Funding Is Oxygen Of Extremism: Karnataka HC Upholds UAPA Case Over US-Linked Fund Transfers [Read Order]

Bengaluru: The Karnataka High Court has dismissed two connected petitions filed under Section 528 of the BNSS, 2023, seeking to quash an FIR against six individuals accused of routing crores of rupees in foreign funds into India through foreign debit cards, with the Enforcement Directorate alleging that part of the money financed Left Wing Extremism in Karnataka, Chhattisgarh and Jharkhand.

Justice M. Nagaprasanna was hearing Criminal Petitions seeking quashing FIRs registered at Kothanur Police Station, Bengaluru, for offences under Sections 318(4), 335(a)(ii), 336(3), 238, 61(2) and 190 of the Bharatiya Nyaya Sanhita, 2023, and Sections 13, 17 and 18 of the Unlawful Activities (Prevention) Act, 1967.

According to the Enforcement Directorate's case, accused No.2 was intercepted at Kempegowda International Airport with 24 international debit cards issued by Truist Bank, USA. Search and seizure conducted on 18.04.2026 and 19.04.2026 under FEMA allegedly unearthed a wider network linked to an entity called The Timothy Initiative, based in the United States. Between November 2025 and April 2026, funds of approximately Rs.92.55 crores were allegedly routed into India through such cards, and between January 2024 and March 2026, nearly Rs.40 crores were allegedly withdrawn through the same mechanism across Chhattisgarh and Assam.

The cards were allegedly issued in the generic name "Santosh Kumar" and coded region-wise as "NE-1", "NE-2" and "Southern Region-1" to conceal actual users and circumvent KYC norms. Ajit Varghese Mathai, accused No.3, allegedly oversaw the financial operations of The Timothy Initiative in India, while Jonathan S. Rajan allegedly supervised its overall operations, with the remaining accused allegedly facilitating ATM withdrawals and deployment of funds. The Directorate's communication dated 06.05.2026 further alleged cash withdrawals exceeding Rs.6.34 crores in Naxal-affected regions of Chhattisgarh, including over Rs.3.2 crores from a single ATM in Dhamtari across 3,200 transactions.

Appearing for accused No.2, senior counsel Sri M.S. Shyam Sundar submitted that the Directorate had no power under the PMLA, 2002 to communicate information for registration of a crime, that no ECIR had been filed to invoke Section 66(2), and that UAPA provisions had been deliberately foisted upon his client without prima facie material connecting him to terrorist activity. He pointed to a pending writ petition alleging custodial assault by the Directorate, suggesting the FIR followed on its heels. Senior counsel Sri S. Basavaraj, for the accused in the connected petition, reiterated these contentions and submitted there was no material linking the remaining accused to accused No.2 beyond mere suspicion.

The State, represented by Sri B.N. Jagadeesha, opposed the petitions, submitting that investigation had only just begun and that, in the garb of missionary work, the accused were indulging in unlawful activities. The Directorate, represented by Sri Madhu N. Rao, submitted that the accounts had issued nearly 900 debit cards, that close to Rs.100 crores had been withdrawn, and that the funds financed Left Wing Extremists in Karnataka, Chhattisgarh and Jharkhand, a banned terrorist outfit, submitting the case was only the tip of the iceberg.

Examining Section 66 of the PMLA, the Court held that sub-section (2) empowers the Director to share information with concerned agencies upon forming an opinion that any other law stands contravened, and that confining this power to PMLA offences alone would render the statutory scheme nugatory. FEMA and PMLA had to be read harmoniously, and the communication dated 06.05.2026 was "neither cryptic nor perfunctory" but a detailed dossier recording a prima facie opinion attracting UAPA offences.

On Sections 13, 17 and 18 of the UAPA, the Court held that at this stage it was required only to examine whether prima facie material existed to justify investigation, and the material available could not be said to be so barren as to warrant judicial interdiction. Rejecting the contention that the accused in the connected petition had no role to play, the Court noted that the chain of events was established in the Directorate's communication under Section 66(2), and this was not a case warranting exercise of inherent jurisdiction to nip the crime in the bud.

Underscoring the national security dimension of the case, the Court observed that "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." Left unchecked, the Court added, such funding can transform ideological extremism into organised violence, threatening national unity and public safety.

Holding that courts must be circumspect in stifling investigation where allegations touch upon economic subversion intertwined with national security, the Court observed that "in the teeth of such accusations as observed hereinabove, investigation is not merely permissible - it becomes imperative."

The Court accordingly dismissed both petitions, clarifying that the petitioners remained at liberty to avail all remedies available in law should a final report be laid against them, and that its observations were confined to Section 528 BNSS proceedings and would not bind the ongoing investigation.

Appearances:

For the Petitioner in Crl.P.No.8401/2026: Sri M.S. Shyam Sundar, Senior Advocate a/w Sri Timothy Charles, Advocate.

For the Petitioners in Crl.P.No.8417/2026: Sri S. Basavaraj, Senior Advocate a/w Sri Mahesh Y.L., Advocate.

For Respondent No.1/State: Sri B.N. Jagadeesha, Additional State Public Prosecutor-I.

For Respondent No.2/Enforcement Directorate: Sri Madhu N. Rao, Special Public Prosecutor.

Case Title: Micah Mark vs. State of Karnataka, Criminal Petition No.8401 of 2026 c/w Criminal Petition No.8417 of 2026

[Read Order]