Karnataka High Court limits ED powers over scheduled offences

In Bengaluru, the Karnataka High Court decided a group of connected petitions concerning the limits of the Enforcement Directorate's authority under the Prevention of Money Laundering Act, 2002. Justice M. I. Arun delivered the judgment on 6 November 2026. The dispute concerned whether the Directorate could pursue money laundering proceedings after an underlying case had been closed, and whether it could file its own private complaint about a scheduled offence when the competent authorities did not act on information it shared.

The High Court distinguished the power to pass information to another agency from the power to start proceedings for the underlying offence. It held that the Directorate could share material under Section 66(2), but could not use a private complaint to establish the basis for a money laundering investigation. In the land matter before it, the underlying complaint had been closed for lack of the required sanction. The Court held that the Directorate could not continue the corresponding inquiry into the alleged proceeds of that offence.

Facts to remember

• Justice M. I. Arun delivered the judgment on 6 November 2026; its neutral citation is 2026:KHC:61902.
• Section 66(2) of the Prevention of Money Laundering Act governs sharing information with the agency concerned.
• The Court rejected the use of a private complaint under Section 200 of the former Code of Criminal Procedure or Section 223 of the Bharatiya Nagarik Suraksha Sanhita for this purpose.
• The batch included a challenge involving K. Y. Nanje Gowda.

Background

A scheduled offence is an offence listed in the Schedule to the money laundering statute. The judgment applies the distinction between investigating the crime that allegedly generated the property and investigating the laundering of proceeds derived from that crime.

Why it matters for exams

For judiciary and APO criminal law, revise the distinction between a predicate offence and money laundering, and identify the power that Section 66(2) actually confers.