State has to comply with PMLA: Supreme Court tells Tamil Nadu in its challenge to ED summons To Its District Collectors

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“State government should assist the ED if there are allegations of money laundering.. if the state machinery is asked for help, it should do so in finding out if there are offences,” the bench observed

The Supreme Court while hearing the Enforcement Directorate's plea against Tamil Nadu government's opposition to summons issued by it to five of the state's District Collectors, has remarked that the state's machinery should help ED in its investigation.

A bench of Justices Bela M Trivedi and Pankaj Mithal has further observed that state government has to comply with the provisions of the Prevention of Money Laundering Act which is a central legislation.

Court has accordingly, asked the state government to provide an explanation for its opposition to ED's investigation into the alleged illegal sand mining case.

Last week, the Supreme Court had questioned Tamil Nadu government's writ petition filed before the Madras High Court against summons issued by the Enforcement Directorate to five of the state's District Collectors.

It further observed that the officials were duty bound to respond to the summons. ED approached the Supreme Court by was of an SLP against a November 2023 order of the Madras High Court whereby an interim stay on the operation of summons issued by the ED.

Top Court had issued notice in the SLP by ED while it also mulled over revoking the stay imposed by the impugned order.

High Court in the impugned order noted that the summons appeared to be part of a "fishing expedition", and prima facie, there was no jurisdiction to issue the summons to any of the State's district collectors.

It is just an attempt to investigate the possibility of identifying any proceeds of crime as a result of any criminal activity, which is not so far registered by the State agencies, the high court had opined while stating that the ED's summons resembled a "fishing enquiry".

The State Government of Tamil Nadu along with the Additional Chief Secretary to the Government, Water Resources Department, and the District Collectors of Vellore District, Trichy District, Karur District, Thanjavur District and Ariyalur District had approached the high court seeking direction to quash the summon issued to the five District Collectors, requiring their appearance to give evidence and produce records in connection with the investigation/proceedings in a PMLA case registered by ED.

The common prayer of all petitioners is for a declaration that the power of the ED so far as it relates to investigation, enquiry etc., of an offence of money laundering in relation to the predicate offence arising out of and within the territorial limits of a State, without the consent of the concerned State, is violative of basic structure of federalism and separation of powers and therefore such enquiry, investigation etc., by ED can be carried out only at the request of the State Agencies/State Government or by the directions of the Constitutional Courts.

Case Title: Enforcement Directorate vs. State of Tamil Nadu