White-Collar Crime Defence in Bangalore: PMLA, GST and SEBI Matters

Bangalore's economy has matured into one where founders, finance heads, CFOs and independent directors face a genuinely different category of criminal exposure. A search by the Enforcement Directorate. A summons under the GST Act. A SEBI show-cause that quietly references criminal consequences. These are not ordinary criminal proceedings, and the playbook is not the same.

White-collar matters move through specialised statutes that survive the BNS rewrite — the Prevention of Money Laundering Act 2002 (PMLA), the CGST and KGST Acts, the SEBI Act, FEMA, the Companies Act, the Income Tax Act and, where applicable, the Black Money Act. Procedure is largely governed by BNSS, but each statute carries its own bail, search and arrest provisions that override ordinary law.

PMLA — the inverted bail standard

Section 45 PMLA imposes twin conditions for bail similar to NDPS — the Court must be satisfied that the accused is not guilty and is not likely to commit any offence on bail. Despite the constitutional questions raised in Vijay Madanlal Choudhary, the provision remains operative. PMLA bail applications are heard by the Special Court for PMLA in Bangalore, and on rejection, by the Karnataka High Court.

ED arrests under Section 19 PMLA must comply with the requirement of recording 'reasons to believe' and furnishing those grounds in writing. The Supreme Court's decision in Pankaj Bansal made the written-grounds requirement non-negotiable. Many recent PMLA bails have turned on Section 19 non-compliance — a procedural defence that is technical, but real.

GST and indirect-tax prosecutions

Section 132 of the CGST Act criminalises certain tax evasions, fake-invoice frauds and ITC frauds, with arrest powers under Section 69 where the alleged evasion crosses the prescribed threshold. Bangalore has seen a sharp rise in DGGI arrests of directors and finance heads, often on the strength of buyer-side or supplier-side investigation rather than direct evidence against the arrested person.

GST arrests are bailable below the threshold and non-bailable above it. The first step is almost always a Section 482 BNSS anticipatory bail petition — many DGGI summons are issued precisely to test whether the recipient will appear or seek protection. We routinely advise clients to seek pre-arrest protection before responding to a summons in serious matters.

SEBI matters and the criminal overlay

Most SEBI proceedings are civil and quasi-judicial — adjudication, settlement, and Securities Appellate Tribunal appeals. But SEBI also retains the power to file criminal complaints under the SEBI Act and the Securities Contracts (Regulation) Act, particularly in insider trading and market manipulation cases. These complaints are tried by the Special Court at Mumbai but their consequences travel to Bangalore-based directors and promoters.

What white-collar defence actually looks like

• Document discipline — every email, ledger and chat is potential evidence; collection and review must be privilege-aware
• Parallel-track strategy — adjudication or assessment proceedings often run alongside criminal proceedings, and a statement made in one is used in the other
• Coordinated counsel — chartered accountants, company secretaries and tax advisors are essential, but they are not lawyers and their communications are not privileged
• Search and seizure response — the first hour of an ED, IT or DGGI search shapes the next two years of the case
• Predicate offence analysis — PMLA depends on a scheduled predicate offence; if the predicate is weak or quashed, the PMLA case often falls

What founders and directors should do first

If you receive a summons, a notice or a search, the priorities are simple. Engage counsel before the response. Preserve and image relevant electronic records under instruction. Identify the predicate offence and the alleged proceeds-of-crime, where PMLA is invoked. Avoid informal phone calls with investigating officers. Where summons are issued repeatedly without progress, a Section 528 BNSS quashing petition before the Karnataka High Court may be appropriate to stop a fishing expedition.

The independent-director question

Independent directors of Bangalore-based companies are increasingly named in chargesheets. Section 9 BNS read with Section 149 of the Companies Act, and the proviso to Section 70 CGST, offer real protections — but only if they are pleaded early. We have moved many quashing petitions on the simple ground that an independent director had no role in the day-to-day affairs alleged.

Search and seizure — the first hour

ED searches under Section 17 PMLA, Income Tax searches under Section 132 of the IT Act, and DGGI searches under Section 67 CGST follow distinct procedures, but the practical footprint is similar. The team arrives early, demands access, and begins imaging devices and copying documents. Insist on the panchnama being read and signed contemporaneously, ensure two independent witnesses from the locality are present, and demand a complete inventory of seized material before the team leaves. Where electronic devices are imaged, ask for a hash value to be recorded — this protects against later tampering allegations and questions of authenticity.

Parallel adjudication, parallel risk

PMLA proceedings run alongside the predicate offence. GST adjudication under Section 74 CGST runs alongside the Section 132 prosecution. SEBI adjudication under Section 15-I runs alongside the criminal complaint. A finding in adjudication does not bind the criminal court, but adverse adjudication findings are routinely produced. We therefore coordinate the criminal defence with the adjudication response so that the two records do not contradict each other — an inconsistency that prosecution counsel will use to discredit the accused at trial.

If you have received an ED, DGGI or SEBI communication in Bangalore, message us on WhatsApp at +91 63634 69138 with the document and a short context note. We will tell you the same day what is at stake and what we would do in the first 72 hours.