How Can State File Writ Petition Challenging ED Summonses To District Collectors? Supreme Court Asks Tamil Nadu

A bench of Justices Bela M Trivedi and Pankaj Mithal was hearing a special leave petition filed by the Directorate of Enforcement (ED) against a November 28 ruling of the high court staying the operation of the summonses issued by the central agency to district collectors in the case under the Prevention of Money Laundering Act, while allowing the investigation to continue.

During the hearing today, Justice Trivedi asked the state government to demonstrate its locus standi to file the writ petition under Article 226 of the Constitution. Questioning the State of Tamil Nadu, the judge initially suggested staying the operation of the high court's interim order, saying, "How can the state file this writ petition? Under which law...You satisfy us on how state is interested and how it can file this writ petition against the Enforcement Directorate. How is the state aggrieved? We'll stay this order."

Senior Advocate Mukul Rohatgi vehemently protested against this on behalf of Tamil Nadu, appearing on caveat, arguing that there was no prohibition under the law enjoining a state from commencing this writ action.

He also pointed to ED's writ petition pending before a bench led by Justice Surya Kant seeking to transfer the investigation of a bribery case against its officer Ankit Tiwari from the Tamil Nadu Directorate of Vigilance and Anti-Corruption (TNDVAC) to the Central Bureau of Investigation (CBI). The central agency, in its writ petition filed under Article 32 of the Constitution, has alleged the non-cooperation of the state government, citing impediments faced in accessing relevant First Information Reports (FIRs) and essential materials necessary for fulfilling its obligations under the anti-money laundering statute.

The senior counsel reasoned today, "The ED has filed a substantive writ against the state government in the Supreme Court in respect of the same issue. This is currently pending in the fourth court."

"But you explain how the state is interested in this case," Justice Trivedi insisted.

At this juncture, Additional Advocate General of TN, Amit Anand Tiwari, pointed out that the district collectors had also moved the high court challenging the summonses. The presiding judge countered, "The district collector, may, in an individual capacity, file this writ petition. But not the state or its secretary."

"Therefore the writ is maintainable at the instance of the collectors. The order is passed also with respect to them," Tiwari argued.

Additional Solicitor General SV Raju chimed in, saying, "They have challenged simple, innocuous summonses as well. The district collectors are not accused, only witnesses. Only information has been sought from them in their official capacities. This is why summonses have been issued, nothing else."

"The district collectors have to respond as government servants. Section 50 of the PMLA empowers the ED to conduct a kind of preliminary inquiry," Justice Trivedi said.

Rohatgi shot back, "They are not criminals that they will be summoned."

"Who said that they are criminals? The ED wants information. Are they not supposed to cooperate with investigating agency?" Justice Trivedi asked. In response to this, Rohatgi contended that the Enforcement Directorate acted without jurisdiction since none of the offences were scheduled offences under the PMLA. The judge, however, maintained that four FIRs contained offences that were included in the schedule under the anti-money laundering statute, on the basis of which the Enforcement Case Information Report (ECIR) was registered. Therefore, the probe agency, she said, was empowered to conduct an investigation.

When the bench indicated that it would issue notice and seek the collectors' response, the State of Tamil Nadu insisted on being allowed to file a response to the Enforcement Directorate's petition. Rohatgi argued -

"The matter is listed for final hearing before the high court next week. The Madras High Court's interim order was passed in November. We are in February. The state government will need a week's time to respond...You cannot allow the petitioner on the very first day. What else will a stay mean? These collectors who have been summoned have nothing to do with the FIRs. There is a very serious issue of federalism. If the ED is acting without jurisdiction, then the district collectors are not obligated to respond. Keep it on Monday, I'll show to Your Lordships why the state has grounds to file this writ petition. The ED has filed a writ petition against the state government in the Supreme Court which has been condoned. I'll satisfy this court that the state had the standing to file this writ in the high court."

Although the court initially directed notice to be issued to the district collectors and the matter to be listed on Monday, Rohatgi pointed out that the state government, despite its willingness to file a counter-affidavit, would not be able to do so within such a short timeframe.

"Alright, don't issue notice," Justice Trivedi relented, agreeing to hear the matter first on Monday.

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