Enforcement Directorate is not a ‘super cop’, says Karnataka High Court

Calling the ED “not a super cop” means the agency is not above ordinary legal limits. The Karnataka High Court said it cannot investigate anything and everything that comes to its notice. It must use only powers expressly granted by the Prevention of Money-Laundering Act, or PMLA. Its power is derivative, not original, because it depends on an underlying scheduled offence.

In this case, the ED began with a land-grant case as the predicate offence. During searches, it found information suggesting a separate recruitment irregularity at KOMUL. The agency shared that information with the Lokayukta police. When no action followed, however, it filed its own private complaint and pursued the alleged job scam. The Court held that the PMLA did not permit this route.

The ruling reinforces checks and balances between state institutions. Under the judgment, the ED must inform the competent agency about a newly discovered scheduled offence rather than become its investigator and prosecutor. The decision also limits attempts to continue money-laundering proceedings when the underlying offence has collapsed.

The Enforcement Directorate, or ED, is the government agency involved here in enforcing the Prevention of Money-Laundering Act. The PMLA is the law under which the agency investigates alleged money laundering and related proceeds of crime. The article’s central point is that the ED’s authority under this law is derivative, not original. It depends on a scheduled offence and cannot operate as a general police force.

The case shows the limits clearly. The ED registered an ECIR, conducted searches, issued summons and pursued seizure proceedings through the PMLA framework. It also shared information about alleged KOMUL recruitment irregularities with the Lokayukta police under Section 66(2). But when that agency did not act, the ED could not file a private complaint and investigate the alleged offence itself.

The Court therefore treated the PMLA as a source of specific powers, not a general licence. It said the Act does not expressly authorise the ED to file a private complaint about a scheduled offence and then investigate the accused under the PMLA. That interpretation strengthens institutional limits and judicial oversight.

The case involved two separate alleged scams. The first was a “land scam” involving alleged irregularities in granting about 80 acres to 38 people. The second was a “job scam” involving alleged irregularities in recruitment to the Kolar and Chikkaballapur Milk Union Ltd., or KOMUL. The Court treated them as distinct alleged offences, even though the second surfaced during the first investigation.

The land case began with a private complaint by K.C. Rajanna against the Malur Land Grant Committee. K.Y. Nanjegowda was its chairman. The ED treated the resulting criminal case as a predicate offence and registered an ECIR in 2023. During searches based on that ECIR, the ED said it found material suggesting recruitment irregularities at KOMUL.

The ED then shared information about the alleged recruitment scam with the Karnataka Lokayukta police. When the Lokayukta police did not act, the ED filed a private complaint before a Bengaluru special court. The High Court said discovering the second allegation did not let the ED independently investigate and prosecute it.

A predicate offence is the underlying scheduled crime that gives alleged money-laundering proceedings their legal foundation. The PMLA’s money-laundering machinery is not meant to stand alone. The article explains that a predicate offence must exist for the ED to begin proceedings contemplated under the Act. This is why the High Court called the ED’s power derivative, rather than original.

Here, the alleged land scam supplied that starting point. A private complaint claimed that the Malur Land Grant Committee had improperly granted about 80 acres to 38 people. The ED treated the related criminal case as the predicate offence and registered an ECIR in November 2023. Searches connected to that ECIR later produced information about alleged recruitment irregularities at KOMUL.

The distinction matters because the ED cannot use one case as a free-standing licence to investigate every new allegation. If the underlying scheduled offence fails, the legal basis for related PMLA action may disappear. The Court therefore rejected the idea that the ED could independently create and pursue a new scheduled-offence case after another agency declined to prosecute.

The land-scam case mattered because the ED had treated it as the predicate offence for its PMLA action. Money-laundering proceedings depend on an underlying scheduled offence. If that foundation disappears, the ED cannot automatically continue acting as though the alleged laundering still has a valid legal source. This is the practical meaning of the Court’s description of ED powers as derivative.

The jurisdictional police filed a closure report in the land case. The trial court then dismissed it because there was no sanction to prosecute a public servant, even though complainant K.C. Rajanna objected. That ended the case being used as the predicate offence. The ED had registered its ECIR in 2023 and conducted searches on that basis.

The High Court accepted the petitioners’ argument that the collapse of the predicate case prevented continuing the related PMLA proceedings. It also rejected the ED’s attempt to pursue the separate KOMUL recruitment allegations through its own private complaint. The ruling therefore tied the agency’s authority to the continuing existence of the underlying scheduled offence.

Section 66(2), as interpreted by the Karnataka High Court, requires the ED to inform the agency competent to investigate a newly discovered scheduled offence. The ED’s duty is to intimate, not to take over. This preserves the division between the money-laundering agency and the authority legally responsible for investigating the underlying crime.

The ED followed the first step in this case. During searches connected with the land-scam ECIR, it said it found evidence of alleged recruitment irregularities at KOMUL. It shared that information with the Karnataka Lokayukta police under Section 66(2). When the Lokayukta police did not act, the ED filed a private complaint before a special court in Bengaluru and pursued the alleged job scam itself.

The Court said that second step was not permitted. The PMLA does not expressly empower the ED to file a private complaint about a scheduled offence and investigate it under the Act. The court applied the principle that where law requires an act in a particular way, it must be done that way and no other way.

Separation of powers means public institutions must operate within their assigned legal roles. Checks and balances prevent one institution from becoming unchecked or supreme. In a constitutional democracy, investigative power is therefore limited by legislation, judicial review and the responsibilities assigned to other agencies. The Karnataka High Court applied that principle directly to the ED.

The Court said the ED could not act as a “super cop” after another agency declined to prosecute. In this case, the ED discovered alleged KOMUL recruitment irregularities during searches linked to a land case. It informed the Lokayukta police, but later filed its own private complaint when no action followed. The Court said the PMLA required a different course.

The ruling means the ED must exercise only powers expressly conferred by the PMLA. It cannot use one institution’s statutory authority to absorb another institution’s investigation. The judgment also reinforces that procedures matter: where the law prescribes a particular method, the agency must follow it rather than invent an alternative route.