No super cop: Karnataka HC defines ED's powers, rejects case against Congress MLA

The Karnataka High Court has drawn a clear ‘Laxman Rekha’ around the Enforcement Directorate's (ED) powers, observing that the central agency cannot function as a 'super cop' or investigate every matter that comes to its notice.Quashing the Enforcement Case Information Report (ECIR) registered against Congress MLA KY Nanjegowda and others, the court set aside all consequential proceedings initiated by the agency, including its private complaint and property attachment orders.A single-judge bench of Justice ML Arun held that the ED's powers under the Prevention of Money Laundering Act (PMLA) are derivative and not original, meaning that its jurisdiction depends on the existence of a predicate offence, or an underlying scheduled crime."ED is not a super cop to investigate anything and everything which comes into its notice," Justice Arun said, referring to the statutory restrictions governing the agency's functioning. It added that proceedings under the PMLA cannot survive if the predicate offence itself ceases to exist.The court further underlined that the agency must operate strictly within the framework prescribed under the PMLA and cannot assume powers that have not been expressly conferred on it by law. The case arose from an investigation into alleged irregularities in the recruitment of employees at the Kolar-Chikkaballapur District Co-operative Milk Producers' Union Limited (KOMUL).The ED's action was linked to an earlier land scam involving allegations that around 80 acres of land had been illegally allotted to 38 persons by the chairman of the Malur Land Grant Committee, KY Nanjegowda, and others.The land scam case was subsequently dismissed by the trial court on the ground that the requisite government sanction to prosecute a public servant had not been obtained. The jurisdictional police had also filed a closure report in the matter.However, the ED continued its proceedings, retained properties seized during the investigation and initiated a fresh complaint before a special court dealing with cases involving MPs and MLAs, seeking a Lokayukta investigation into the alleged recruitment irregularities at KOMUL.Questioning this course of action, the High Court said the ED could not independently initiate a private complaint under Section 200 of the Code of Criminal Procedure or Section 223 of the BNSS to establish a scheduled offence and subsequently launch PMLA proceedings.Referring to Section 66(2) of the PMLA, the court noted that where the ED comes across material indicating a scheduled offence, it must forward the information to the appropriate investigating agency."Maintaining law and order is the responsibility of the State and not the Centre," the court observed, emphasising that the concerned state agency must decide whether further prosecution is warranted.The High Court consequently quashed the ECIR and the proceedings arising from it, set aside the Adjudicating Authority's order confirming the attachment of properties and directed the return of items seized from one of the petitioners.The ruling reinforces the limits of the ED's investigative jurisdiction and makes clear that the agency cannot bypass the statutory process to pursue independent criminal proceedings.The judgment is expected to have implications for cases where PMLA investigations continue despite the closure or termination of the underlying scheduled offence.- Ends