State or its officers should help ED, comply with law enacted by Parliament: SC tells Tamil Nadu govt

The apex court had last week questioned the Tamil Nadu government for filing a plea in the Madras High Court against the ED for its probe in a money laundering case.
Last Updated 26 February 2024, 12:04 IST

New Delhi: The Supreme Court on Monday once again quizzed the Tamil Nadu government as to how it was aggrieved by the action initiated by the Enforcement Directorate against the state officers in money laundering case related to sand mining.

The top court told the counsel that state or its officers should help the ED in finding out if any offence is made out against any person, since the state has to comply with laws enacted by the Parliament.

“If the state machinery is asked to help, what is the prejudice caused,” a bench of Justices Bela M Trivedi and Pankaj Mithal asked senior advocate Kapil Sibal and Additional Advocate General Amit Anand Tiwari, appearing for Tamil Nadu government.

The bench also said if district collector was aggrieved, he could have moved the court in individual capacity.

"Is he (collector) not part of the state," Sibal asked the bench which said under Article 256 of the Constitution, states have to comply with central laws

The bench cited the enactment of Prevention of Money Laundering Act by the Parliament.

To this, Sibal said mining is not a scheduled offence.

On February 23, the Supreme Court questioned the Tamil Nadu government for challenging summons issued to five district collectors by the ED in connection with a money-laundering case.

The bench had then asked the Tamil Nadu government counsel, how the state can file writ petition before the High Court, under which law and that too against the ED.

On Monday, Sibal said there are no proceeds of crime pending in any FIR, no predicate offence in any FIR qua which information is sought. The bench asked the counsel if for issuance of Section 50 summons there has to be a predicate offence.

Sibal said there is none here and they are asking information for something there is no predicate offence, therefore the question of summons does not arise.

Sibal the ED is concerned with money laundering and it cannot investigate a predicate offence, it has no power under PMLA to investigate a predicate offence. “Now, in this case the state is filing a writ petition because the authority of the state has been asked to produce documents in respect of leases qua which there is no scheduled offence,” Sibal said.

On this, the bench said, “The state or its officers, they should help the ED for finding out any offence is made out against any person”. Sibal, opposing the observation made by the bench, said then the court may say the ED can investigate anywhere in this country.

Referring to the SC's judgment in Vijay Madanlal Choudhary case, Sibal said if it is a predicate offence only then the ED can investigate, so where is that predicate offence here. “If the state machinery is asked to help, what is the prejudice caused,” the bench asked the counsel.

Sibal said there is provision Section 66(2) of PMLA, the ED is investigating any offence in the course of which it finds information with the commission of a predicate offence, it sends the documents to the investigating authority of the state, and not the other way around.

"ED cannot say please give us information of some offence that is not the jurisdiction of the ED and they are asking information from an authority of the state and the state is aggrieved and the authority (district collector) is also aggrieved, and what is the legal basis of saying that the state cannot file the writ petition," Sibal asked.

“That is our query,” the bench said.

Sibal said there should be a formal notice so that the state can file an affidavit, and the matter is listed before high court in March first week.

"Anyway your lordships have already determined, your lordships may decide. It is quite clear," he said.

The bench told Sibal, “It is up to you whether you argue or not, we issue notice and we will see".

Additional Solicitor General S V Raju, representing the ED, argued that according to Supreme Court rules there is no need for notice to a caveator and in the previous hearing senior advocate Mukul Rohatgi appeared for the state government and sought time, which was provided by the court.

“We are investigating the proceeds of crime and looking at the attitude of the state, it appears state wants to protect the accused persons…the state is stepping into the shoes of the accused and trying to prevent information, simple innocuous information being asked, we are not investigating any predicate offence,” Raju said.

The bench said the senior counsel appearing for respondents on caveat has submitted that a short counter-affidavit on preliminary issue relating to maintainability has to be filed and let it be placed on record. The court fixed the matter for further hearing on Tuesday.

The alleged illegal sand mining scam has brought five district collectors of Tamil Nadu under the scanner, with the ED issuing summons to them. After the state government filed a writ petition challenging the summons, the ED asked the Supreme Court to halt the interference.

(Published 26 February 2024, 12:04 IST)

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