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Madras HC Stays ED’s Summons To Collectors In Illegal Sand Mining Case; Investigation To Carry On

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The Madras High Court on 28 November 2023 stayed the summons issued by the Enforcement Directorate (ED) to 5 Collectors in Tamil Nadu in the ongoing illegal sand mining investigation. The court said that the investigation can continue. 

In September 2023, sand quarries and the offices and residences of contractors were raided by the ED at 34 locations. From the raids which lasted for 2 days, unaccounted property documents, ₹12.82 crores in cash, and 124 grams of gold jewellery were seized. 

On Monday, 27 November 2023, the Madras High Court announced its decision to deliver orders on the following day regarding the Tamil Nadu Government’s plea to not only halt the summons issued by the ED to five District Collectors but also to suspend the entire investigation into the alleged money laundering associated with widespread illegal sand mining in the state. A Division Bench comprising Justices S.S. Sundar and Sunder Mohan heard arguments presented by senior counsel Dushyant Dave on behalf of the State government and Additional Solicitor General (ASG) AR.L. Sundaresan representing the ED. The court opted to address the State’s request for interim relief before delving into the main cases. The State government and the five Collectors collectively filed ten writ petitions, with five challenging the ED’s summons and the other five seeking a declaration that the ED’s authority to investigate such offenses without the State government’s consent goes against federalism, a fundamental aspect of the Constitution.

During the hearing on 27 November 2023, when the judges sought clarification on the basis for the Enforcement Directorate (ED) registering an Enforcement Case Information Report (ECIR) on 11 September 2023, the Additional Solicitor General (ASG) stated that it was grounded in four First Information Reports (FIRs) filed by the State police related to illegal mining.

The ED formally requested details of all FIRs related to illegal sand mining in the last five years from the Director General of Police on 17 October 2023. However, according to the ASG, the DGP has not provided these details, and the ED’s request has been pending. The ASG, along with ED’s Special Public Prosecutor N. Ramesh, made these assertions during the hearing.

As a part of the investigation, the ED summoned 10 District Collectors, Water Resources Department Principal Chief Engineer Muthiah, and others. In response, Muthiah appeared at the Nungambakkam office of the ED in Chennai and gave his statements. 

On the other hand, IAS officers who were issued the summons submitted a plea in the Madras High Court requesting to cancel the summons sent to them. When the case came up for hearing, the TN government’s counsel submitted that the ED cannot take action unless the state government is informed about the illegal sand mining crime. The government’s counsel also submitted that the ED was functioning differently in each state and that the ED did not have the powers to issue summons to the IAS officers but could rather request their cooperation in the investigation. 

The ED argued that Minister Durai Murugan’s interview assistant Umapathi forced an officer not to appear for an investigation requested by the ED. They also said that during the investigation, the officials admitted that there had been illegal sand mining in huge amounts. The ED said that the officials also admitted that no action was taken against the wrongdoers despite the huge impact on the Water Resources Department. These statements from the officials of the Water Resources dept were also filed by the ED in court. The ED also added that the officials said they had no choice but to obey the oral orders of their superiors. The officials have confessed that they had also made a mistake by allowing the illegal sand mining activities to occur. 

Justice Sundar highlighted that, under the Prevention of Money Laundering Act (PMLA) of 2002, the ED needed the existence of a predicate offence and identification of proceeds of crime to probe a case. In response, Mr. Sundresan argued that, according to the ED, the proceeds of the crime exceeded ₹4,500 crore.

He further explained that the ED had enlisted a team of professors from the Indian Institute of Technology (IIT)-Kanpur to estimate the volume of sand extracted from 28 mining sites in Tamil Nadu. The team’s findings indicated that approximately 24 lakh units of the mineral had been illicitly mined in the last one to two years, resulting in significant financial loss to the exchequer.

Justice Sundar expressed skepticism about whether the outcomes of such a survey could serve as a basis for initiating action under the Prevention of Money Laundering Act, raising the question of whether the law is appropriate for addressing the alleged corruption exposed by the survey.

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 requested a week’s extension to submit a rejoinder to the ED’s counter affidavit and sought interim protection until the main writ petitions were disposed of. He strongly objected to the ED’s accusation that the State government was trying to shield the offenders by filing the current writ petitions. He argued that the central investigating agency lacked the authority to summon the Collectors of Ariyalur, Karur, Vellore, Thanjavur, and Tiruchi, and demand information about sand quarries in their respective 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 the investigation.

The hearing on the main writ petitions was adjourned by three weeks.

(with inputs from The Hindu)

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