Supreme Court: “State’s Writ Petition Deemed Misguided”. Today (February 27), the Supreme Court halted the enforcement and implementation of an interim order from the Madras High Court that had suspended the summonses sent to district collectors in Tamil Nadu regarding alleged illegal sand mining-money laundering cases.
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NEW DELHI: Today (February 27), the Supreme Court halted the enforcement of an interim order from the Madras High Court that had put a pause on summonses issued to district collectors in Tamil Nadu regarding alleged illegal sand mining-money laundering cases.
Responding to a special leave petition filed by the Directorate of Enforcement (ED) against the high court’s November 28 ruling, the top court granted temporary relief. The high court’s order had suspended the execution of summonses issued by the central agency under the Prevention of Money Laundering Act but allowed the investigation to proceed.
ALSO READ: Supreme Court Deliberates on ED’s Authority in Tamil Nadu District Collectors’ Summoning
Justices Bela M Trivedi and Pankaj Mithal directed the district collectors to appear and address the summonses issued by the ED on the next indicated date.
In its ruling, the bench remarked that the state government’s petition before the high court against the summonses seemed to be based on a misunderstanding of the law. The bench cited Article 256 of the Constitution, which requires state governments to ensure compliance with laws enacted by Parliament. It stressed that the ED had the authority to summon individuals during investigations under the anti-money laundering statute.
The bench observed in its interim order,
“Since the Enforcement Directorate is conducting inquiry/investigation under PMLA in connection with four FIRs, this could be an investigation or proceedings under the act and hence, the district collectors and persons to whom summonses have been issued are obliged to respect and respond to said summonses…”.
During the initial hearing, the bench questioned the state government’s authority to utilize Article 226 of the Constitution before the high court to challenge summonses issued to district collectors. Following this, the apex court continued its thorough examination of the Tamil Nadu government’s standing to contest summonses issued by the Enforcement Directorate to district collectors.
Senior Advocate Kapil Sibal, representing the state government, strongly defended its right to invoke Article 226 of the Constitution against these summonses. Responding to Justice Trivedi’s inquiry regarding the state’s intervention on behalf of the district collectors, Sibal argued that the collectors were acting not as individuals but as representatives of the state. He also raised objections to what he characterized as a broad order issued by the probe agency, seeking a wide range of information from the collectors.
Sibal reiterated the state government’s challenge to the jurisdiction of the Enforcement Directorate under the Prevention of Money Laundering Act to investigate what he termed as “mining offences.” He emphasized that none of the offences were listed under the anti-money laundering statute. Additionally, Sibal pointed out the absence of any investigation or first information report (FIR) regarding the leases in question, nor any identified proceeds of crime, questioning the basis on which the ED sought information.
However, in response to these arguments, Justice Mithal suggested that every state and its officers should assist the Enforcement Directorate in determining if any offence is committed. Sibal expressed concerns about the implications of this suggestion on the scope of the central agency’s investigative powers, countering,
“Then Your Lordships may as well say that the Enforcement Directorate can investigate anywhere in this country, qua any offence. Please say that then.”
When questioned about the prejudice caused to the state machinery if it assists the central agency, Sibal insisted that according to Sub-section (2) of Section 66 of the Prevention of Money Laundering Act, which mandates the disclosure and sharing of information between authorities, the ED was required to provide relevant documents upon finding information related to the commission of a predicate offence to the concerned state authority, and “not the other way around”.
Contrarily, ASG SV Raju countered Sibal’s contentions relating to the question of maintainability, insisting that the ED was entitled to investigate the offences concerned. They are not mining offences, the law officer argued, but were offences under the Indian Penal Code and the Prevention of Corruption Act. He also accused the state government of attempting to shield potential offenders. Their conduct, despite the information being sought from the collectors being innocuous, made it appear as though the State of Tamil Nadu wanted to “protect the accused”, he said.
Today, Sibal emphatically highlighted a discrepancy between the districts from whose collectors information has been sought by the central agency and the districts mentioned in the FIRs filed with respect to the illegal sand mining case. Sibal raised concerns about the ED’s broad powers, questioning whether the agency could demand information without any scheduled offence or crime being set out with respect to the concerned districts. He also asked why the central agency had asked the collectors to furnish their passport and Aadhar cards.
This sentiment was echoed by Rohatgi, appearing for the collectors today. Questioning the practice of demanding passport and Aadhar card details from them, he said,
“Is this how government officers are to be treated?On noting the court’s inclination to stay the high court’s order, Rohatgi also suggested, “Your Lordships may exempt their personal appearance and they will send whatever they have. It’s very demeaning.”
The judges, however, refused to relent, with Justice Trivedi categorically stating,
“If their personal assistance is required, they are bound to provide that to the Enforcement Directorate.”
In response to Sibal’s and Rohatgi’s submissions, ASG Raju defended the agency’s actions, stating that seeking information from district collectors was part of the investigation process. Refuting the contention that the central agency could not seek information from collectors of districts not related to the FIRs, Raju argued that the ED needed to determine whether proceeds of crime had travelled to other districts.
However, making a small concession, the law officer clarified that the ED would not ask for passport and Aadhar card details from the officials, even though it was a part of their standard operating procedure.
BACKGROUND OF THE CASE
The legal dispute originated from an interim order issued by Justice SS Sundar and Justice Sunder Mohan, allowing the Enforcement Directorate (ED) to continue its investigation into the summonses issued to district collectors in Tamil Nadu. However, the Madras High Court granted three weeks for the ED to respond to the case.
In the proceedings before the high court, the Tamil Nadu government argued that the Mines and Minerals (Development and Regulation) Act formed a comprehensive legal framework, implying that the ED lacked investigative authority under this law. Additionally, it was argued that the offences under the MMDR Act were not listed as scheduled offences under the Prevention of Money Laundering Act. This supported the state’s contention that the ED had overstepped its jurisdiction by issuing summonses.
On the other hand, the ED defended its actions, rejecting claims of a speculative investigation. It also challenged the admissibility of the petitions, noting that none of the petitioners were accused in the case, thereby questioning the rationale behind halting the investigation. Furthermore, the ED argued that widespread illegal mining in Tamil Nadu constituted offences under various sections of the Indian Penal Code and the Prevention of Corruption Act. These offences, the ED contended, were scheduled offences falling within its investigative purview. Additionally, the central agency accused the Tamil Nadu government and its officials of attempting to shield potential wrongdoers.
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