The past months have seen States ruled by Opposition parties battle tooth-and-nail the Directorate of Enforcement in the Supreme Court.
The frequency of the cases has raised questions, both inside and outside the courtroom, as to whether the Central agency and the Prevention of Money Laundering Act (PMLA) are being used by the Union government to harass rival politicians and State officials ahead of the Lok Sabha polls.
The Supreme Court, meanwhile, has sent mixed signals from multiple Benches while dealing with these cases. While one Bench has called for a “neutral mechanism” to sift through cases to check if hidden political vendettas and one-upmanship were at play between the Centre and States, another Bench led by Justice Bela Trivedi prioritised the investigating agency, making it clear that States had no choice but comply with the summons of the Directorate of Enforcement (ED).
The Bench led by Justice Trivedi, while directing four District Collectors in Tamil Nadu to abide by the ED summons in the sand mining case, found the State’s intervention to protect the officials both “strange and unusual”. Justice Trivedi even remarked that the Tamil Nadu government was making “an unnecessary issue out of nothing”.
This when the Madras High Court had recorded a prima facie finding that the agency had no jurisdiction to summon the officials. The High Court had summed up ED’s summons as “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”.
Editorial | Vulnerable to criticism: On the ED and a possible violation of federal principles
The States claim that the actions of the ED, often in cases in which the predicate offence is not a scheduled offence under the PMLA, violate the principles of federalism.
In January, a Supreme Court Bench led by Justice Surya Kant suggested a “fair and transparent” mechanism or body to “look into the inter-state ramifications, especially when different parties are at the Centre and States, and keep intact the object of punishing the guilty while preventing vindictive arrests”.
In this case, the ED had approached the apex court against the arrest of its officer, Ankit Tiwari, by the Tamil Nadu Directorate of Vigilance and Anti-Corruption in a bribe case. Several ED raids and searches across the State had preceded Mr. Tiwari’s arrest.
Again, in May last year, a Supreme Court Bench headed by Justice (now retired) Sanjay Kishan Kaul had warned the ED against creating an “atmosphere of fear”. The court was dealing with a petition filed by the earlier Congress government led by Bhupesh Bhagel in Chhattisgarh, who alleged that the ED was “running amok” to “implicate” the Chief Minister in a money laundering case linked to a ₹2000-crore liquor scam. The ED had maintained that it was just doing its duty and probing a scam in the State.
There are also cases in which the Supreme Court has plainly refused to intervene.
When former Jharkhand Chief Minister Hemant Soren moved the apex court challenging his arrest on money laundering charges in a land scam case, a Bench led by Justice Sanjiv Khanna asked him to approach the State High Court. The court did not heed arguments by his lawyers that the Supreme Court had concurrent jurisdiction with the High Court.
Similarly, in July 2023, a Bench headed by Chief Justice of India D.Y. Chandrachud refused to interfere with a Calcutta High Court order allowing ED to investigate Trinamool Congress leader Abhishek Banerjee in the West Bengal teachers’ recruitment scam case. Mr. Banerjee’s lawyers had submitted that such scams were “created to terrorise certain people”. Mr. Banerjee is a nephew of West Bengal Chief Minister Mamata Banerjee.
Additional Solicitor General SV Raju, for the agency, had responded that the “ED has the power of investigation. That power is unfettered, it cannot be usurped”.
However, earlier this week, the apex court trimmed ED wings when it dismissed PMLA proceedings against Karnataka Deputy Chief Minister DK Shivakumar instituted on the basis of a complaint filed by the Income Tax department in 2018. His lawyers contended that the ED had tried to make a PMLA case against the Congress leader on a complaint alleging tax violations.
