Karnataka High Court Quashes ECIR Against MLA KY Nanjegowda, Says ED Powers Are Derivative

On November 7, 2026, the Karnataka High Court quashed the Enforcement Case Information Report registered by the Enforcement Directorate against Congress MLA K Y Nanjegowda and other petitioners under the Prevention of Money Laundering Act. A single-judge bench of Justice M L Arun set aside the private complaint and the property attachment orders that followed the ECIR.

Justice Arun held that the powers of ED under the Prevention of Money Laundering Act are derivative and not original. Jurisdiction under the Act depends on the existence of a predicate offence, described in the order as an underlying scheduled crime. "ED is not a super cop to investigate anything and everything which comes into its notice," the judge said. Proceedings under the Act cannot survive if the predicate offence itself ceases to exist. The bench described the statutory limits as a 'Laxman Rekha' and said the agency must act strictly within the framework prescribed by the law and cannot assume powers not expressly conferred on it.

KOMUL recruitment probe linked to land case

The allegations concerned recruitment of employees at the Kolar-Chikkaballapur District Co-operative Milk Producers' Union Limited, known as KOMUL. The bench recorded that the Directorate's action was linked to an earlier land matter in which around 80 acres were alleged to have been illegally allotted to 38 persons by the chairman of the Malur Land Grant Committee and others. The order identifies Nanjegowda as the chairman concerned in that allegation.

In that land case, the trial court had dismissed the prosecution on the ground that requisite government sanction to prosecute a public servant had not been obtained. The jurisdictional police had filed a closure report in the matter. Despite that closure, the Directorate retained properties seized during its investigation. It then filed a fresh complaint before the special court dealing with cases involving MPs and MLAs and sought a Lokayukta investigation into the alleged recruitment irregularities at KOMUL.

The High Court said the Directorate could not initiate a private complaint under Section 200 of the Code of Criminal Procedure or Section 223 of the Bharatiya Nagarik Suraksha Sanhita to establish a scheduled offence and then start proceedings under the money-laundering statute. Referring to Section 66(2) of the Prevention of Money Laundering Act, the bench said where the Directorate comes across material indicating a scheduled offence it must forward the information to the appropriate investigating agency. "Maintaining law and order is the responsibility of the State and not the Centre," the court observed. The order leaves the decision on further prosecution to the concerned state agency.

It set aside the Adjudicating Authority's order confirming attachment of the properties. The items seized from one of the petitioners must be returned.