Supreme Court Allows ED To Proceed With Summonses To Tamil Nadu District Collectors, Says State's Writ Petition Prima Facie Misconceived
The Supreme Court on Tuesday (February 27) suspended the operation and execution of an interim order issued by the Madras High Court staying the summonses issued to district collectors in Tamil Nadu in connection with alleged illegal sand mining-money laundering cases. The top court today granted interim relief in response to a special leave petition filed by the Directorate of Enforcement...
The Supreme Court on Tuesday (February 27) suspended the operation and execution of an interim order issued by the Madras High Court staying the summonses issued to district collectors in Tamil Nadu in connection with alleged illegal sand mining-money laundering cases.
The top court today granted interim relief in response to a special leave petition filed by the Directorate of Enforcement (ED) against a November 28 ruling of the high court staying the operation of these summonses issued by the central agency under the Prevention of Money Laundering Act but allowing the investigation to continue, a bench of Justices Bela M Trivedi and Pankaj Mithal today directed the district collectors to appear and respond to the summonses issued by the ED on the next indicated date.
In its order, the bench noted that the State of Tamil Nadu's writ petition before the high court against the summonses prima facie appeared to be 'misconstrued' and based on a 'misconception of the law'. The bench highlighted that Article 256 of the Constitution obligates state governments to ensure compliance with laws made by Parliament. They also emphasised that the ED had the power to summon individuals during investigations under the anti-money laundering statute.
"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.
Courtroom Exchange
On the first day of the hearing, 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.
Yesterday, the apex court continued its probing examination of the Tamil Nadu government's standing to challenge summonses issued by the Enforcement Directorate to district collectors. The state government, represented by Senior Advocate Kapil Sibal, vehemently defended its right to invoke Article 226 of the Constitution against these summonses. To Justice Trivedi's query on why the State intervened on behalf of the district collectors, Sibal insisted 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.
He 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'. Sibal stressed that none of the offences were scheduled offences under the anti-money laundering statute. Sibal 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.
However, in response to these submissions, Justice Mithal suggested that every state and its officers should help the Enforcement Directorate to find out if any offence is 'laid out'. This suggestion was met with resistance from Sibal, who raised apprehensions about its implications on the contours of the central agency's powers to conduct a probe. He countered, “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 asked what prejudice is caused to the state machinery if it has to help the central agency, Sibal 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".
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
The legal controversy can be traced back to an interim directive issued by the division bench of Justice SS Sundar and Justice Sunder Mohan in response to a batch of pleas challenging the ED's summonses to district collectors in Tamil Nadu. While the investigation was permitted to proceed, the Madras High Court granted three weeks for the Enforcement Directorate to respond to the case.
Before the high court, the Tamil Nadu government contended that the Mines and Minerals (Development and Regulation) Act constituted a self-contained code, suggesting that the central agency lacked investigative powers under this legislation. It was also pointed out that the MMDR Act were not scheduled offences under the Prevention of Money Laundering Act, in support of the state government's argument that the ED had exceeded its jurisdiction by issuing summonses.
Contrarily, the probe agency 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. It also went on to argue 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 the its jurisdiction to investigate. The Tamil Nadu government and its officers were also accused by the central agency of attempting to shield potential offenders.
Case Details
Directorate of Enforcement v. State of Tamil Nadu & Ors. | Special Leave Petition (Criminal) No. 1959-1963 of 2024