MICAH MARK v. STATE OF KARNATAKA & ORS
Section 66(2) of the PMLA obliges the Enforcement Directorate to share with the concerned agency information it holds showing contravention of any other law, and is not limited to PMLA offences, so a police case registered on such information is not without authority; where the material, prima facie, alleges offences including conspiracy and the funding of unlawful activity touching national security, the Court will not interdict the investigation at the threshold.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-10-07
After a search for suspected FEMA violations, the ED told the Karnataka police that a US-based organisation had funded large cash withdrawals in India through ATM cards in a generic name, and that some withdrawals were in areas affected by left-wing extremism. An FIR including UAPA offences followed. The accused sought quashing; the Court refused because the investigation was at an early stage.
What happened
The ED searched under section 37 of FEMA on 18 and 19 April 2026 and intercepted the first petitioner (accused no. 2) at Kempegowda International Airport with 24 international debit cards issued by a US bank. Its letter of 6 May 2026 to the Director General of Police under section 66(2) of the PMLA alleged that a US-based organisation, The Timothy Initiative, used such cards, printed in the name 'Santosh Kumar' and coded by region, to withdraw about ₹92.55 crores (USD 99,95,240) between November 2025 and April 2026 and funds of about ₹44 crores between January 2024 and March 2026; that over a thousand cards were distributed; that data was deleted remotely after the search; and that cash withdrawals of about ₹6.34 crores in Dhamtari and the Bastar region of Chhattisgarh, including ₹3.2 crores in 3,200 transactions of ₹10,000 from a single ATM, suggested funding of left-wing extremism, amounting to unlawful activity under UAPA. The Commissioner of Police received further letters on 6 and 10 June 2026 and Crime No. 202 of 2026 was registered on 11 June 2026 under sections 318(4), 335(a)(ii), 336(3), 238, 61(2) and 190 of the BNS and sections 13, 17 and 18 of the UAPA. The petitioners argued that the ED had no power to prompt registration of a crime, there was no ECIR, UAPA was added to look draconian, and no material linked them; accused no. 2 said he was assaulted in custody and had challenged the summons in W.P. No. 13156 of 2026.
Questions before the court
- Can the FIR, registered on the ED's information under section 66(2) of the PMLA with UAPA charges, be quashed at this stage?
Why the court ruled this way
Section 66(2) requires the Director, if of the opinion on the information in his possession that provisions of any other law have been contravened, to share it with the concerned agency, so the statute ensures that information found under one law does not remain siloed, and reading it to cover only PMLA offences would make clause (i) of section 66(1) irrelevant (paragraph 11). The ED's communication was a detailed dossier on the modus operandi, flow of funds and ATM withdrawals and recorded a prima facie opinion that UAPA offences might be attracted (paragraphs 10 and 11). The matter began with possession of 24 cards bearing the same name, the ED could not be faulted for sharing the information, and PMLA and FEMA are to be read in tandem (paragraphs 12 to 14). The UAPA provisions, sections 13, 17 and 18, were noticed; the Court is not to return findings of guilt but only to see whether prima facie material justifies investigation, and the communication was not so barren as to warrant interdiction (paragraph 15). The companion petitioners' claim of no role was contrary to the record, and funding of extremism being a grave threat to national security makes investigation imperative (paragraphs 16 to 18).
Controlling point
The FIR is not liable to be quashed at the threshold.
Order and next steps
The petitions were dismissed, pending applications disposed of, and the petitioners left at liberty to avail all remedies in law if a final report is laid; the observations are only for deciding the petitions under section 528 BNSS and do not bind or influence the ongoing investigation.
Practical implications
An accused cannot defeat an FIR merely by saying the ED lacked power to send information to the police; the challenge has to be to the existence of prima facie material for each offence.
Limits of this ruling
- All facts are allegations made by the ED and the police; the Court made no finding on the truth of the allegations, on UAPA applicability, or on the custodial assault claim, which is before another Bench.
Law and judgment source
- Prevention of Money-Laundering Act, 2002, section 66
- Unlawful Activities (Prevention) Act, 1967, sections 2(o), 13, 17 and 18
- Foreign Exchange Management Act, 1999, section 37
- Bharatiya Nagarik Suraksha Sanhita, 2023, section 528
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Source checked: 2026-10-07 · Judgment paragraphs: paragraphs 1–19 · Later case history: not verified. Verify appeals, stays and subsequent orders before reliance.
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