Karnataka High Court Denies Bail To Man Accused Of Islamic State Links And Terror Funding Via Cryptocurrency
Isabella Mariam
The High Court of Karnataka Division Bench of Justice H.P. Sandesh and Justice Venkatesh Naik T declined to grant bail to an accused booked by the National Investigation Agency, holding that the material on record disclosed a prima facie case and that the statutory restriction on bail under the Unlawful Activities (Prevention) Act applied. The court refused to interfere with the trial court’s order rejecting bail. The prosecution case, as recorded in the order, is that the accused was associated with the proscribed terrorist organisation Islamic State, was radicalised and recruited by a college mate, took part in reconnaissance and arson in and around Mangaluru with the stated objective of waging war against the Government of India, and facilitated transfer of funds through cryptocurrency by receiving amounts into wallets, converting them to cash, and passing them to a co-accused.
The appellant (accused No.4) challenged rejection of bail in an NIA case invoking IPC Sections 120B, 121A, 427 and 435, UAPA Sections 16 to 18, 20 and 38 to 40, and Section 2 of the Karnataka State Prevention of Destruction and Loss of Property Act, 1981.
The prosecution alleged he was linked to Islamic State, was radicalised and recruited by a college mate, and participated in reconnaissance and arson in Mangaluru. It was also alleged he facilitated funds through cryptocurrency by receiving amounts into wallets, converting them to cash, and passing them to a co-accused.
He was arrested on 05.01.2023, and a mobile phone, SIM and micro SD card were seized. He contended the allegations lacked support and that Section 15 UAPA was not attracted. The NIA opposed bail, citing the final report, framing of charges, trial, and Section 43D(5) UAPA.
The Division Bench observed: "The main allegation against the present appellant/accused No.4 is set out in paragraph 19 of the order of the Trial Court that he is a member of the proscribed terrorist organization, Islamic State and was radicalized and recruited by accused No.2 who is his college mate at PA College of Engineering, Mangaluru. As part of a larger conspiracy, accused No.4 allegedly participated in reconnaissance and arson activities in Mangaluru with an intention to wage war against the Government of India. He is also accused of facilitating the transfer of terror funds by sharing crypto-currency wallet details, converting the received funds into cash and handing it over to accused No.2. Additionally, he allegedly purchased a Honda Activa for use in these activities, funded by money received through an online handler named “Colonel”. The Investigating Officer has gathered both oral and documentary evidence to support these claims."
On the assessment of the material and the findings recorded by the trial court, the Bench stated: "Heard the learned counsel appearing for the respective parties and also considered the paragraph 19 of the order of the Trial Court wherein the Trial Court summarized the involvement of the appellant along with accused No.2 who is a college mate in the terrorist activities as part of a larger conspiracy and this appellant participated in reconnaissance and arson activities in Mangaluru with an intention to wage war against the Government of India also in paragraphs 20 to 22 and the Trial Court taken note of the involvement of this accused along with accused No.2 under whom he was working was taken note of in paragraphs 27 and 28 and involvement in crypto-currency transfers also taken note of in paragraph 38 of the order of the Trial Court and cumulative material was also considered by the Trial Court holding that there is a prima facie material evidence against accused No.4/appellant to show that he is acting to further the objectives of the proscribed terrorist organization, Islamic State."
The Bench recorded the evidentiary aspects relied upon: "It is also important to note that FSL report revealed the images of electric substations, boatyards, gas stations, oil tankers, shops and various locations identified during the reconnaissance by accused No.4." "Additionally, news clippings about the jeep and Innova car were found in the mobile phone of accused No.2 and arson-related images were recovered from the device and the device was also recovered from this accused and the same clearly demonstrates that this appellant actively involved in reconnaissance and arson activities in and around Mangaluru as alleged by the prosecution and the same is taken note of by the Trial Court in paragraph 35."
Referring to the trial court’s conclusions on association, alleged role, and funds, the Bench noted: "In paragraph 57 also, the Trial Court held that thorough examination of material on record reveals that accused No.4 was a close associate of accused No.2 and 6. It is evident that accused No.2 played a pivotal role in radicalising and recruiting accused No.4 to further the agenda of the proscribed organisation, Islamic State. Both accused No.2 and accused No.4 are actively involved in conducting reconnaissance and arson activities in and around Mangaluru. Furthermore, it has been established that accused No.4 received funds through Crypto-currency from online handler affiliated with the terrorist outfit and these funds were subsequently utilized to carry out the terrorist activities. The Trial Court further held that the facts which have been taken together provide reasonable grounds to believe that the accusations levelled against accused No.4 are prima facie true."
On the bail standard under the UAP Act, the Bench observed: "The Trial Court having taken note of all these materials and also in the light of the bar imposed by Section 43D(5) of the UAP Act of 1967 comes to the conclusion that Court is precluded from granting bail when prima facie evidence supports the allegations of involvement in terrorist activities."
Applying that approach to the appeal, the Bench stated: "Having considered the order passed by the Trial Court considering the involvement of the appellant in the acts which has been narrated from paragraph 21 onwards of the order including the involvement of crypto-currency in paragraph 38 and also taking note of FSL report in paragraph 35 of the order of the Trial Court, this Court is of the opinion that it is not a case for setting aside the order of the Trial Court since the Trial Court in detail discussed the material collected against the appellant which substantiated the prima facie case against him. Hence, appellant/accused No.4 has not made out any ground to enlarge him on bail."
Referring to the Ram Kishore Arora's Case the Bench recorded: "Even on that ground also, the appellant is not entitled for bail having considered the material collected by IO during the investigation and matter requires trial and the same is commenced. Having taken note of the principles laid down in the judgments referred supra as well as considering the material on record, this Court is of the opinion that it is not a case to enlarge the appellant on bail by setting aside the order of the Trial Court. The criminal appeal is dismissed.”
Advocates Representing the Parties
For the Appellant: Sri Usman P, Advocate
For the Respondent: Sri P. Prasanna Kumar, Special Public Prosecutor
Case Title: Reeshaan Thajuddin Sheikh v National Investigation Agency
Neutral Citation: NC: 2026: KHC:3550-DB
Case Number: Criminal Appeal No.1548 of 2025
Bench: Justice H.P. Sandesh, Justice Venkatesh Naik T
