“ED Can’t Investigate Predicate Offences”: TN Govt.; Today, February 26, the Supreme Court persisted in its thorough inquiry into the Tamil Nadu government’s authority to contest summonses from the Enforcement Directorate (ED) directed at district collectors concerning purported illegal sand mining and money laundering incidents.
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NEW DELHI: The Supreme Court of India is currently examining a contentious issue involving the Enforcement Directorate (ED) and its authority to summon district collectors in Tamil Nadu. This case, which revolves around the intricate balance of federalism and the central agency’s powers under the Prevention of Money Laundering Act (PMLA), has sparked a debate on the limits of jurisdiction and the role of state officials in central investigations.
A bench comprising Justices Bela M. Trivedi and Pankaj Mithal is presiding over a special leave petition filed by the ED against a November 28 ruling of the Madras High Court. The High Court’s decision temporarily halted the operation of summonses issued by the ED to district collectors in Tamil Nadu, albeit allowing the investigation to proceed under the PMLA. The Supreme Court’s engagement with this matter underscores the complex interplay between state and central authorities in the enforcement of law and order.
During the proceedings, the bench expressed skepticism regarding the Tamil Nadu government’s standing to challenge the summonses under Article 226 of the Constitution. Justice Trivedi, in particular, pondered the appropriateness of the High Court’s interim order and considered a stay, only to defer the decision upon Senior Advocate Mukul Rohatgi’s request.
Representing Tamil Nadu, Rohatgi defended the state’s right to initiate writ action, framing it as a matter of “federalism” and highlighting a separate writ petition by the ED in the Supreme Court, which sought to transfer a bribery case to the CBI due to alleged non-cooperation from the state government.
The dialogue in the courtroom was marked by robust exchanges, with Senior Advocate Kapil Sibal stepping in to defend the Tamil Nadu government’s position. Sibal questioned the ED’s jurisdiction under the PMLA to investigate what he termed as “mining offences,” arguing that none of the alleged offences were scheduled under the anti-money laundering statute. He emphasized that the district collectors were acting as representatives of the state, not in their individual capacities, and criticized the ED’s “omnibus order” for seeking a broad spectrum of information from them.
“Is a district collector not a part of the State? Information was not sought from the collectors in an individual capacity. The state government is aggrieved by an omnibus order of the Enforcement Directorate asking information from an authority of the State. In this omnibus order, four collectors in four districts have been asked by the agency to furnish whatever information that has been sought. Both the state government and its authorities are petitioners before the court, on grounds that the ED had no jurisdiction. What is the legal basis for saying that the state government cannot file a writ petition?”
-Sibal
“First, there are no proceeds of crime in any FIR, nor any predicate offence in any FIR qua which information has been sought. Therefore, the question of issuing notice under Sub-section (2) of Section 50 does not arise. That’s the second point. Third, the ED is concerned with money laundering. It has no powers under the PMLA to investigate predicate offence. Fourth, in this case, the state government has filed a writ petition because the authority of the state has been asked to produce documents with respect to leases vis-à-vis which there is no scheduled offence.”
-The senior counsel summarised.
Sibal’s arguments were met with counterpoints from Additional Solicitor General SV Raju, who insisted on the ED’s entitlement to investigate the offences in question. Raju accused the Tamil Nadu government of attempting to shield potential offenders, emphasizing the innocuous nature of the information sought from the collectors and questioning the state’s agitation over the matter.
“This is the State stepping in the shoes of the accused and trying to prevent the ED from getting information. We have asked for simple, innocuous information. So, why is the state government getting agitated over it? We are not investigating any predicate offence. I make this statement. Look at their conduct. We have written to the director general seeking copies of the FIRs, but neither have they sent them across, nor have they replied,”
-ASG
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“Let us see. What to do. We’ll hear this tomorrow.”
-Court said.
The legal tussle has its roots in an interim directive by the Madras High Court, which responded to pleas challenging the ED’s summonses. The High Court allowed the investigation to proceed but called for the ED to clarify its position within three weeks. The state government argued that the Mines and Minerals (Development and Regulation) Act constituted a self-contained code, suggesting the ED lacked investigative powers under this legislation. Conversely, the ED defended its actions, asserting its jurisdiction over scheduled offences under the PMLA and accusing state officials of protecting potential offenders.
As the Supreme Court adjourned the hearing to allow for further affidavits to be filed, the legal community and the public await a resolution that will clarify the boundaries of central and state powers in investigations under the PMLA. This case not only highlights the challenges of navigating India’s federal structure but also sets a precedent for the interaction between state authorities and central agencies in the enforcement of national laws.
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