Karnataka High Court: ED Cannot Act as a 'Super Cop' Under PMLA

The Karnataka High Court has ruled that the Enforcement Directorate (ED) cannot act as a "super cop" by investigating every alleged offence that comes to its notice. The Court held that the ED cannot independently initiate proceedings concerning scheduled offences or file private complaints when the competent investigating authorities decline to take action.

Justice M.I. Arun delivered the judgment on November 6, 2026, while allowing a batch of writ petitions filed by Y.B. Ashwathanarayan, Karnataka Congress MLA K.Y. Nanje Gowda and others. The petitions challenged the continuation of money-laundering proceedings, the seizure of articles and a private complaint filed by the ED.

Background of the Case

The matter originated from allegations of irregularities in the allotment of approximately 80 acres of land to 38 persons by the Malur Land Grant Committee in Karnataka's Kolar district. K.Y. Nanje Gowda, who headed the committee, was accused of facilitating illegal land allotments by abusing his official position.

Based on the allegations, the ED registered an investigation in November 2023, treating the alleged land scam as a predicate offence under the Prevention of Money Laundering Act, 2002 (PMLA).

During its investigation, the ED allegedly discovered irregularities relating to employee recruitment at the Kolar and Chikkaballapur Milk Union Ltd. (KOMUL). The agency forwarded the relevant information to the Karnataka Lokayukta Police under Section 66(2) of the PMLA.

However, after the competent authorities did not initiate proceedings based on the information, the ED filed a private complaint seeking an investigation into the alleged recruitment scam. Meanwhile, the underlying land scam complaint had been closed for want of the requisite sanction from the competent authority.

Key Issues Before the Court

  • Whether the ED could continue PMLA proceedings after the underlying predicate offence had been closed.
  • Whether the ED could file a private complaint under Section 200 of the Code of Criminal Procedure, 1973, corresponding to Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023.
  • Whether the ED could independently pursue an investigation into another alleged scheduled offence after forwarding information to the competent investigating agency under Section 66(2) of the PMLA.

Observations and Findings of the Court

The High Court reiterated that the ED's powers under the PMLA are "derivative and not original". It observed that proceedings under the PMLA require the existence of a scheduled offence forming the foundation for the alleged proceeds of crime.

Referring to the Supreme Court's ruling in Vijay Madanlal Choudhary v. Union of India, the Court explained that an investigation into money laundering cannot be sustained independently when the underlying predicate offence no longer exists.

The Court further examined Section 66(2) of the PMLA, which requires the ED to forward information concerning violations of other laws to the appropriate investigating agency. It held that the provision does not authorise the ED to take over the investigation or file a private complaint concerning such scheduled offences.

Emphasising constitutional separation of powers and institutional checks and balances, Justice Arun observed that permitting the ED to initiate private complaints whenever another competent authority declines to act would place the agency on a higher pedestal than other investigating institutions.

The Court stated that the ED is not empowered to exercise powers beyond those expressly conferred upon it by the PMLA.

Final Decision

The Karnataka High Court allowed the batch of writ petitions. It quashed the relevant adjudicating authority's order, the Enforcement Case Information Report (ECIR), consequential summons and proceedings, as well as the private complaint to the extent they concerned the respective petitioners.

The Court also directed the authorities to return the articles seized from the concerned petitioner.

Legal Significance

The judgment reinforces the statutory limits of the Enforcement Directorate under the PMLA and clarifies the distinction between investigating money laundering and investigating independent scheduled offences. It underscores that specialised investigative agencies must operate within the powers granted by their governing legislation and cannot assume the functions of other competent authorities.