The Madras High Court on Monday decided to pass orders on Tuesday on Tamil Nadu Government’s plea to stay not only the summons issued by Directorate of Enforcement (ED) to five District Collectors but also the entire investigation being conducted into alleged money laundering of the proceeds of rampant illegal sand mining in the State.
A Division Bench of Justices S.S. Sundar and Sunder Mohan heard the arguments advanced by senior counsel Dushyant Dave for the State government and Additional Solicitor General (ASG) AR.L. Sundaresan for the ED and decided to first pronounce its orders on the State’s plea for interim relief before dealing with the main cases.
The State government and the five Collectors had jointly filed 10 writ petitions — five challenging the summons and the other five seeking a declaration that the ED’s power to investigate such offences, without the consent of the State government, was against federalism which was a basic structure of the Constitution.
During the course of hearing on Monday, when the judges wanted to know on what basis did the ED register a Enforcement Case Information Report (ECIR) on September 11, 2023, the ASG said, it was on the basis of four First Information Reports (FIRs) that the State police had registered in connection with illegal mining.
The ED had written to the Director General of Police on October 17, 2023 seeking details of all FIRs registered in connection with illegal sand mining in the last five years. However, “the DGP has been sitting over it and not providing us those details,” the ASG, assisted by ED’s Special Public Prosecutor N. Ramesh, charged.
When Justice Sundar pointed out that the existence of a predicate offence and identification of proceeds of crime were essential for the ED to probe a case under the Prevention of Money Laundering Act (PMLA) of 2002, Mr. Sundresan said, according to the ED, the proceeds of the crime were more than ₹4,500 crore.
He said, the ED had engaged a team comprising professors from Indian Institute of Technology (IIT)-Kanpur to estimate the volume of sand excavated from 28 mining sites in Tamil Nadu and found that around 24 lakh units of the mineral had been mined illegally in the last one to two years causing great loss to the exchequer.
Wondering whether the result of such a survey could be the basis for initiaing action under the PMLA, Justice Sundar said: “Your purpose appears to be to expose huge amount of corruption but can you do it under the Prevention of Money Laundering Act is the question.”
Justice Mohan said: “Your objective may be laudable but your powers are limited. You can’t say I did a survey and therefore I want to investigate. You need the proceeds of the crime.” Mr. Dave sought a week’s time to file a rejoinder to ED’s counter affidavit and sought interim protection till the disposal of the main writ petitions.
Taking strong objection to the ED’s charge that the State government was attempting to shield the offenders by filing the present writ petitions, he said, the central investigating agency had no authority to summon the Collectors of Ariyalur, Karur, Vellore, Thanjavur and Tiruchi and seek details of sand quarries in their districts.
“This amounts to a roving and fishing inquiry by the ED. These writ petitions require a detailed hearing since they touch upon the federal structure. Till then, the State must be protected. Heavens will not fall down if an interim relief is granted,” he said when the ASG vehemently opposed a stay on investigation.
