Not a ‘super cop’ to probe ‘anything & everything’: Madras HC pulls up ED
Not a ‘super cop’ to probe ‘anything & everything’: Madras HC pulls up ED
M.U.H
20/07/202526
CHENNAI: The Madras High Court has come down heavily on the Enforcement Directorate (ED), saying the agency is neither a “super cop” to investigate anything and everything that catches its eyes nor a “drone” to attack at will on any “criminal activity”.
The observations were made while ordering the release of Rs 901 crore fixed deposits of the Chennai-based RKM Powergen Private Limited. The company filed petitions in the court challenging a January 31 ED order to freeze the amount.
The central agency had proceeded against the company under the PMLA based on a 2014 FIR registered by the CBI over allocation of coal blocks for running a thermal power plant in Chhattisgarh in 2006.
CBI registered the cases under relevant sections as per the directions of the Supreme Court, which cancelled the coal allocation based on a PIL. The ED registered an ECIR under PMLA in the same year.
While CBI filed a closure report in July 2017 finding no material of foul play in allocation of coal blocks, the CBI special court in Delhi did not accept the same and wanted further probe on certain aspects, including the environmental clearance.
Subsequently, in August 2023, CBI filed a supplementary final report finding incriminating materials for prosecution for criminal conspiracy, cheating and corruption.
ED not drone to attack at will on any crimes: HC
Based on this, the ED conducted searches on January 31, 2025 and issued orders to freeze the fixed deposits.
However, the division bench set aside the orders, observing that the ED did not have jurisdiction for the actions it took in January since there was no predicate offence or proceeds of crime as per PMLA. “There should be a “criminal activity” which attracts the schedule to PMLA, and on account of such criminal activity, there should have been proceeds of crime,” the bench said in the recent order. Senior counsel B Kumar, assisted by S Ramachandran, appeared for the petitioner company while Additional Solicitor General (ASG) ARL Sundaresan represented the ED.
Stating that unless and until proceeds of crime linked to the predicate offence are shown, ED by virtue of a combined reading of 2(1)(u) (which defines proceeds of crime), 2(1)(p) and 3 (both of which deal with offence of money laundering), read with Section 17 of PMLA (that deals with power for search and seizure), lacked the jurisdiction to proceed further, the bench said.
The bench said that ED is like limpet mine attached to a ship. If there is no ship, the limpet cannot work. The ship is the predicate offence and proceeds of crime, it added. “ED is not a loitering munition or drone to attack at will on any criminal activity,” it said. The bench further stated that the ED does not and cannot possess jurisdiction based on the “phantoms” that it sees from the chargesheet. It added that ED’s jurisdiction to attach and investigate is being traced to the CBI charge sheet and noted that neither financial adviser nor the lenders complained of diversion of funds.
