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News18
2 days ago
- Business
- News18
‘ED Not A Supercop': Madras HC Slams Agency For Overreach, Quashes Rs 901 Crore Freeze Order
The court also rejected ED's reliance on alleged FEMA violations, saying such infractions don't automatically trigger PMLA provisions and can't be used as a 'backdoor' In a sharp rebuke to the Enforcement Directorate (ED), the Madras High Court has quashed the agency's move to freeze Rs 901 crore in fixed deposits of RKM Powergen Private Limited, warning that the agency is 'not a super cop" empowered to investigate everything that comes to its notice. A division bench of Justices MS Ramesh and V Lakshminarayanan ruled that in the absence of a predicate offence, ie a scheduled offence under the Prevention of Money Laundering Act (PMLA), the ED has no jurisdiction to invoke its powers. There must first be a scheduled criminal activity and proceeds arising from such activity. Only then does ED's mandate under PMLA begin, the bench clarified. The judgment comes as the latest twist in the long-running saga surrounding the contentious 2008 allocation of the Fatehpur East coal block, later cancelled by the Supreme Court in 2014 after it was revealed the block lay within a protected forest area. Although the CBI initially registered a case in 2014, it filed a closure report citing lack of evidence. However, a special court in 2017 ordered further investigation. Based on this, the ED had frozen RKMP's accounts in 2015, but that action was already struck down by the high court the same year. Despite the court's 2022 direction restraining further investigation under PMLA due to the absence of a predicate offence, the ED revived its probe after the CBI filed a supplementary chargesheet in 2023. That eventually led to the freezing of RKMP's fixed deposits in early 2025. Rejecting this fresh freeze, the high court found no new material or grounds to justify the ED's action. It pointed out that the agency's seizure memo merely parroted the statute without any application of mind. The court also rejected ED's reliance on alleged violations of FEMA (Foreign Exchange Management Act), saying such infractions don't automatically trigger PMLA provisions and cannot be used as a backdoor for initiating proceedings. Importantly, the bench clarified that even the filing of a chargesheet by the CBI does not automatically justify ED's entry unless it specifically establishes that proceeds of crime stem from a scheduled offence. The court underscored the principle that 'without a predicate offence, the ED simply cannot act". Foreign investments made into RKMP, which ED previously questioned as potential round-tripping, were found to have been made transparently and with full disclosure to the RBI. view comments First Published: July 23, 2025, 14:02 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Indian Express
5 days ago
- Politics
- Indian Express
ED not a drone to attack at will on any criminal activity: Madras HC
The Madras High Court has observed that the Enforcement Directorate (ED) was not a 'drone' to attack at will, and nor was it a 'super cop' to investigate anything and everything which comes to its notice. A division bench of Justice M S Ramesh and Justice V Lakshminarayanan made the observations while hearing the plea by city-based RKM Powergen Private Ltd challenging the ED seizing Rs 901 crore of its fixed deposits in connection with a PMLA case. The ED action came on the basis of an FIR registered by the CBI in 2014 over the allocation of coal blocks for a power plant in Chhattisgarh earlier. The agency filed a closure report in 2017 saying it found no irregularities in the allocation of coal blocks. The CBI court did not agree with the closure report and wanted further probe in some aspects. In 2023, CBI filed a supplementary final report, which found that there were sufficient incriminating materials warranting prosecution under sections of IPC and Prevention of Corruption Act. Later, the ED conducted searches in the premises of directors and holding companies associated with RKMP. On January 31,2025 a freezing order was passed wherein the fixed deposit to the tune of Rs 901 crore was frozen by the ED. The company challenged the said order and the court set it aside. The bench said that a careful perusal of Section 66(2) of PMLA points out that if during the course of investigation, the ED comes across violations of other provisions of law, then it cannot assume the role of investigating those offences also. It is to inform the appropriate agency, which is empowered by law to investigate that offence. If that agency, on the intimation from the ED, commences investigation and registers a complaint, then certainly the ED can investigate into those aspects also, provided there are 'proceeds of crime'. 'In case, the investigating agency does not find any case with respect to the aspects pointed out by the ED, then the ED cannot suo motu proceed with the investigation and assume powers. The essential ingredient for the ED to seize jurisdiction is the presence of a predicate offence. It is like a 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'. The ED is not a loitering munition or drone to attack at will on any criminal activity,' the bench said. It further said that a perusal of the papers show that no complaint had been lodged with respect to any of the aforesaid alleged criminal activities. 'The ED is not a super cop to investigate anything and everything which comes to its notice.' 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, it said
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Business Standard
5 days ago
- Politics
- Business Standard
ED not a drone to attack at will on any criminal activity, says Madras HC
The Madras High Court has observed that the ED was not a "drone" to attack at will, and nor was it a "super cop" to investigate anything and everything which comes to its notice. A division bench of Justice M S Ramesh and Justice V Lakshminarayanan made the observations while hearing the plea by city-based RKM Powergen Private Ltd challenging the Enforcement Directorate (ED) seizing ₹901 crore of its fixed deposits in connection with a PMLA case. The ED action came on the basis of an FIR registered by the CBI in 2014 over the allocation of coal blocks for a power plant in Chhattisgarh earlier. The agency filed a closure report in 2017 saying it found no irregularities in the allocation of coal blocks. The CBI court did not agree with the closure report and wanted further probe in some aspects. In 2023, CBI filed a supplementary final report, which found that there were sufficient incriminating materials warranting prosecution under sections of IPC and Prevention of Corruption Act. Later, the ED conducted searches in the premises of directors and holding companies associated with RKMP. On January 31,2025 a freezing order was passed wherein the fixed deposit to the tune of Rs 901 crore was frozen by the ED. The company challenged the said order and the court set it aside. The bench said that a careful perusal of Section 66(2) of PMLA points out that if during the course of investigation, the ED comes across violations of other provisions of law, then it cannot assume the role of investigating those offences also. It is to inform the appropriate agency, which is empowered by law to investigate that offence. If that agency, on the intimation from the ED, commences investigation and registers a complaint, then certainly the ED can investigate into those aspects also, provided there are "proceeds of crime". "In case, the investigating agency does not find any case with respect to the aspects pointed out by the ED, then the ED cannot suo motu proceed with the investigation and assume powers. The essential ingredient for the ED to seize jurisdiction is the presence of a predicate offence. It is like a 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". The ED is not a loitering munition or drone to attack at will on any criminal activity," the bench said. It further said that a perusal of the papers show that no complaint had been lodged with respect to any of the aforesaid alleged criminal activities. "The ED is not a super cop to investigate anything and everything which comes to its notice." 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, it said.
Time of India
5 days ago
- Business
- Time of India
ED not a drone to attack at will on any criminal activity: Madras HC
The Madras High Court has observed that the ED was not a "drone" to attack at will, and nor was it a "super cop" to investigate anything and everything which comes to its notice. A division bench of Justice M S Ramesh and Justice V Lakshminarayanan made the observations while hearing the plea by city-based RKM Powergen Private Ltd challenging the Enforcement Directorate (ED) seizing Rs 901 crore of its fixed deposits in connection with a PMLA case . Explore courses from Top Institutes in Select a Course Category Degree Design Thinking others Public Policy Digital Marketing Artificial Intelligence Product Management Finance Management Data Analytics Leadership Data Science Others Technology Operations Management healthcare Healthcare MCA MBA Data Science CXO Project Management PGDM Cybersecurity Skills you'll gain: Data-Driven Decision-Making Strategic Leadership and Transformation Global Business Acumen Comprehensive Business Expertise Duration: 2 Years University of Western Australia UWA Global MBA Starts on Jun 28, 2024 Get Details The ED action came on the basis of an FIR registered by the CBI in 2014 over the allocation of coal blocks for a power plant in Chhattisgarh earlier. The agency filed a closure report in 2017 saying it found no irregularities in the allocation of coal blocks. The CBI court did not agree with the closure report and wanted further probe in some aspects. Live Events In 2023, CBI filed a supplementary final report, which found that there were sufficient incriminating materials warranting prosecution under sections of IPC and Prevention of Corruption Act. Later, the ED conducted searches in the premises of directors and holding companies associated with RKMP. On January 31,2025 a freezing order was passed wherein the fixed deposit to the tune of Rs 901 crore was frozen by the ED. The company challenged the said order and the court set it aside. The bench said that a careful perusal of Section 66(2) of PMLA points out that if during the course of investigation, the ED comes across violations of other provisions of law, then it cannot assume the role of investigating those offences also. It is to inform the appropriate agency, which is empowered by law to investigate that offence. If that agency, on the intimation from the ED, commences investigation and registers a complaint, then certainly the ED can investigate into those aspects also, provided there are "proceeds of crime". "In case, the investigating agency does not find any case with respect to the aspects pointed out by the ED, then the ED cannot suo motu proceed with the investigation and assume powers. The essential ingredient for the ED to seize jurisdiction is the presence of a predicate offence. It is like a 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". The ED is not a loitering munition or drone to attack at will on any criminal activity," the bench said. It further said that a perusal of the papers show that no complaint had been lodged with respect to any of the aforesaid alleged criminal activities. "The ED is not a super cop to investigate anything and everything which comes to its notice." 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, it said. PTI Economic Times WhatsApp channel )
Time of India
5 days ago
- Business
- Time of India
ED not a ‘loitering munition' or ‘super cop': Madras HC
Madras high court CHENNAI: Enforcement Directorate is not a 'loitering munition or drone' that can strike at will, nor a 'super cop' empowered to investigate every matter that comes to its notice, Madras HC has observed while quashing a Rs 901-crore fixed deposit freeze order issued by the agency. A division bench of Justices MS Ramesh and V Lakshminarayanan ruled that ED's powers under the Prevention of Money Laundering Act (PMLA) can only be invoked when there is a scheduled offence — termed a 'predicate offence' — and the existence of proceeds of crime arising from it. 'PMLA demands the existence of a predicate offence. When there is no predicate offence, initiation of proceedings under PMLA is anonstarter,' the bench said. It likened ED's jurisdiction to a limpet mine requiring a ship to function. 'The ship is the predicate offence and proceeds of crime,' it added. The ruling came in response to a plea by RKM Powergen Pvt Ltd, which challenged ED's January 31 order freezing its fixed deposits. The company, represented by senior advocate B Kumar, said the freeze disregarded earlier court rulings and lacked fresh material. RKMP was allocated the Fatehpur East coal block in 2006. The Supreme Court cancelled the allocation in 2014. CBI initially registered an FIR but closed the case in 2017. Despite this, ED launched a PMLA probe in 2015 and froze RKMP's accounts, which was struck down by Madras HC earlier. Rejecting ED's stand, HC said actions under PMLA must follow legally prescribed route and termed the freeze order 'legally untenable.'
