The Karnataka High Court has refused to quash an FIR invoking provisions of the Unlawful Activities (Prevention) Act, 1967 (UAPA) against six persons accused of operating an alleged foreign funding network involving withdrawals of over ₹92.55 crore through foreign debit cards, holding that the allegations raised issues of national security warranting a full-fledged investigation.
Justice M. Nagaprasanna dismissed two petitions challenging the crime registered by the Kothanur Police on the basis of information shared by the Enforcement Directorate (ED). The FIR invokes offences under the Bharatiya Nyaya Sanhita (BNS) and Sections 13, 17 and 18 of the UAPA.
According to the prosecution, the petitioner (Accused No. 2) was intercepted at Bengaluru’s Kempegowda International Airport while allegedly carrying 24 international debit cards issued by Truist Bank, USA. Subsequent searches by the ED allegedly uncovered a larger network linked to a US-based organisation, The Timothy Initiative (TTI).
The ED alleged that between November 2025 and April 2026, approximately ₹92.55 crore (USD 9.99 million) was withdrawn across India using foreign debit cards, while nearly ₹40 crore had been withdrawn between January 2024 and March 2026 from states including Chhattisgarh and Assam. The agency claimed the cards were issued in the common name “Santosh Kumar” to conceal the identities of users and circumvent Know Your Customer (KYC) norms.
According to the ED, the funds were routed through foreign debit cards and withdrawn in Left Wing Extremism (LWE)-affected regions, allegedly to finance extremist activities. It further alleged that more than 1,000 such debit cards had been circulated in India over the years.
The petitioners, however, argued that the ED lacked statutory authority to communicate information to the State Police for registration of an FIR and contended that the invocation of the stringent provisions of the UAPA was wholly unwarranted. They also submitted that the allegations merely reflected suspicion and disclosed no material connecting them to terrorist activities.
Rejecting these submissions, the Court held that Section 66(2) of the PMLA expressly authorises the Director or authorised officer to share information with the concerned agency if, on the basis of material in its possession, it forms an opinion that provisions of any other law have been contravened. The Court held that the provision was intended to ensure that information uncovered during one investigation is not confined to a single statute when it discloses violations under another law. It further observed that a restrictive interpretation would defeat the legislative intent underlying Section 66(2). The court remarked: “Statutory interpretation cannot be so myopic as to defeat the plain purpose of the enactment.”
The Court also rejected the contention that proceedings initiated under the Foreign Exchange Management Act, 1999 (FEMA) only permit search and seizure and not disclosure of information to other agencies. It held that the PMLA and FEMA operate in cognate fields and must be construed harmoniously rather than in isolation.
On the challenge to the invocation of the UAPA, the Court held that at the stage of considering a petition under Section 528 of the BNSS, it was not required to determine guilt but only to examine whether prima facie material existed to justify an investigation. It found that the detailed communication forwarded by the ED under Section 66(2) of the PMLA contained sufficient material to warrant investigation into the alleged offences under the UAPA and that any deeper scrutiny at this stage would trench upon the investigative domain.
Emphasising the seriousness of the allegations, Justice Nagaprasanna observed that the case concerned issues of national security, remarking:
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“Therefore, this is not a case warranting exercise of inherent jurisdiction to nip the crime in the bud. The case concerns National security. National security is the invisible architecture upon which the sovereignty, stability and constitutional order of a nation rest. One of the gravest threats to National security in the present times is, the clandestine funding of extremism. Funding, therefore, becomes the oxygen that enables extremist movements to survive and proliferate. The danger of extremist financing lies not merely in the money transferred, but in the consequences it unleashes. Left unchecked, such funding can transform ideological extremism into organized violence, threatening National unity and public safety. The preservation of National security, therefore, demands robust vigilance against financial channels that sustain extremism. Effective intelligence gathering, strict regulatory oversight, inter-agency coordination, and rigorous enforcement of antimoney laundering. Institutions tasked with financial monitoring and security enforcement must act with both precision and urgency to dismantle these covert networks. Protecting National security is thus a collective constitutional obligation, and preventing the funding of extremism forms an indispensable part of that solemn duty.
The Courts must therefore be circumspect in stifling investigation, particularly where allegations touch upon issues of economic subversion intertwined with National security. In the teeth of such accusations… investigation is not merely permissible, it becomes imperative.”
Accordingly, the High Court dismissed both petitions while clarifying that the observations made in the order were confined to deciding the quashing petitions and would not influence the ongoing investigation or any future proceedings.
