Punjab & Haryana High Court Orders CBI Probe Into State Corruption Scams After Punjab Police Fails To Act On ED’s Section 66(2) PMLA Referral

"The material forwarded by ED to Punjab Police is voluminous and contains incriminating material which was expected to have led to a responsible response from the State Police... We deem it appropriate to entrust investigation of the present case to the Central Bureau of Investigation which will register an FIR in the matter and proceed with the investigation forthwith." Punjab and Haryana High Court, in a significant ruling dated 05 October 2026, has directed the Central Bureau of Investigation (CBI) to register an FIR and conduct a probe into alleged large-scale corruption involving senior Punjab government officials.

A bench comprising Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor observed that despite receiving detailed evidence of "cash for transfers" and policy manipulation from the Enforcement Directorate (ED) under Section 66(2) of the Prevention of Money Laundering Act, 2002 (PMLA), the Punjab Police engaged in prolonged, circular deliberation that appeared designed to "shield the guilty."

The petition was filed by an advocate highlighting systemic corruption involving high-ranking officials and their intermediaries, who allegedly orchestrated transfers, government tenders, and policy changes in exchange for illegal gratification. The petitioner alleged that the ED had shared extensive digital evidence, including WhatsApp chats and travel ledgers, with the Punjab Police, but the state authorities refused to initiate a criminal investigation. Notably, the petitioner alleged that after filing the PIL, the state government initiated sudden, retaliatory demolition proceedings against his property, an action the Court found to be marked by "undue hot-haste."

The Court was called upon to determine whether a public-spirited person has the locus to challenge the non-registration of an FIR based on ED referrals. It further examined whether the state police’s failure to act on Section 66(2) PMLA material justified the transfer of the investigation to an independent central agency, specifically in light of the mandate for mandatory FIR registration in cognizable offences as established in Lalita Kumari v. Government of Uttar Pradesh.

Court Rejects Maintainability Objections

The State of Punjab challenged the petition, arguing that the petitioner was a "stranger" and lacked the credentials to seek an investigation, citing his involvement in prior, dismissed PILs. The Court rejected these contentions, holding that the petitioner's history of advocacy on police and judicial reforms sufficiently established his bona fides. The bench emphasized that each PIL must be judged on its own merits and that prior, case-specific dismissals do not bar a petitioner from approaching the Court when a matter of "vital public importance" is raised.

Court Criticizes Procedural Delay by Punjab Police

The Court scrutinized the "fact sheet" submitted by the Punjab Bureau of Investigation, noting that while the police spent weeks issuing notices to various departments and individuals, they failed to register an FIR despite having prima facie evidence of cognizable offences. The bench observed that the police’s sudden demand for "legible documents" after a month of deliberations was a tactical manoeuvre. The Court remarked that this journey was one "with all travel and no reaching," lending credence to the petitioner's claim that the state was attempting to manipulate evidence and protect senior officials.

Registration of FIR is Mandatory

Relying on the Supreme Court’s dictum in Lalita Kumari and Vijay Madanlal Choudhary, the High Court reiterated that once information received by an investigating agency discloses a cognizable offence, the registration of an FIR is mandatory. The bench clarified that Section 66(2) of the PMLA exists to activate the criminal justice machinery. Where such information is detailed and incriminating, a "preliminary inquiry" cannot be used as a cloak to avoid the statutory duty of registering an FIR and initiating a formal investigation.

Transfer to CBI Ordered

Finding that the state’s preliminary inquiry was biased and that the timing of the demolition notice against the petitioner suggested "malice apparent on the face of the record," the Court invoked its extraordinary jurisdiction. The bench concluded that a fair and transparent investigation was impossible under the current state machinery. Consequently, the CBI has been ordered to register a formal FIR and submit a status report on the investigation within two months, with a further hearing scheduled for 07 December 2026.

Date of Decision: 05 October 2026