The Enforcement Directorate (ED) has taken decisive legal action by filing a formal prosecution complaint under the stringent Prevention of Money Laundering Act (PMLA). This move targets an alleged illegal dabba trading operation, marking a significant escalation in the probe.
Investigation Triggered by Police FIR
The federal agency's investigation was initiated on the basis of a First Information Report (FIR) registered by the Indore Police. The police case involved serious offences under the new criminal code. Specifically, the FIR was filed under Sections 319(2) and 318(4) of the Bhartiya Nyaya Sanhita, 2023. These sections correspond to the older Sections 419 (cheating by personation) and 420 (cheating) of the Indian Penal Code (IPC), 1860.
The Legal Framework and Allegations
Dabba trading, an illegal form of off-exchange trading, is often pursued by enforcement agencies for potential financial fraud and money laundering activities. By filing a prosecution complaint (akin to a chargesheet) under the PMLA, the ED has indicated it has gathered what it believes is sufficient evidence of proceeds of crime generated from the alleged illegal trading activity. The case underscores the agency's focus on clamping down on unauthorized financial markets that operate outside the regulatory purview of bodies like the Securities and Exchange Board of India (SEBI).
Next Steps in the Enforcement Process
The filing of the prosecution complaint, dated 23 December 2025, will now be presented before a special PMLA court. The court will examine the ED's evidence before deciding on taking cognizance of the charges. This legal step is crucial as it formally begins the trial process against the accused entities or individuals involved in the case. The development highlights the continuing inter-agency cooperation between state police forces and federal financial investigation units in tackling complex economic crimes.
The ED's action demonstrates a robust approach towards curbing illicit financial practices like dabba trading, which not only cheat investors but also pose a systemic risk to the formal financial system by operating in shadow markets.
