In a significant legal development, the Madras High Court division bench, presided over by Justice SS Sundar and Justice Sunder Mohan, has issued a stay on the summons issued by the Enforcement Directorate (ED) to district collectors. This ruling comes in connection with a money laundering case linked to illegal sand mining.
The ED conducted raids in September 2023 at 34 locations, including sand quarries, contractors’ offices, and residences. During the two-day operation, unaccounted property documents, ₹12.82 crores in cash, and 124 grams of gold jewellery were seized. Following the raids, the ED formally requested details of all First Information Reports (FIRs) related to illegal sand mining in the last five years from the Director General of Police on October 17, 2023. However, the Additional Solicitor General (ASG) informed the court that the DGP has not provided the requested information, and the ED’s request remains pending.
During the court hearing, the ASG and ED’s Special Public Prosecutor N. Ramesh asserted that the Directorate’s request for information has not been fulfilled by the DGP. In response to the ED’s actions, the DMK government, along with five Collectors, collectively filed ten writ petitions. Five of these petitions challenge the ED’s summons, while the other five seek a declaration that the ED’s authority to investigate such offenses without the State government’s consent infringes upon federalism, a fundamental aspect of the Constitution.
In a courtroom showdown, Senior Advocate Dushyant Dave, representing the Tamil Nadu government, contested the powers of the Enforcement Directorate (ED) in the sand mining money laundering case. Dave argued that the Mines and Minerals (Development and Regulation) Act constituted a comprehensive legal framework in itself, contending that the central authority lacked jurisdiction to probe under this Act. Furthermore, he asserted that the offences under the MMDR Act were not scheduled offences under the Prevention of Money Laundering Act (PMLA), challenging the ED’s authority in this regard.
The counsel for the Tamil Nadu government emphasised that the ED could not take unilateral action without informing the State government about alleged illegal sand mining activities. It was argued that the ED’s approach varied across states and that the authority did not possess the power to issue summons to IAS officers but rather could request their cooperation in the investigation.
On the opposing side, Additional Solicitor General ARL Sundaresdan, representing the ED, countered these arguments, asserting that the officers were merely called upon to assist in the investigation and that no arbitrary or expansive inquiry was being conducted. Sundaresdan challenged the maintainability of the petition, pointing out that none of the petitioners were accused in the case and therefore contending that the present petition aimed at stalling the probe should not be allowed.
The ED presented an additional dimension to the case, alleging that Water Resources Minister Durai Murugan’s assistant, Umapathi, had coerced an officer to evade an investigation requested by the ED. During the proceedings, the ED claimed that officials admitted to substantial illegal sand mining activities during the investigation. Shockingly, these officials purportedly confessed that despite the significant impact on the Water Resources Department, no action was taken against the wrongdoers. The ED filed statements from Water Resources Department officials in court, revealing their acknowledgment that they had erred by permitting illegal sand mining activities under the purported oral orders of their superiors.
— Polimer News (@polimernews) November 28, 2023
In a crucial legal face-off, Justice Sundar of the Madras High Court underscored a key aspect of the Prevention of Money Laundering Act (PMLA) of 2002, asserting that the Enforcement Directorate (ED) required both the existence of a predicate offence and the identification of proceeds of crime to initiate a probe. Responding to this, ARL Sundaresan, the Additional Solicitor General (ASG), argued on behalf of the ED, stating that, by their estimation, the proceeds of the alleged crime surpassed a staggering Rs 4,500 crore.
Sundaresan clarified that the ED had engaged a team of professors from the Indian Institute of Technology (IIT)-Kanpur to assess the volume of sand extracted from 28 mining sites in Tamil Nadu. The findings, he claimed, indicated that approximately 24 lakh units of the mineral had been illicitly mined over the past one to two years, causing substantial financial loss to the exchequer. However, Justice Mohan cautioned against overreach, stating, “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.”
The ASG further contended that rampant illegal mining in Tamil Nadu, constituting offences under Sections 417, 418, 419, 420, 471 of the Indian Penal Code (IPC) and the Prevention of Corruption Act, provided the ED with jurisdiction to probe the matter as these were scheduled offences.
The Madras High Court, after hearing arguments from both sides, announced on November 27, 2023, that it would deliver orders the following day regarding the Tamil Nadu Government’s plea. The government sought not only to halt the summons issued by the ED to five District Collectors but also to suspend the entire investigation into the alleged money laundering linked to widespread illegal sand mining in the state.
In a significant development, the bench remarked, “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 interim relief is granted.” Despite strong opposition from the ASG against a stay on the investigation, the court reserved its judgement, indicating the importance of a detailed examination of the legal intricacies involved in the case.
— Mohamed Imranullah S (@imranhindu) November 28, 2023
The Madras High Court has decided to adjourn the hearing on the main writ petitions in the alleged money laundering case connected to illegal sand mining by three weeks. The decision comes after intense legal arguments and amidst growing concerns over the jurisdiction and powers of the Enforcement Directorate (ED) in the case.
Amidst the legal developments, K Annamalai, the President of Tamil Nadu’s Bharatiya Janata Party (BJP) unit, took to the social media platform X to express his views on the matter. Annamalai stated, “The assessment by the authorities is the tip of the iceberg for the volume of state-sponsored loot under this corrupt DMK Government. It’s becoming clear that the DMK Govt is a party to this crime & with the going rate, the DMK Govt would ensure that our entire State is sold to the highest bidder before the end of its tenure.”
The assessment by the authorities is the tip of the iceberg for the volume of state-sponsored loot under this Corrupt DMK Government.
It’s becoming clear that the DMK Govt is a party to this crime & with the going rate, the DMK Govt would ensure that our entire State is sold to… https://t.co/2ufgtJPsfE
— K.Annamalai (மோடியின் குடும்பம்) (@annamalai_k) November 27, 2023
The adjournment of the main writ petition hearing adds a new dimension to the ongoing legal saga, allowing for a more extended period for the examination of the complex legal issues at play. Annamalai’s remarks on social media underscore the escalating political tensions surrounding the case, as allegations of state-sponsored corruption continue to make headlines. The three-week hiatus in the legal proceedings will undoubtedly be closely watched as the case unfolds further.