The Madras High Court on Thursday asked the Enforcement Directorate (ED) not to continue the investigation against the Tamil Nadu State Marketing Corporation (TASMAC) till March 25. The ED is probing a case under the Prevention of Money Laundering Act (PMLA).
The Division Bench of Justice MS Ramesh and Justice N Senthilkumar issued the order on a petition filed by the Corporation challenging the recent searches conducted by ED at the TASMAC headquarters.
The top court of the country further directed the ED to file a counter to the plea and listed the matter for further hearing on March 25.
The Tamil Nadu government filed a separate petition seeking a declaration that the ED’s power to investigate an offence under PMLA arising out of and within the territorial limits of the State, without the State consent, was violative of the basic structure of federalism and separation of powers.
The Apex Court, however, observed that the relief sought was wide and directed the petitioner to modify the prayer.
Appearing for the government of Tamil Nadu, Advocate General PS Raman assured the Apex Court that the State would modify the prayer.
Appearing for TASMAC, Senior Advocate Vikram Chaudhri questioned the manner in which the search and seizure was conducted by the ED.
Citing Section 17(1) of PMLA, he said the Director or any other officer not below the rank of Deputy Director was to proceed with the search on the basis of information in his possession and should have reason to believe that an offence under the Act was committed.
The Section mandated that such reasons be recorded in writing, noted the Senior Counsel, adding that the national agency failed to follow the procedures in the matter.
He argued that in the present case, there was a total invasion of privacy by ED as it entered the premises, took documents and also seized the mobile phones of the employees. The national agency did not have the power to barge into the office and take any document it wished. The seizure should be proportional to the offence, added the Senior Counsel.
Senior Advocate Chaudhri further apprised the Bench that the employees were made to sit for 60 hours. Women officers were sent back home late in the night with total disregard to their rights.
Appearing for the ED, Additional Solicitor General ARL Sundaresan refuted the allegations and submitted that the employees were allowed to go home. He argued that the ED had adequate material to proceed with the seizure.
Advocate General PS Raman said TASMAC had CCTV footage in support of its allegations.
The Bench asked ED whether it had the power to detain the entire office based on materials available against some persons. Was this not an alarming situation, it observed.
The top court of the country further pointed out that while the national agency claimed to have enough material to proceed with the case, TASMAC has submitted that the material was not made available to them.
The Bench ordered the ED to file its counter and asked the parties to produce the necessary documents.
Filed through the State Additional Chief Secretary, the petition by the State of Tamil Nadu claimed that the ED was conducting a roving enquiry without having sufficient material.
It submitted that even after conducting searches for prolonged hours, ED was not able to recover any proceeds of crime under the PMLA. There was no material to show that TASMAC was involved in the commission of offences under the PMLA.
The plea further submitted that the search itself was conducted without following due procedure as the authorities were not given a copy of the search warrant but were forced to acknowledge that they have read and understood the content of the warrant/memo.
It claimed that the search was conducted in blatant disregard to the fundamental rights of life liberty and dignity of the TASMAC employees.
The ED’s coercive tactics demonstrated a shocking disregard for the rule of law and the fundamental rights of the employees. The actions were arbitrary, without any jurisdiction, and violative of Articles 14 & 21 of the Constitution, noted the State.
The petition alleged that ED had been misusing its powers and engaging in a pick-and-choose approach, in violation of the principles of federalism.
The national agency’s action amounted to usurping the power of the State in contravention with the constitutional limits prescribed, it added.