Karnataka High Court: ED Is 'Not a Super Cop', Cannot File Private Complaints

The Karnataka High Court has quashed money laundering proceedings against Congress leader K Y Nanje Gowda, ruling on 8 November that the Enforcement Directorate is "not a super cop to investigate anything and everything which comes into its notice." Justice M I Arun held that the ED cannot file a private complaint before a magistrate when local police decline to act on information it shares, and that PMLA proceedings cannot survive the closure of the predicate offence.

The court directed the ED to return seized articles to a petitioner as it allowed the batch of petitions.

What did the bench decide?

The holding rests on three propositions. First, the ED's power under the Prevention of Money Laundering Act is derivative, not original. It cannot initiate an investigation suo motu based on a standalone suspicion of money laundering. Second, Section 66(2) of the PMLA provides the sole route when the agency believes it holds material constituting a scheduled offence: forward it to the concerned agency. Third, maintaining law and order is the responsibility of the State, not the Centre.

The bench quoted its operative language directly: "The ED is not a super cop to investigate anything and everything which comes into its notice. Section 66(2) of PMLA envisages that if the ED is of the opinion that it is having certain materials which constitute a scheduled offence, then in that event, the same should be forwarded to the concerned agency."

On private complaints, the court said: "The Act does not expressly empower the ED or the authorities under the PMLA to prefer private complaint in respect of a scheduled offence and on the strength of it, thereafter, take up investigation against the accused therein under the provisions of PMLA."

What was the case about?

K Y Nanje Gowda served as Chairman of the Land Grant Committee of Malur, Kolar District. Allegations surfaced that he and other committee members had recommended grants of about 80 acres of land to about 38 persons by abusing their official positions.

Social activist K C Rajanna filed a private complaint before the Chief Metropolitan Magistrate, Bangalore, in 2022. That produced a case under Sections 420, 464, 465, 468, 471 and 120B of the Indian Penal Code, 1860. Gowda was later appointed Chairman of the Kolar and Chikkaballapur Milk Union Ltd. (KOMUL).

The ED treated the 2022 case as a predicate offence and registered its own complaint in 2023. During its investigation, the agency found material it characterised as a recruitment scam at KOMUL — the "Job scam case." Under Section 66(2) of the PMLA, the ED shared that material with local police.

Then the foundations shifted. The land scam case collapsed for non-prosecution. The local police declined to act on the ED's job scam information. In 2024, the ED filed a private complaint asking that the job scam case be referred to the Lokayukta Police, alleging offences under the Prevention of Corruption Act.

How did the parties argue?

The petitioners contended that once a predicate offence closes — on merits or on technical grounds — the ED loses its jurisdiction to continue investigating under the PMLA. The agency, they argued, may share information with police but may not lodge private complaints and then pursue money laundering charges on that footing.

The ED countered through Additional Solicitor General S.V. Raju, appearing with Advocate Anuparna Bordoloi. The agency submitted that where a predicate offence closes on technical grounds rather than merits, its power to investigate money laundering survives. It added that when an authority ignores information shared under Section 66(2), any person may set criminal proceedings in motion.

What does the ruling change?

The court rejected the ED's position on both fronts. It relied on the Supreme Court's decision in Vijay Madanlal Choudhary and Others v. Union of India and Others, which requires the pre-existence of a predicate offence before any inquiry into proceeds of crime. The ED's role begins only after a primary law enforcement agency registers an FIR or formal complaint.

The land scam complaint, the bench noted, was closed for want of sanction from the competent authority. On those facts, the court said continued ED inquiry into proceeds of crime "cannot be sustained."

On the private complaint route, Justice Arun invoked constitutional structure: "Our Constitution envisages separation of powers between different organs of government. The reason being that one institution in the country does not become supreme so that it is in a position to abuse the powers conferred on it. Law recognizes the requirements of checks and balances."

The court held that the ED is not like any other person entitled to file a complaint under Section 200 Cr.P.C. or Section 223 of the BNSS. Permitting it to do so when other authorities decline to act "will amount to permitting the ED to act as a super cop and it goes against the philosophy of the Act."

For practitioners, the ruling narrows the ED's toolkit: no suo motu laundering probes, no private complaints to revive stalled predicate offences, and no PMLA proceedings once the underlying scheduled offence falls away.

Senior Advocate Kiran Javali appeared for the petitioners, with Advocates Mayank Jain, Madhur Jain, Arpit Goel and Mahendra Gowda.