'Can You Withhold Entire Office & Staff Under Your Control?' : Madras High Court Orally Asks ED To Halt Probe Against TASMAC Till March 25

The Madras High Court on Thursday (March 20) orally asked the Enforcement Directorate not to proceed with its investigation against the Tamil Nadu State Marketing Corporation (TASMAC) in an alleged money laundering case till the next date of hearing. 

A division bench of Justice MS Ramesh and Justice N Senthilkumar directed the ED to file a counter to the petition filed by TASMAC challenging the recent searches by the agency conducted at the latter's headquarters. In the meantime, the court orally asked the ED to not proceed with the investigation and adjourned the case to March 25 (Tuesday).

The State had also filed a petition seeking for a declaration that ED's power to investigate into an offence of money laundering arising out of and within the territorial limits of the State, without state consent is violative of the basic structure of federalism and separation of powers. However, noting that the relief sought is wide, the court directed the State to modify its prayer. Advocate General PS Raman assured the court that the state would modify the prayer. 

During the hearing, Senior Advocate Vikram Chaudhri appearing for TASMAC questioned the manner in which the search and seizure was conducted by the ED. He argued that as per Section 17(1) of the Prevention of Money Laundering Act, the Director or any other officer not below the rank of Deputy Director was to proceed with the search on the basis of information in his possession and should have reason to believe that an offence under the Act was committed. He pointed out that the Section mandated that such reasons should be recorded in writing. Emphasising on the requirement of these procedures, he submitted that the ED had failed to follow the procedures in the present case.

Chaudhri argued that in the present case, there was a total invasion of privacy by the ED as it entered the premises and had taken documents, seized mobile phones of the employees. Chaudhri argued that ED did not have powers to barge into the office and take any document it wished. He added that the seizure should be proportional to the offence. He also informed the court that the employees were made to sit for 60 hours with women officers being sent back home late in the night with total disregard to their rights.

Additional Solicitor General ARL Sundaresan appearing for ED, however, denied the allegation and submitted that the employees were allowed to go home. He argued that the ED had materials to proceed with the seizure.

The court wondered if the ED had the power to detain the entire office based on materials available against some persons. The court also pointed out that while the ED argued that it had enough materials, the TASMAC's grievance was that such materials were not made available to them.