Sri. C T Muddukumar Vs State of Karnataka

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1 - NC: 2026:KHC:19302 WP No. 6167 of 2026

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7^TH DAY OF APRIL, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 6167 OF 2026 (GM-RES)

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BETWEEN:

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SRI. C T MUDDUKUMAR S/O LATE THAMMAIAH AGED ABOUT 58 YEARS ADDITIONAL DIRECTOR AND CHIEF OPERATING OFFICER DEPARTMENT OF INDUSTRIES AND COMMERCE INVEST KARNATAKA FOURUM RESIDING AT #5 22^ND CROSS MALAGALA NAGARABAVI II STAGE BENGALURU - 560 072.

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Digitally signed by CHAITHRA A Location: HIGH COURT OF KARNATAKA

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SMT B N GAYATHRIDEVI W/O C T MUDDUKUMAR AGED ABOUT 54 YEARS RESIDING AT KHATA NO. 34/66/1 SHETTIKERE HOBALI CHIKKANAYAKANAHALLI TALUK RANGANATHAPURA KOTTIGEMANE FARM VTC: BAGGANAHALLI, PO: GODEKERE DISTRICT - TUMAKURU 572214

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SMT NETHRAVATHI P W/O NARASIMHAMURHTY P D RESIDING AT PAKEERAPPANAPALYA, TUMBAADI POST KORATAGERE TALUK VTC: PAKEERAPPANAPALYA DISTRICT TUMKUR 572129.

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NC: 2026:KHC:19302 WP No. 6167 of 2026

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HC-KAR

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SMT HANUMAKKA

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W/O LATE THAMMAIAH REVANNA MATHA BEEDI CHIKANAYAKANAYALL (R) RESIDING AT CHIKNAYAKANAHALLI DISTRICT TUMKRU - 572214.

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&PETITIONERS

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(BY SRI. SHIVAPRASAD SHANTANAGOUDAR.,ADVOCATE)

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AND:

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STATE OF KARNATAKA BY LOKAYUKTHA POLCE TUMKURU DIVISION TUMAKURU REPRESENTED BY SPECIAL PUBLIC PROSECUTOR KARANTAKA HIGH COURT BUILDING BENGALURU - 560 001.

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&RESPONDENT

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(V/O DTD: 06.03.2026, VENKATESH S ARABATTI ,ADVOCATE)

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THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TOWHEREFORE, IN THE VIEW OF THE AFOREMENTIONED GROUNDSAND THE GROUNDS TO BE URGED AT THE TIME OF HEARING, IT IS MOST RESPECTFULLY PRAYED THAT THIS HON BLE COURT MAY BE PLEASED ISSUE A WRIT OF MANDAMUS OR ORDER OR DIRECTION AND THEREBY DIRECT THE RESPONDENT POLICE TO INTIMATE THE RESPECTIVE BANKS TO DEFREEZE THE FOLLOWING BANK ACCOUNTS IN THE INTEREST OF JUSTICE AND EQUITY.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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3 - NC: 2026:KHC:19302 WP No. 6167 of 2026

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HC-KAR

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ORAL ORDER

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The captioned petition is filed seeking a mandamus directing the respondent-police to intimate the respective banks to defreeze the following accounts held by the

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petitioners:

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"I. Account Holder Name: C.T. Muddukumar SB A/C No.: 38191390894 Bank: State Bank of Indi, Dr. Ambedkar Veedhi, Bengaluru

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II. Account Holder Name: C.T. Muddukumar SB A/c No: 64063149157 Bank: State Bank of India, Bank Road Branch, Tumakuru

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III. Account Holder Name: C.T. Muddukumar SB A/c No: 1005 Bank: Magadi Kempegowda Credit Co-Operative Society Ltd., K.H.B. Colony, Bengaluru

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IV. Account Holder Name: C.T. Muddukumar SB A/c No: 694 Bank: Sri. Kavirathna Kalidasa Pattina Sahakara Sangha, Gurushanthappa Complex, Tumakuru

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V. Account Holder Name: B.N. Gayathridevi SB A/c No: 35839690682 Bank: State Bank of India, Malagala Road Branch, Bengaluru

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VI. Account Holder Name: B.N. Gayathridevi SB A/c No: 0530201000480 Bank: Canara Bank, Chikkanayakanahalli Branch, Bengaluru

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HC-KAR

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VII. Account Holder Name: Nethravathi Current A/c No: 120024208547 Bank: Canara Bank Kodandaramapuram Branch, Bengaluru

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VIII. Account Holder Name: C.T. Muddukumar & B.N. Gayathridevi (Joint Account) S.B. A/c No: 20128596666 Bank: State Bank of India, Malagala Road Branch, Bengaluru

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IX. Account Holder Name: Hanumakka Current A/c No: 37779717042 Bank: State Bank of India, Vasanthanarasapura Branch, Tumakuru

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X. Account Holder Name: Hanumakka Current A/c No: 20388785623 Bank: State Bank of India, Vasanthanarasapura Branch, Tumakuru"

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Heard the learned counsel for the petitioners

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and learned standing counsel appearing for respondent.

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Based on a source report, the Superintendent of

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Police attached to the respondent3Karnataka Lokayukta addressed a communication dated 09.05.2024 to the Inspector General of Police, Karnataka Lokayukta, setting out the allegations against the first petitioner and seeking permission to initiate appropriate proceedings. Upon securing the requisite approval, the jurisdictional

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HC-KAR

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Investigating Officer, invoking Section 17(c) of the Prevention of Corruption (Amendment) Act, 2018 (for short, <the Act=), proceeded to register a case in Crime No.8/2024 against the first petitioner for the offences punishable under Section 13(1)(b) read with Section 13(2) of the Act. Consequent to the registration of the said crime, the bank accounts of the first petitioner as well as his family members were subjected to debit freeze.

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Being aggrieved, the petitioners are stated to have challenged the very registration of the FIR as well as the source report before this Court in Criminal Petition No.8907/2024, wherein this Court has granted an interim order staying further proceedings. It is the specific assertion of the petitioners that the matter is presently subjudice in the said criminal petition. Pursuant to the interim protection granted by this Court, the petitioners filed an application under Sections 451 and 457 of the Code of Criminal Procedure, 1973 (for short, <Cr.P.C.=) before the VII Additional District and Sessions Judge and

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NC: 2026:KHC:19302 WP No. 6167 of 2026

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Special Judge (PC Act), seeking defreezing of the bank accounts by placing reliance on the interim order of stay. However, the Special Court, by its impugned order, rejected the said application on the ground that in view of the stay of proceedings, it lacked jurisdiction to entertain

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or pass orders on the application. Being aggrieved by the said rejection, the petitioners are before this Court in the present writ petition.

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Learned counsel appearing for the respondent3 Lokayukta would vehemently contend that the action of debit freezing has been lawfully undertaken by the Investigating Officer on the basis of a duly prepared source report disclosing prima facie material indicative of acquisition of disproportionate assets. He would submit that the amounts lying in the bank accounts constitute suspected tainted money and permitting the petitioners to operate such accounts would frustrate the very object of investigation under the provisions of the Act. It is therefore contended that no indulgence be shown in

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favour of the petitioners and that the application for defreezing was rightly rejected by the Special Court. The respondent has also placed on record its detailed objections opposing the grant of any relief.

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Per contra, learned counsel appearing for the petitioners, placing strong reliance on the judgment of the Hon9ble Apex Court in State of West Bengal v. Anil Kumar Dey¹ , would contend that once the very initiation of criminal proceedings is stayed by this Court, all consequential actions, including the continued debit freeze of the bank accounts, cannot be permitted to operate to the prejudice of the petitioners. He would submit that the freezing of accounts has resulted in severe financial hardship not only to the first petitioner but also to his family members, whose accounts have also been affected. Emphasizing the binding nature of the interim order passed by this Court in Criminal Petition No.8907/2024, learned counsel would urge that appropriate directions be

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1 2025 INSC 1413.

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8 - NC: 2026:KHC:19302 WP No. 6167 of 2026

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HC-KAR

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issued to defreeze the bank accounts and permit their operation, subject to such conditions as this Court may deem fit.

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Upon careful consideration of the material on record, this Court finds that though the respondent3 Investigating Agency has initiated proceedings under Section 13(1)(b) read with Section 13(2) of the Act, it is not in dispute that further proceedings pursuant to the registration of FIR in Crime No.8/2024 are presently stayed by this Court in Criminal Petition No.8907/2024. In such circumstances, the continuation of debit freeze on the bank accounts of the petitioners would undoubtedly result in serious prejudice, particularly when the very substratum

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of the proceedings is under challenge and remains interdicted by an order of stay. At the same time, this Court cannot lose sight of the interest of the Investigating Agency, which is entitled to ensure that the alleged proceeds of crime, if ultimately established, are preserved and made available for appropriate action in accordance

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9 - NC: 2026:KHC:19302 WP No. 6167 of 2026

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with law. Therefore, this Court is of the considered view that the equities between the parties require to be suitably balanced. While the petitioners, in light of the interim order of stay, are entitled to seek operation of their bank accounts, adequate safeguards must be imposed to secure

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the amounts presently lying in such accounts, so as to protect the interest of the prosecution in the event the challenge to the proceedings does not succeed.

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Insofar as the submission of the learned counsel for the respondent that the petitioners be directed to furnish a bank guarantee is concerned, this Court is of the opinion that such a condition would be onerous in the facts and circumstances of the case. Instead, the ends of justice would be met if the petitioners are directed to furnish an indemnity bond for the value of the amounts lying in the frozen accounts, along with a surety for the like sum, to the satisfaction of the jurisdictional Trial Court. Such a condition would sufficiently safeguard the interest of the respondent3Investigating Agency while at

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HC-KAR

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the same time alleviating the hardship caused to the petitioners due to the continued freezing of their accounts.

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Accordingly, this Court proceeds to pass the

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following:

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ORDER

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(i) The writ petition is allowed in part.

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(ii) The impugned order passed by the VII Additional District and Sessions Judge and Special Judge (PC Act), rejecting the petitioners9 application filed under Sections 451 and 457 of the Code of Criminal Procedure, 1973, stands set aside.

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(iii) The respondent3Investigating Agency is directed to defreeze the bank accounts standing in the name of the petitioners forthwith, subject to the condition that the petitioners shall, within a period of two (2) weeks from the date of receipt of a certified copy of this order, furnish an indemnity bond for the value of the amounts lying in the respective frozen accounts, along

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with one surety for the like sum, to the satisfaction of the jurisdictional Trial Court.

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(iv) Upon compliance of the above condition, the concerned banks shall permit the petitioners to operate the accounts in accordance with law.

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(vi) It is further clarified that this order is passed having regard to the interim stay granted by this Court and shall not be construed as an expression on the merits of the allegations or the pending criminal proceedings.

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(vii) Liberty is reserved to the respondent3 Investigating Agency to seek appropriate orders in accordance with law, in the event of any violation of the conditions imposed herein.

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Sd/(SACHIN SHANKAR MAGADUM) JUDGE

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ALB

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List No.: 1 Sl No.: 55

Sri. C T Muddukumar v. State of Karnataka

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Sri. C T Muddukumar v. State of Karnataka

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