betting operators from intermediaries from all across India. ED investigation has revealed a nexus of online betting apps with isolated instances of cybercrime across India, by way of mule accounts creation in the name of individuals in exchange for petty sums,” the ED said.

“The estimated turnover of these betting applications being controlled by K C Veerendra is more than ₹2,000 crore,” the statement added.

The counsel for Puppy have argued in the courts that the ED case of money laundering against the Congress MLA is without a legal basis since there were no predicate offences pending against him as claimed by the agency in its grounds of arrest on August 23.

The counsel have also argued that Puppy is not named in any FIR, which has alleged fraud against online betting apps. There were also no summons issued under Section 50 of the PMLA for questioning the MLA after an Enforcement Case Information Report was registered in July and ahead of his August 23 arrest, the counsel have argued.

The case against Puppy

K C Veerendra Puppy is the son-in-law of Kannada film actor Doddanna. The CBI arrested Puppy in 2016 for attempting to launder money during the demonetisation period after income tax officials seized ₹ 5.7 crore of cash in new ₹ 2,000 notes in a secret chamber in the bathroom of his Chitradurga home. He was later discharged from the case for lack of evidence of wrongdoing.

Puppy is considered to be a close associate of Karnataka Deputy Chief Minister D K Shivakumar. Among the premises linked to Puppy that were searched by the ED was that of Anil Gowda, the brother of Congress RR Nagar MLA candidate Kusuma G, a close associate of Shivakumar’s brother and former MP, D K Suresh.

According to the ED, Puppy is one of the nine accused in three cases of fraud involving betting sites that have been registered in Goa—where the MLA owns casinos—Hyderabad and Vadodara. The ED has also alleged that the MLA received funds from illegal betting sites through three firms operated by him—ABH Infrastructure, AVSVA Enterprises and Diamond Softech.

The new FIRs to which the ED has linked Puppy are “complaints that are registered in different parts of the country by users” and he is not linked in the cases, his counsel have argued.

On August 22 and 23, the ED carried out searches at 31 locations linked to Puppy, as well as his brothers and associates. The ED also arrested the MLA in Gangtok, Sikkim, on August 23 while he was on a business visit.

The searches on the Congress MLA’s gambling and gaming businesses came close on the heels of Parliament passing a bill to ban online real money-based gaming activities.

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