Vakil Help Desk News: the Karnataka High Court has held that the Enforcement Directorate cannot file a private complaint to force a criminal case when the local police decline to act, and that a money-laundering case cannot survive once the underlying offence is closed.
Vakil Help Desk News, Litigation & Courts. The Karnataka High Court has drawn a firm line around the powers of the Enforcement Directorate (ED), holding that the agency is not a ‘super cop’ that can step in and file its own criminal complaint whenever the regular police choose not to act. In the same judgment, the Court quashed money-laundering proceedings because the underlying case they were built on had already been closed.
How money-laundering cases are supposed to work
To understand the ruling, it helps to know one basic rule of the Prevention of Money Laundering Act, 2002 (PMLA). A money-laundering case cannot stand on its own — it must sit on top of a separate, ordinary crime, called the ‘predicate offence’ (for example, cheating, forgery or corruption). The idea is simple: first there is a crime that generates illegal money; then the ED investigates the laundering of that money. If there is no predicate offence, there is nothing for the PMLA to attach to.
What happened
The matter began with a private complaint in 2022 about a land-grant scandal near Malur, where a committee was accused of recommending roughly 80 acres to a group of people by misusing office. Treating that as the predicate offence, the ED opened its own money-laundering inquiry in 2023. While digging, the ED came across material pointing to a separate recruitment scam at a dairy federation and, as the law allows, passed that information to the local police under Section 66(2) of the PMLA.
Two things then happened. The original land case was closed. And the police did not act on the recruitment-scam information the ED had shared. So in 2024 the ED did something unusual: it filed its own private complaint, asking that the recruitment-scam case be sent for investigation. The accused challenged this before the High Court.
What the Court held, in plain words
- No predicate offence, no PMLA case. Relying on the Supreme Court's well-known Vijay Madanlal Choudhary ruling, the Court said the ED's job begins only after a primary agency has registered a crime. Once the land case was closed, the foundation was gone, and the money-laundering proceedings could not continue.
- The ED's power is ‘derivative’, not original. The ED cannot launch an investigation on a standalone suspicion of money laundering. Its authority is triggered by someone else's case — it does not create its own starting point.
- The ED cannot file a private complaint like an ordinary citizen. The PMLA does not contemplate the ED stepping into the shoes of a private complainant under Section 200 of the old Criminal Procedure Code (or Section 223 of the new BNSS). Letting it do so whenever other authorities decline would turn it into a ‘super cop’, upsetting the checks and balances the law is built on.
- Law and order is the State's job. The Court reminded that policing is primarily a State responsibility, and the ED's special, narrow role under the PMLA cannot be stretched to fill that space.
The Court allowed the petitions, quashed the money-laundering proceedings, and directed the ED to return the articles it had seized from one of the petitioners.
What this means for you
A money-laundering case under the PMLA cannot survive once the underlying crime is closed, and the ED cannot file a private complaint to force a case the police have chosen not to pursue — its powers are triggered by another agency's case, not by its own suspicion. If you are facing ED or PMLA proceedings, these limits can be decisive. We advise on PMLA matters, ED summons and attachments, and quashing petitions before the High Court.