The Madras High Court on November 28 stayed the summons issued by the Directorate of Enforcement (ED) on November 17 to the Collectors of Ariyalur, Karur, Thanjavur, Tiruchi and Vellore for producing details regarding all sand quarry sites in their districts.
Justices S.S. Sundar and Sunder Mohan, prima facie, agreed with the Tamil Nadu government’s contention that the ED, acting under the Prevention of Money Laundering Act (PMLA) of 2002, could not engage in a fishing expedition to identify possible proceeds of crime.
The judges said, existence of a predicate offence as well as the proceeds of crime were quintessential for initiating proceedings under the PMLA whereas in the present case, the ED had sought details from the Collectors to find out whether any offence had been committed at all.
Dictating the order in open court, Justice Sundar pointed out the ED had registered an Enforcement Case Information Report (ECIR) on September 11, 2023 with regard to alleged laundering of the proceeds of rampant illegal sand mining reportedly taking place in Tamil Nadu.
Four FIRs
The ECIR was based on four First Information Reports (FIRs) registered by the State police in connection with sand mining cases. However, curiously, the first FIR was related to the murder of a Village Administrative Officer who attempted to prevent illegal sand mining at Orathanadu in Thoothukudi district.
The second FIR was related to seizure of ₹1.5 lakh of unaccounted money by the Directorate of Vigilance and Anti Corruption sleuths from the office of the geology and mining department officials in Dindigul district. The other two FIRs were also of similar nature.
Though the ED had written to Tamil Nadu’s Director General of Police/head of police force on October 17, 2023 seeking details of all FIRs registered in connection with illegal sand mining in the State in the last five years, it was yet to be provided with such details.
Nevertheless, it had quantified the proceeds of crime to be ₹4,730 crore on the basis of a survey conducted by it through an expert team which had estimated that around 24 lakh units of sand could have mined illegally from 28 sites in the State in the last one to two years.
“Therefore, this court is prima facie convinced that the impugned [under challenge] summons are not within the jurisdiction of the respondent [ED] and it is just an attempt to investigate the possibility of identifying proceeds of crime as a result of any activity which is not so far registered by the State agencies,” the Bench concluded.
However, it added a rider that all observations made by it in the order were only for the purpose of granting interim relief and that the ED could raise all its contentions during the final hearing of the writ petitions, filed by the Tamil Nadu government along with the Collectors, on December 21.
Though the State government had also sought to stay all further proceedings pursuant to the registration of the ECIR, thereby virtually seeking a stay on the investigation being carried out by the ED, the judges refrained from passing any orders on those interim applications.
They decided to take up all 10 writ petitions — five challenging the summons and five questioning the authority of the ED to investigate such offences without the consent of the State government — for final hearing next month and appreciated the ED for having filed a detailed objection affidavit quickly.
