The Karnataka High Court on Monday halted further investigation into extortion and related charges against Nirmala Sitharaman and others linked to the electoral bonds scheme.

The stay was granted by Justice M Nagaprasanna in response to a petition filed by BJP member Nalin Kumar Kateel, who contested the criminal complaint against him in the case.

"Section 383 mandates any informant should have been put into fear. It is only then extortion can be established. Criminal law can be set into motion by any person. But in cases of 384, it can be set into motion only by the aggrieved ... Who is the complainant here becomes significant ... In this case, permitting further proceedings atleast until the objections have been filed will become an abuse of the process of law. Therefore, further proceedings are stayed until the next date," the Court said.

Senior Advocate KG Raghavan, representing Nalin Kumar Kateel, argued that a plain reading of the complaint does not support the allegation of extortion. He described the complaint as frivolous, vexatious, and an outright misuse of the legal process.

"The entire allegation is extortion by accused using government agencies, by putting money in electoral bonds. That can never be extortion in eyes of law," he said.

Senior Advocate KG Raghavan urged the Court to stay the criminal proceedings. On the other hand, Advocate Prashant Bhushan, appearing for a private respondent, argued that the case presents a "classic instance of extortion." He further contended that there was no need for an interim order to stay the proceedings, as no coercive action had been taken against anyone thus far.

"It's a perfectly valid case. At this stage, no plea can be raised that sanction has to be taken. Sanction has to be taken at the stage cognisance ... Today the plea is only that 'this is not a case of extortion.' I am saying this is the most classic case of extortion. If ever there is a case of extortion, this is it. When you put the fear of arrest and put the fear of raids etc. in the minds of a company and thereby induce them induce them with that fear to give electoral bonds to the party which controls the ED and thereafter the ED stops the action - what else is extortion? This is classic extortion," he said.

Last week, the city police registered an FIR against Nirmala Sitharaman, BJP President JP Nadda, BJP National Executive Member Nalin Kumar Kateel, unknown Enforcement Directorate (ED) officials, and others after the XLII Additional Chief Judicial Magistrate in Bengaluru took cognizance of a private complaint filed against them.

In his petition challenging the FIR, Kateel argued that he and the others have been "falsely implicated" with "ulterior political motives." The complaint, filed by activist Adarsh R Iyer of the NGO Janaadhikaara Sangharsha Parishath, accused BJP members, including Sitharaman and Nadda, of colluding with ED officials to extort private companies and amass illegal gains through the Electoral Bonds Scheme, which the Supreme Court struck down in February.

Iyer alleged that the accused engaged in "extortion under the guise of electoral bonds," profiting over ₹8,000 crore. The complaint detailed ED raids on companies like Vedanta, Sterlite, and Aurobindo Pharma, allegedly pressuring their proprietors to donate via electoral bonds. Iyer further informed the Court that he had initially approached the Deputy Commissioner of Police (DCP) Bengaluru South East on February 4, but after no action was taken, he sought the Court’s intervention.