Sand Mining Money Laundering Case | Madras High Court Closes Plea Challenging ED's Notice To District Collectors

The bench of Justice SM Subramaniam and Justice M Jothiraman closed the plea after the Advocate General informed the court that the plea had become infructuous since the collectors had already appeared before the investigation agency following the orders of the Supreme Court.

The state had sought for a stay on the summons and the proceedings under the ECIR. The state had also sought to declare that the ED's power with respect to enquiring offences within the territorial limits of a State without the consent of the concerned State is violative of the basic structure of federalism and separation of powers.

In November 2023, a division bench of the High Court had stayed the operation of the summons. While doing so, the High Court remarked that the ED had attempted to conduct a “fishing inquiry” relating to sand mining without the existence of proceeds of crime. The court added that the agency was trying to identify cases of illegal mining and whether it led to an inference of commission of the scheduled offense and then to infer the existence of “proceeds of crime.”

When this order was challenged in the Supreme Court, the top court suspended the operation and execution of the interim order and remarked that the State's petition before the High Court 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 emphasized that the ED had the power to summon individuals during investigations under the anti-money laundering statute.

Following this, the State agreed to share details of the FIRs and other documents sought by the ED. Recording the same, the Supreme Court had closed the plea.

When the matter was taken up by the High Court, the Advocate General informed the court that nothing survived in the petition as the collectors had already appeared before the investigating agency. Noting this, the court disposed the plea.

Case Title: State of Tamil Nadu v Directorate of Enforcement

Case No: WP 33459 of 2023