Franklin Templeton Matter- Economic Offences Wing In State Police Needs To Be Beefed Up With Appropriate Personnel: Madras HC

The plea before Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy raised concerns regarding officials' ability and their technical expertise to conduct the investigation into the matter.

The plea before the Court

The writ petitioner submitted that his attempt was to unearth the flight of capital of about Rs.2,000 crore due to related parties transactions and redemption to the extent of a 5,000% increase on account of insider trading.

The petitioner stated that complaints in the Franklin Templeton Matter ought to be investigated by investigating agencies that have the wherewithal and domain knowledge to undertake such tasks.

It was also alleged that though an Economic Offences Wing had been created in the State police, no degree of specialization had been attempted.

It was submitted that the usual transfer of a Deputy Superintendent of Police from one district or some Inspector of Police from another branch was being done without identifying appropriate personnel having an aptitude or understanding of economic affairs or market conditions to undertake the highly sophisticated investigation necessary as in the present case.

Court's observations

The Court noted that in its earlier orders, it had directed to ensure that the Economic Offences Wing is manned by trained personnel who have experience in or knowledge of accounting, auditing and market conditions.

However, the Court further observed that no attempt had been made to either train personnel or recruit trained personnel or even engage experts or consultants in such regard.

Accordingly, the Court opined,

"It is necessary that the investigation into the role of those in control of the six funds be conducted and, at the same time, the Economic Offences Wing in the State police is beefed up, so to say, with appropriate personnel."

Significantly, the Court added the Securities Exchange Board of India and the Enforcement Directorate as parties to the instant proceedings noting that the market regulator and the said investigating agency may be best equipped to delve into the transactions pertaining to the six mutual funds to unearth anything remiss therein.

At the same time, the Chief Secretary and the Home Secretary, Government of Tamil Nadu, were called upon to file a report suggesting measures to introduce a degree of specialization in the Economic Offences Wing of the State police, particularly in the manner of recruitment or even engagement of consultants or the like.

Lastly, the matter was posted for further hearing on 07^th June 2021.

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