Can the ED file its own private complaint once the underlying criminal case is over? The Karnataka High Court has said it cannot, quashing an ED money laundering probe naming Congress leader KY Nanje Gowda and holding that the Enforcement Directorate’s power is derivative and that it cannot act as a “super cop”.
Bengaluru: Once the foundational criminal case has ended in favour of the accused, the Enforcement Directorate (ED) cannot launch a probe under the Prevention of Money Laundering Act (PMLA) on its own private complaint, the Karnataka High Court has ruled, quashing the ED money laundering probe that named Congress leader KY Nanje Gowda and others [YB Ashwathanarayan v. Union of India].
Justice MI Arun held that the ED’s power is “derivative and not original” and that, without a live predicate offence, proceedings under the PMLA cannot exist or continue.
Derivative, not original
The ED can prosecute only as long as a foundational criminal offence is pending, Justice MI Arun held:
“The power of the ED is derivative and not original. It cannot initiate an investigation suo motu based on a standalone suspicion of money laundering. If there is no existence of the predicate offence, then in that event, proceedings under PMLA cannot exist; meaning even when the predicate offence is terminated in favour of the accused therein, the proceedings under PMLA cannot continue.”
The Court stressed the need for checks and balances and the limits that the PMLA itself places on the authorities it creates:
“Law recognizes the requirements of checks and balances. The ED is not a super cop to investigate anything and everything which comes into its notice. Section 48 of the PMLA envisages the authorities under the Act. Once appointed under the PMLA, they are bound by the restraints imposed on them by the PMLA.”
Section 66(2) of the PMLA, the Court said, requires the ED to forward to the agency concerned any material it believes discloses a scheduled offence. The Act does not expressly empower the ED to file a private complaint about a scheduled offence and then use it as the basis for a PMLA investigation.
How the matter reached the Court
The ED had taken up a land case in which Nanje Gowda, as Chairman of the Malur Land Grant Committee, and several others were accused of granting 80 acres of land to 38 persons illegally by abusing their official position. These were allegations at the stage of investigation and were never tested at a trial.
Before the ED’s investigation began, Nanje Gowda had been appointed Chairman of the Kolar and Chikkaballapur Milk Union Ltd (KOMUL). According to the ED, it came across material relating to alleged irregularities in the recruitment of KOMUL employees, and in that connection it issued summons to YB Ashwathanarayan.
The trial court dismissed the land case that had triggered the ED’s investigation because the government sanction required to prosecute a public servant had not been obtained. The jurisdictional police also filed a closure report in that case.
Despite this, the ED did not release the properties it had seized from Ashwathanarayan. Instead, it filed a fresh private complaint before the special court for MPs and MLAs seeking to set in motion a Lokayukta probe into the recruitment allegations. The petitioners challenged these proceedings before the High Court.
The private complaint route
Noting that the police had already filed a closure report in the land case, the Court observed:
“In fact, maintaining law and order is the responsibility of the State and not the Centre. It is the duty of the concerned agency to examine the same and to take a decision whether to prosecute the matter further or not. The ED is not like any other person to file a complaint under Section 200 Cr.P.C./223 of BNSS. It has to exercise only those powers expressly conferred on it by the PMLA.”
Allowing such complaints, the Court warned, would open the door to the ED proceeding against anyone it chose:
“Allowing the ED to prefer a private complaint, when the other government authorities deem it inappropriate to initiate any proceedings against anybody, will amount to permitting the ED to act as a super cop and it goes against the philosophy of the Act which requires a predicate offence to be in existence for the ED to initiate proceedings as contemplated under the PMLA.”
On this basis, the High Court quashed the ED’s money laundering proceedings against the petitioners.
Why the judgment matters
The ruling applies the settled position that money laundering is a dependent offence. A PMLA case must rest on a scheduled offence registered and pursued by the agency competent to investigate it, and once that predicate case is closed, dismissed or ends in the accused’s favour, the money laundering case loses its footing.
The judgment goes a step further by addressing a specific route: the ED filing its own private complaint to revive or create a predicate offence after the regular agencies have decided not to proceed. By holding that Section 66(2) PMLA only lets the ED share material with the competent agency, and does not make it a complainant of its own, the Court has drawn a clear line on the agency’s jurisdiction. The ruling may be tested in appeal, and the question of private complaints by the ED is also under consideration in other courts.
Case Title: YB Ashwathanarayan v. Union of India
Bench: Justice MI Arun, Karnataka High Court
Date of Judgment: November 2026 (date to be verified)
Appearances: Senior Advocate Kiran S Javali with advocates Mahendra Gouda and Mayank Jain for YB Ashwathanarayan, KN Gopala Murthy, Nagesh N and KY Nanje Gowda; Additional Solicitor General SV Raju with advocate Anuparna Bordoloi for the ED; advocate Thammaiah HN for Dr Raju Krishna; advocate BS Prasad for the Karnataka Lokayukta Police
