Karnataka High Court Rules Enforcement Directorate Lacks Power to File Private Complaints

The Karnataka High Court has ruled that the Directorate of Enforcement cannot file private complaints to start money-laundering probes when other authorities choose not to act on information provided by the agency. Justice M.I. Arun delivered the verdict while allowing petitions filed by Malur Congress MLA K.Y. Nanjegowda and four other individuals.

What Happened

The legal battle began when the ED registered an Enforcement Case Information Report in November 2023 following a land scam complaint involving the Malur Land Grant Committee, where Mr. Nanjegowda served as chairman. During searches, the agency found material pointing to recruitment irregularities at the Kolar and Chikkaballapur Milk Union Ltd, leading to a separate job scam inquiry. When the original land case closed and local police declined to pursue the recruitment findings, the ED launched its own private complaint before a special court in Bengaluru.

Court Rulings

The High Court emphasized that the agency's powers under the Prevention of Money-Laundering Act are derivative rather than original. The bench noted that allowing the agency to launch private complaints when local authorities decide against prosecution would grant unchecked authority and violate the legal requirement for checks and balances.

Context

The Prevention of Money-Laundering Act requires a valid underlying crime, known as a predicate offence, to exist before financial investigation proceedings can begin. When financial investigators uncover evidence of other separate offences during their work, the legal framework directs them to share those findings with competent local police or anti-corruption bodies rather than taking up direct prosecution themselves.