Madras HC slams ED, says it has no power to be a super cop

The Madras High Court has slammed the Enforcement Directorate (ED), saying it's "not a super cop" with unbridled power to investigate matters beyond its jurisdiction.

The ruling came in response to writ petitions filed by RKM Powergen Private Limited, challenging the ED’s actions in a case linked to an alleged coal allocation scam.

Justices MS Ramesh and VLK Narayanan set aside an ED order of attachment, stating that the agency lacked jurisdiction to proceed without a clear "predicate offence" under the Prevention of Money Laundering Act (PMLA).

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The bench said ED cannot conduct roving inquiries or assume investigative powers over unrelated allegations without a registered complaint tied to a scheduled offence under the PMLA.

'Not connected to coal scam'

The case stemmed from a joint venture between RKM Powergen and Malaysia-based Mudajaya Corporation, established in 2005 to set up a coal-powered electricity generation plant in Chhattisgarh. The ED’s investigation began after a CBI chargesheet, but the court found that the agency’s probe into alleged misuse of funds and diversion of public loans was not connected to the coal scam.

'ED not loitering munition'

Citing the Supreme Court’s ruling in the Vijay Madanlal Choudhary case, the court reiterated that the ED’s jurisdiction hinges on the existence of a 'predicate offence' and "proceeds of crime" .The bench remarked, “The ED is not a loitering munition or a drone to attack at will on any criminal activity.”

Without a complaint from affected parties, such as Power Finance Corporation, which had lent funds to RKM Powergen, the ED’s actions were deemed a “non-starter”.

The court clarified that under Section 66(2) of the PMLA, if the ED uncovers violations of other laws during its investigation, it must refer them to the appropriate agency rather than assume investigative powers itself.

The court ordered the petitioner to file a 'cost memo' within a week.