New Delhi: The Supreme Court on Monday agreed to examine an important legal question: whether the Enforcement Directorate (ED) possessed powers, under the anti-money laundering law, to attach properties if there is no prior FIR for scheduled offences.
The matter came up before a bench led by Chief Justice of India Sanjiv Khanna and comprising Justice Sanjay Kumar.
Citing a verdict of the apex court, additional solicitor general S V Raju, representing the ED, contended that the central agency could seek a direction from a competent court under CrPC, if the concerned authority declined to register an FIR in the main scheduled offences.
Senior advocate Mukul Rohatgi, appearing for private contractors, vehemently opposed ED’s contention. Rohatgi said the ED was overstepping its jurisdiction by acting without a predicate offence.
Regarding ED’s powers, the CJI orally observed, "Your arms are so strong and long, nobody can purchase them….”. The bench said it will issue notice in the matter and added, “we are not passing any order”.
“ASG has relied upon first and the second proviso of the Section 5 of the Prevention of Money Laundering Act….”, said the bench, in its order. Section 5 of the law empowers the ED to attach properties involved in money laundering cases. Section 5's first provision mandates an FIR for attachment, and the other allows attachment without an FIR if the ED initiates a money laundering probe.
The apex court issued a notice to one K Govindaraj and others on a plea filed by the ED. The central agency moved the apex court challenging an order passed by the Madras High Court, restraining from taking action against private contractors allegedly involved in illegal sand mining.
During the hearing on Monday, the bench declined to order a status quo on the provisional attachment orders and observed there was a need to give a harmonious interpretation to two provisions of Section 5 of the Prevention of Money Laundering Act. “We are primarily going by the reasoning of the high court that seems to be at variance because the first and second proviso have to be harmonized…”, said the CJI. Rohatgi insisted that “there cannot be an attachment….”.
The matter is scheduled to come up for hearing in the week commencing February 17, 2025.
The issue arises from an ECIR (complaint) filed by the ED against the private contractors based on four FIRs alleging illegal sand mining.
The high court had quashed the ED’s actions, stating that sand mining was not listed as a scheduled offence under the PMLA. The probe agency conducted searches, issued summons, and passed provisional attachment orders on the contractors' properties.
