Karnataka High Court Restricts ED’s Powers, Says Agency Cannot Investigate Every Matter

The Karnataka High Court has made important observations on the investigative powers of the Enforcement Directorate (ED), stating that the agency cannot investigate every matter that comes to its notice. The court clarified that the ED cannot bypass statutory procedures while initiating money laundering investigations. It directed the agency not to invoke the Prevention of Money Laundering Act (PMLA) in cases involving offences that do not fall within its jurisdiction. Justice M.I. Arun also quashed the proceedings initiated by the ED against Karnataka Congress MLA K.Y. Nanjegowda and several other petitioners associated with him.

The High Court further set aside the PMLA authority’s order confirming the attachment of properties and directed the return of items seized from one of the petitioners. The ED had initiated an investigation into alleged irregularities in employee recruitment at the Kolar and Chikkaballapur District Cooperative Milk Producers’ Union Limited (KOMUL). Hearing petitions challenging the investigation, the court observed that the ED could proceed only if an FIR or an official criminal case had been registered in connection with the alleged irregularities. It also stated that initiating an investigation by taking cognisance of money laundering allegations on its own was not legally appropriate.