Karnataka High Court rules Enforcement Directorate cannot file private complaints when other agencies drop cases

UPDATE - follow-up to Enforcement Directorate is not a 'super cop', says Karnataka High Court: The High Court of Karnataka has ruled that the Directorate of Enforcement cannot file private complaints to start money-laundering probes when other competent agencies refuse to act on its findings. Justice M.I. Arun issued the ruling while granting relief to a group of petitioners including Malur Congress MLA K.Y. Nanjegowda and four others who challenged the agency's actions.

What Happened

The legal battle began after the financial probe agency registered an Enforcement Case Information Report in November 2023 based on a land scam complaint involving the Malur Land Grant Committee. During subsequent searches, officials claimed they found evidence of a separate job scam at the Kolar and Chikkaballapur Milk Union Ltd. Although the original land case was dropped with a police closure report, and the local Lokayukta police chose not to act on the milk union information shared with them, the agency went ahead and filed its own private complaint before a special court in Bengaluru.

The Ruling

The court struck down the agency's move, stating that its powers under the Prevention of Money-Laundering Act are derivative rather than original. Judges emphasized that the agency must stick strictly to its defined mandate and cannot act as a supreme police authority to investigate anything it pleases. The bench noted that when another authority decides not to pursue a scheduled offence, filing a direct private complaint bypasses legal checks and balances.

Context

Courts in India regularly review the boundaries of investigative agencies to ensure they operate strictly within the powers granted by specific statutes like the Prevention of Money-Laundering Act. This legal framework generally requires a valid underlying predicate offence to exist before a financial investigation can proceed further. Understanding these jurisdictional limits helps clarify how different law enforcement bodies coordinate or operate independently within the legal system.