The Karnataka High Court on Monday stayed an investigation against Union Finance Minister Nirmala Sitharaman and several others in an extortion case linked to the electoral bonds scheme, Bar and Bench reported.

Justice M Nagaprasanna issued the order in response to a petition by Bharatiya Janata Party member Nalin Kumar Kateel, who has challenged a criminal complaint against him in the case. Kateel was the party’s Karnataka chief between 2019 and 2023.

On Saturday, the Karnataka Police filed a first information report against Sitharaman, Kateel and the BJP’s state chief BY Vijayendra, among others, for allegedly misusing the electoral bond scheme to extort money from private companies.

The Supreme Court in February struck down the electoral bonds scheme as unconstitutional, holding that it violated the right to information, freedom of speech and could lead to quid pro quo arrangements between donors and political parties.

The first information report came on the direction of a Bengaluru court. The court’s order was based on a complaint by activist Adarsh R Iyer of the non-governmental organisation Janaadhikaara Sangharsha Parishath.

Sitharaman and the others were booked for extortion, criminal conspiracy and “acts done with common intention” under sections of the Indian Penal Code.

“Section 383 of the Indian Penal Code [inducing fear] mandates any informant should have been put into fear,” said the court on Monday. “It is only then that extortion can be established. Criminal law can be set into motion by any person. But in cases of Section 384 [extortion], it can be set into motion only by the aggrieved.”

“Permitting further proceedings at least until the objections have been filed will become an abuse of the process of law,” the court added.

Iyer’s petition claimed that Sitharaman and officials of the Enforcement Directorate connived with leaders and officer bearers of the BJP to commit “extortion under the guise and garb of electoral bonds and benefited to the tune of 8,000 and more crores of INR [Indian Rupees]”.

He also claimed that Sitharaman had used the central law enforcement agency to “conduct raids, seizures and arrests to compel the corporates to pay”. The Enforcement Directorate reports to the finance ministry.

Kateel’s petition alleged that he and the others have been “falsely implicated” in the case “with an ulterior political motive”, reported Bar and Bench.

KG Raghavan, the lawyer appearing for Kateel argued that Iyer’s complaint failed to substantiate his allegations. He described the complaint as frivolous, vexatious and a complete abuse of the process of law.

Prashant Bhushan, the lawyer for a private respondent, claimed that a “classic case of extortion” could be made out against the accused persons. He argued that there was no need for an interim order staying proceedings against anyone, as no coercive action had been taken in the case so far.

The matter will be heard next on October 22.