'ED is not a super cop': Karnataka HC quashes ECIR against Congress MLA, others

The Karnataka High Court dismissed an Enforcement Case Information Report (ECIR) against a Congress MLA and several others, asserting the Enforcement Directorate (ED) is not a "super cop" with unrestricted investigative powers. The decision was made in connection with an ED probe into alleged recruitment irregularities at the Kolar-Chikkaballapur District Cooperative Milk Producers Union Ltd (KOMUL). The petitioners in the case included Congress MLA KY Nanjegowda and those connected to him.

Justice MI Arun emphasized the limited scope of the ED's authority under the Prevention of Money Laundering Act (PMLA), which is derivative and not original. The agency cannot initiate an investigation without a primary law-enforcement agency registering an FIR or a formal complaint concerning a scheduled offence. ED's role under the PMLA is triggered only after such a primary investigation.

Furthermore, the court held that PMLA proceedings cannot proceed if the underlying offence has been closed or the accused acquitted. In this case, the land scam investigation against Nanjegowda and the other petitioners had been closed due to denial of prosecution sanction, rendering the ED's investigation unfounded. The bench further ruled that the ED can only exercise powers explicitly granted under the PMLA; if it encounters information suggesting another scheduled offence, it must refer the matter to the appropriate agency rather than pursue it independently.

Rejecting the ED's arguments, Justice Arun dismissed the notion that the agency could continue its investigation even after the underlying offence had been closed on technical grounds. He stated that allowing such a course of action would elevate the ED's position above other investigating bodies, which is not permissible under existing laws.

Consequently, the court quashed the ECIR dated November 30, 2023, the summons issued on that date, and all subsequent proceedings against Nanjegowda and the other petitioners. Additionally, the court overturned the June 6, 2024 order of the PMLA Adjudicating Authority concerning one of the petitioners and ordered the return of seized assets.