CHENNAI: Calling the summons issued to five collectors by the Enforcement Directorate over alleged irregularities in sand mining as violation of federalism, the Tamil Nadu government and collectors have moved the Madras High Court seeking a stay. “The summons were issued without authority and jurisdiction,” the petitioners said.
The government also asked the court to issue a “writ of declaration” to the effect that power of ED regarding inquiry of an offence of money laundering in relation to a 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”. “Such a probe by the ED can be carried out only at the request of the state agencies/government or under the directions of Constitutional Courts,” the state told the HC.
The government also raised issues involving interpretation of scope and ambit of powers of authorities constituted under the Prevention of Money Laundering Act (PMLA), 2002, to intervene in issues pertaining to state laws including ones that govern mining of minerals. “Why do powers exercised under PMLA act only in certain states for alleged offences under the Mines and Minerals Act, especially minor minerals, when no such action is initiated in other states like Gujarat, Maharashtra, Madhya Pradesh and Uttar Pradesh where thousands of cases under PMLA are pending as per the statement of minister in Parliament,” the state asked.
“The process, purportedly taken under PMLA, is to pressurise and demoralise the state administration from discharging its functions and duties without any just cause and reason,” the petitions said. “The powers under PMLA are exercised in a pick-and-choose approach in violation of principles of federalism, impinging upon and hindering the power of the state government in states that are not governed by the political party (BJP) in power at the centre.
The summons is perverse on the ground that ED is indulging in usurpation of powers of the state government by an instrumentality of the Union government in contravention to the constitutional limits and creates serious issues affecting the functioning of democracy under the Constitution,” the petition filed by public secretary K Nandakumar said.
The ED, being an investigative authority under the control of Union Finance Ministry, cannot invade into the probe and prosecution domain of other bodies’ action within their jurisdiction such as mining activities and the agency is not entitled to enquire and probe into mining sand since “minor minerals is a subject matter of Entry 23, List II of the Seventh Schedule of the Constitution” over which the state government exercises exclusive power, TN’s petition said.
The federal structure prohibits central agencies from investigating with criminal offences committed within the state. The summons, therefore, were issued without any authority and in violation of the basic structure of the Constitution, it said. The offences under Mines and Minerals Act, 1957, and TN Minor Mineral Concession Rules, 1959, are not scheduled offences, and ED cannot exercise PMLA powers with regard to alleged offences under the Acts.
“The respondent’s investigation results is harassment of state authorities and causes hindrance to administration. If any assistance in an enquiry is required, the PMLA provides for it under section 54 and not under section 50,” they said. The summons were issued by placing reliance on sub-section 2 of section 50 of PMLA which only permits ED to summon individuals and not officers, for which, the power is specifically excluded by virtue of a clause in PMLA.
The ED’s action would be vitiated on account of malice in law; and the impugned actions are taken for ‘collateral, oblique and improper purposes’ clearly amounting to ‘colourable exercise of powers’ and are ‘wholly unsustainable’. The government said by issuing the impugned summons seeking information in a prescribed format, which is not readily available, the ED ‘traversed beyond’ what can be sought under section 50 (2) of the PMLA.
Asking the court to stay the operation of the summons, the petitioners said no prejudice will be caused to the respondent if the collectors do not appear in person for the hearing between November 23 and 29.