New Delhi: The Supreme Court Monday verbally observed that a state or its officers should help the Enforcement Directorate (ED) — a central government agency — in finding out if any offence (under Prevention of Money Laundering Act, 2002) is made out.
A bench of justices Bela Trivedi and Pankaj Mithal made this remark while it was hearing the anti-money laundering agency’s appeal against a recent Madras High Court order that stayed ED’s summonses issued against four District Collectors, seeking their explanation in connection with an alleged sand mining case in Tamil Nadu.
The high court had done so on a writ petition filed by the Tamil Nadu state in which the latter questioned ED’s jurisdiction, contending the state had exclusive powers to investigate alleged violations in mining.
On the last hearing in the Supreme Court, the top court had asked the Tamil Nadu government to explain how its writ petition was maintainable before the high court. The bench of justices Trivedi and Mithal opined ED summonses were issued to officials of the state government and since they were aggrieved by this action of the agency, they should have filed individual cases before the HC.
Reiterating the same view, the bench Monday went a step ahead and observed: “In the general proposition we are saying, if the state machinery is asked to help then what is wrong in it.”
This comment came soon after Tamil Nadu counsel, senior advocates Kapil Sibal and Amit Anand Tiwari maintained that ED can probe a case only if there is an FIR registered under a predicate offence, which is mentioned in the PMLA. “ED would investigate money laundering charges if there is a predicate offence. There is none here,” Sibal told the bench.
When the bench suggested the state government’s cooperation in the matter, Sibal quipped: “In that case, you (bench) can say that ED can investigate all offences in the country.”
At the outset, Sibal asked the bench to give the Tamil Nadu government time to file an appropriate response to ED’s appeal. However, the bench did not indulge him and asked him to argue the matter, saying the court on the last hearing adjourned the case only to give the state time to prepare on the point of how Tamil Nadu is aggrieved with the ED’s summonses.
“State has to comply with the law made by the Parliament under Article 356,” Justice Trivedi told Sibal. In response, the senior counsel read out from the high court order, which held Tamil Nadu’s writ petition maintainable.
He said the state had already initiated action in a case and that there is no FIR in connection with the alleged violation which ED wants to probe.
“Under which provision can the ED probe in case there is no FIR,” Sibal wondered.
He disclosed the facts of the case to inform the bench that the case under state investigation is related to four districts — Thanjavur, Dindigul, Theni and Thoothukudi — while ED summonses have gone to District Collectors of Vellore, Ariyalur, Karur and Trichy.
“Where are the proceeds of crime, there is no case registered, there is no predicate offence,” he said.
Moreover, he added, ED can only investigate money laundering charges and not the predicate offence, which would fall within the state’s jurisdiction.
If at all ED stumbles upon any commission of offence, then it has to send documents to the state police under PMLA, he said, adding, “It cannot be the other way round (state helping ED probe a predicate offence).”
Sibal then insisted that the State must get an opportunity to file a detailed response to ED’s petition in the Supreme Court.
“The matter is listed before 5 March,” he said, indicating the top court should let HC decide the matter conclusively. “You have not even issued notice and we are being asked to argue,” he complained.
Appearing for ED, additional solicitor general S.V. Raju opposed Sibal’s request for time. He said the Tamil Nadu government was on caveat and, therefore, did not need a notice, as per the Supreme Court rules.
Raju pointed to the FIR registered in connection with the alleged mining violations, under the state probe, to say that various sections under the Indian Penal Code (IPC) have been invoked in it, including that of criminal conspiracy. These sections, he said, were predicate offences under the PMLA, giving ED every right to probe the violations.
Raju also said that ED had asked for innocuous information from District Collectors, whereas the state has tried to step into the shoes of the accused by filing the writ petition in the high court.
“This is the attitude of the state, which wants to protect the accused. We are not investigating any predicate offence. We have written to the Director General of Police (of Tamil Nadu) and they are not replying,” Raju said.
ED has in its appeal in the Supreme Court sought a direction to the state government to appoint a nodal officer for the purpose of sharing with the ED all FIRs registered in the state where scheduled offences under the PMLA are involved.
This is the second case where ED and Tamil Nadu are involved in litigation over the former exercising its jurisdiction to investigate alleged money laundering charges in the state in connection with mining violations.
In the first case, the Tamil Nadu government had arrested an ED officer on charges of corruption. ED has moved the top court, asking it to direct the state to hand over the officer to the central agency so that it can conduct a thorough probe into the matter.
Tamil Nadu is yet to file its response in the case.
Meanwhile, Tamil Nadu filed a short response on the matter that was taken up Monday by Justice Trivedi’s bench. In it, Tamil Nadu has said that the top court in a catena of judgements has held that writ petitions filed by both state and Centre are maintainable, particularly qua federalism.
(Edited by Amrtansh Arora)
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