States » SouthPosted at: Nov 7 2026 8:17PM


ED cannot revive closed cases through fresh complaints: Karnataka HC

Bengaluru, Nov 7 (UNI) The Karnataka High Court has ruled that the Enforcement Directorate cannot revive a money laundering investigation by filing a fresh private complaint after the underlying criminal case has been closed, drawing a clear boundary around the agency's investigative powers under the Prevention of Money Laundering Act (PMLA).
In a significant observation with implications for the ED's investigative jurisdiction, Justice MI Arun held that the agency cannot use a separate complaint to overcome the closure of a predicate offence and subsequently launch or sustain money laundering proceedings against the accused.
The ruling came while quashing the ED proceedings involving Congress leader KY Nanje Gowda and others in connection with allegations initially relating to an illegal land grant and subsequently linked to a recruitment scam in the Kolar and Chikkaballapur Milk union Ltd (KOMUL).
The Court noted that the original land scam case, involving the alleged illegal grant of around 80 acres to 38 persons, had been dismissed by the trial court because the mandatory government sanction to prosecute a public servant had not been obtained. The jurisdictional police had also filed a closure report.
However, the ED continued its investigation, retained seized properties and filed a fresh complaint before a special court for MPs and MLAs, seeking a Lokayukta investigation into alleged recruitment irregularities in KOMUL.
Questioning this course of action, the High Court held that the ED could not independently create the legal basis for invoking the PMLA when the underlying scheduled offence was no longer available to sustain its jurisdiction.
"The power of the ED is derivative and not original. It cannot initiate an investigation suo motu based on a standalone suspicion of money laundering," Justice Arun observed.
The Court said that if the ED came across material suggesting the commission of a scheduled offence, it was required to forward it to the appropriate investigating agency under Section 66(2) of the PMLA rather than assume the role of a primary investigating authority.
"Allowing the ED to prefer a private complaint, when the other government authorities deem it inappropriate to initiate any proceedings against anybody, will amount to permitting the ED to act as a super cop," it said.
The judgment also highlighted that the ED could exercise only those powers expressly conferred upon it by the PMLA and could not file private complaints in respect of scheduled offences to create grounds for subsequent money laundering investigations.
The Court underscored that the responsibility for maintaining law and order rested with the State and that the appropriate investigating agency had to decide whether a criminal case warranted further prosecution.
The ruling reinforces the legal requirement that money laundering proceedings must have the backing of an existing predicate offence and cannot be sustained merely on the basis of independent allegations or suspicion.
Senior Advocate Kiran S Javali appeared for the petitioners, while Additional Solicitor General SV Raju represented the ED.
UNI BDN
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