"ED Is Not a Super Cop": Karnataka High Court Limits the Enforcement Directorate's Power to File Private Complaints
The High Court of Karnataka (Justice M.I. Arun) held that the Enforcement Directorate (ED) cannot file a private complaint in a criminal court to start a case on its own, when the agencies that are supposed to investigate that crime decide not to act.
The Court said the ED's power under the Prevention of Money Laundering Act (PMLA), 2002 is "derivative and not original". In simple words, the ED can act only when some other crime (a "scheduled offence") already exists and is being pursued by the proper agency.
Background: the ED registered a money laundering case (an ECIR) in November 2023, based on a private complaint about irregular grants of about 80 acres of land to 38 persons by a land grant committee in Malur (Kolar district). During searches, the ED claimed to find signs of a separate "job scam" in recruitments at a district milk union. It passed this information to the Karnataka Lokayukta police under Section 66(2) of the PMLA.
The land case ended: the police filed a closure report, and the trial court dismissed it because there was no sanction (government permission) to prosecute a public servant. The Lokayukta police did not act on the "job scam" information. So the ED itself filed a private complaint before a special court in Bengaluru.
The Court held that Section 66(2) only allows the ED to share information with the proper agency. It does not let the ED take up the case itself. It quashed the ED's case, the related summons, the order confirming seizure of articles, and the private complaint, all against a sitting MLA from Malur and four others.
The Court said that the PMLA nowhere allows the ED to file a private complaint under Section 200 of the old CrPC / Section 223 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), and that "where an act is to be done in a particular way, it must be done in that way and in no other way."
Prevention of Money Laundering Act (PMLA), 2002
The Prevention of Money Laundering Act, or PMLA, is India's main law against money laundering: the process of making money earned from crime look like clean, legal money. It lets the government trace, freeze and take away such money, and punish those who launder it. The law is enforced mainly by the Enforcement Directorate (ED). It came into force on 1 July 2005.
The Karnataka High Court applied the basic design of the PMLA: money laundering depends on a scheduled offence that is pursued by its own agency. When the land case collapsed and the Lokayukta police chose not to act on the "job scam" information, the ED could not fill the gap by filing its own private complaint. Section 66(2) only lets it pass information on.
Enforcement Directorate (ED)
The Enforcement Directorate, or ED, is India's main agency for investigating economic crimes like money laundering and foreign exchange violations. It works under the Department of Revenue, Ministry of Finance, with its headquarters in New Delhi. It is not a constitutional body. All its powers come from specific laws passed by Parliament, mainly the PMLA, 2002 and FEMA, 1999.
The Karnataka High Court reminded the ED that it is a creature of statute: it can do only what the PMLA allows. Because the ED depends on other agencies to pursue the basic crime, it cannot become the complainant itself when those agencies decline to act. In the Court's words, it is "not a super cop".
Sanction for prosecution of public servants: from CrPC Section 197 to BNSS Section 218
Before a court can try a government servant for an act done while doing official duty, the law usually requires prior sanction, which means written permission from the government that appointed the official. This is meant to protect honest officers from false or revengeful cases. The general rule was in Section 197 of the Code of Criminal Procedure (CrPC) and is now in Section 218 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. Corruption cases have their own sanction rule in Section 19 of the Prevention of Corruption Act, 1988.
The original "land scam" complaint, which was the scheduled offence behind the ED's case, was dismissed by the trial court for want of sanction to prosecute a public servant. With that basic case gone, the ED's attempt to keep going through its own private complaint was found to have no legal basis.
- Court: High Court of Karnataka; Judge: Justice M.I. Arun
- Held: ED's power under PMLA is "derivative and not original"; ED cannot file a private complaint under Section 200 CrPC / Section 223 BNSS
- Section 66(2) PMLA: duty to share information with the concerned agency, not to investigate the other offence itself
- ECIR registered: November 2023
- Underlying land case: about 80 acres granted to 38 persons; closed by police; complaint dismissed for want of sanction
- "Job scam" information shared with the Karnataka Lokayukta police, which did not act on it
- PMLA in force since 1 July 2005; punishment 3 to 7 years (10 years for NDPS-linked cases)
- ED set up 1 May 1956; works under the Department of Revenue, Ministry of Finance