‘Mining no crime under PMLA’: HC restrains ED action

The ED had filed its Enforcement Case Information Report (ECIR) last September against contractors and other suppliers of machineries, including excavators allegedly over illegal sand mining case.

Chennai: The Madras High Court has ordered the Enforcement Directorate (ED) not to take any further action on a sand mining case in Tamil Nadu stating that mining is not a scheduled offence under the Prevention of Money Launderig Act (PMLA).

The ED had filed its Enforcement Case Information Report (ECIR) last September against contractors and other suppliers of machineries, including excavators allegedly over illegal sand mining case. (HT PHOTO)

The ED had filed its Enforcement Case Information Report (ECIR) last September against contractors and other suppliers of machineries, including excavators allegedly over illegal sand mining case.

A division bench of Justices M S Ramesh and Sunder Mohan passed the order on Tuesday, on a batch of petitions filed by among others, the contractors — K Rethinam, P Karikalan and S Ramachandran — seeking to quash the ECIR stating that the central agency lacks jurisdiction.

“The respondents (ED) shall not continue further action pursuant to the ECIR in so far as the petitioners are concerned till such time the statutory and other requirements that we have pointed out above are complied with,” the court said in its order.

The court also quashed ED orders provisionally attaching the properties of the contractors. “We are thus of the view that unless an information with regard to any case in the scheduled offence is registered and such an offence has generated proceeds of crime, which is dealt with by the petitioners, no action can be initiated,” the court said. “As stated earlier, the materials collected and the reasons shown in the Provisional Attachment Order, even if accepted to be true only suggests that the respondents have unearthed large scale illegal sand mining and that may have generated illegal money.”

The ED had alleged that sand worth ₹4,730 crore was illegally mined across five districts of Tamil Nadu. The agency had issued summons to five district collectors — Ariyalur, Karur, Thanjavur, Trichy, and Vellore. The collectors had challenged the ED’s summons in the HC which stayed their operation. But, the stay was vacated by the Supreme Court based on ED appeals.

On Tuesday, the Court cited Supreme Court’s judgements that in the absence of any scheduled offence that had resulted in proceeds of crime, ED cannot assume jurisdiction to initiate action under PMLA. The court ordered ED not to take any action against the petitioners unless a scheduled offence is registered. “One cannot put the cart before the horse,” the court said. “Therefore, we are of the view that the impugned actions, which are challenged in the Writ Petitions, are without jurisdiction and they are liable to be quashed and as such, stand quashed.”