The Supreme Court on Tuesday allowed the Enforcement Directorate to proceed with the summons issued to the District collectors in Tamil Nadu in connection with the alleged illegal sand mining-money laundering case.
The Court suspended the interim order issued by the Madras High Court staying the summonses saying it was ‘misconceived’.
A bench comprising Justice Bela M Trivedi and Justice Pankaj Mithal directed the district collectors to appear and respond to the summonses issued by the ED on the next indicated date.
The Supreme Court’s directions came on a special leave petition filed by the Enforcement Directorate (ED) against a November 28 order of the Madras High Court which had stayed the operation of the summons issued by the central agency under the Prevention of Money Laundering Act but at the same time it had allowed it to continue the investigation.
The bench noted that the writ petition filed by the State of Tamil Nadu before the high court against the summons appeared to be ‘misconstrued’ and based on a ‘misconception of the law’.
The bench said that Article 256 of the Constitution obligates state governments to ensure compliance with laws made by the Parliament and added that the ED had the power to summon individuals during investigations under the anti-money laundering law.
The case pertains to a controversy that erupted when interim directions were issued by the division bench of the Madras High Court in response to a batch of pleas challenging the ED’s summonses to district collectors in Tamil Nadu.
A bench of Justice SS Sundar and Justice Sunder Mohan though stayed the summons issued by the ED but allowed the investigation to proceed.
The Madras High Court granted the ED three weeks time to respond to the case.
The Tamil Nadu government contended that the Mines and Minerals (Development and Regulation) Act constituted a self-contained code, asserting that the central agency had no powers to investigate under this legislation.
It was also pointed out that the MMDR Act were not a scheduled offence under the Prevention of Money Laundering Act, in support of the state government’s argument that the ED had exceeded its jurisdiction by issuing summons.
The ED defended its actions and refuted any allegations of a fishing expedition.
The ED also questioned the maintainability of the petitions, highlighting that none of the petitioners were accused in the case, thus questioning the grounds for stalling the investigation.
The Supreme Court in its order today said, “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,” the bench observed in the interim order.
During the hearing in the Supreme Court, the bench questioned the state government’s locus standi to invoke Article 226 of the Constitution before the high court, assailing summonses issued to district collectors.
The state government, represented by Senior Advocate Kapil Sibal, defended its right to invoke Article 226 of the Constitution against these summonses. To this, Justice Trivedi’s query on why the State intervened on behalf of the district collectors, Sibal said that the collectors were not acting as individuals but as its representatives.
He also objected to what he described as an ‘omnibus order’ issued by the probe agency seeking a wide gamut of information from the collectors.
Sibal then reiterated the state government’s challenge to the jurisdiction of the Enforcement Directorate under the Prevention of Money Laundering Act to investigate what he described as ‘mining offences’.
The Senior Advocate said that none of the offences were scheduled offences under the anti-money laundering statute and further pointed out that there was no 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.
Justice Mithal suggested that every state and its officers should help the Enforcement Directorate to find out if any offence is ‘laid out’. To this, Sibal raised apprehensions about its implications on the contours of the central agency’s powers to conduct a probe.
Sibal said“Then Your Lordships may as well say that the Enforcement Directorate can investigate anywhere in this country, qua any offence.
He insisted that under Sub-section (2) of Section 66 of the Prevention of Money Laundering Act, which provides for the disclosure and sharing of information between authorities, the ED was required to send relevant documents on finding information relating to the commission of a predicate offence to the concerned state authority, and “not the other way around”.
The Additional Solicitor General (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’, ASG 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”,
Today, Sibal 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 for 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 to the concerned districts.
He also questioned why the central agency had asked the collectors to furnish their passports and Aadhar cards. Senior Advocate Mukul Rohatgi, appearing for the collectors said that the practice of demanding passport and Aadhar card details from them, “Is this how government officers are to be treated?”
On noting the court’s inclination to stay the high court’s order, Rohatgi suggested, “Your Lordships may exempt their appearance and they will send whatever they have…It’s very demeaning.”
The judges, however, refused to agree with the arguments and said, “If their assistance is required, they are bound to provide that to the Enforcement Directorate.”
ASG Raju defended the agency’s actions, stating that seeking information from district collectors was part of the investigation process and the ED needed to determine whether proceeds of crime had travelled to other districts.
However, making a small concession, ASG Raju 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 (SoP).
The ASG alleged that rampant illegal mining in Tamil Nadu constituted offences under various sections of the Indian Penal Code and the Prevention of Corruption Act. These, the ED asserted, were scheduled offences that fell within its jurisdiction to investigate. The Tamil Nadu government and its officers were also accused by the central agency of attempting to shield potential offenders, Raju said.
