Supreme Court Stays Operation Of Interim Order By Madras HC Staying Summons Issued By ED To District Collectors, Says Writ Petition By State Challenging Summons Is Misconceived

In a Special Leave Petition filed by the Enforcement Directorate (ED) against the order of stay by the High Court of summonses issued by the ED, the Apex Court directed the District Collectors to appear and respond to the summonses issued by the ED.

The Division Bench of Justice Bela M Trivedi and Justice Pankaj Mithal held, “Article 226 of the Constitution obliges the State Government to exercise the executive power to ensure compliance with the laws made by the Parliament. Interim summonses have been issued by the Petitioner in the exercise of the powers under Section 50(2) and (3) of said provision…., it clearly transpired that concerned authorities as mentioned therein have the power to summon any person, its attendance is considered necessary either to give evidence or to produce any document during the course of the investigation or proceeding under the Act.”

ASG S V Raju appeared on behalf of the Petitioner and Senior Advocates Kapil Sibal and Mukul Rohtagi appeared for the Respondents.

Sibal submitted that in the present case, summonses under Section 50(3) of the Prevention of Money Laundering Act (PMLA) relate to the areas which are not related to any FIR, except Thanjavur. Further, he emphasized that ED must satisfy Section 2(1)(u) of the Act which defines “proceeds of the crime” concerning the scheduled offence, and then only ED will have the jurisdiction to serve summonses upon the District Collectors. He said, “What jurisdiction ED has where there are no proceeds of crime, no criminal activity, no scheduled offence in these Districts?”

Rohtagi appeared on behalf of the District Collectors and asked, “Why Aadhar Card and Passport have been sought from the District Collectors?… Passport and Aadhar for identification? Is this the way you treat your officers?” He further requested the Court to exempt the personal appearance of the Collectors and that they will send the requisite documents.

ASG S V Raju clarified that asking for the information is part of the procedure of investigation which is related to the offence. He submitted that the ED will not ask for Aadhaar or Passport from the District Collectors and that it was part just part of the prescribed form. 

The Madras High Court had in November 2023 granted an interim stay on the summonses issued by the ED to the District Collectors in Tamil Nadu. Therefore, aggrieved, ED approached the Apex Court challenging the order of the High Court.

When the Court was requested by Mukul Rohtagi to permit the High Court to decide the issue finally in the pending Writ Petition, the Court refused to adopt that course of action and proceeded to pass a detailed order on the issue. The Court has observed in its order that the Writ Petition filed by the State challenging the Summons is prima facie misconceived. 

The Court has ordered listing of the matter after four weeks and that pleadings be completed in the meantime.  

Cause Title: Directorate of Enforcement vs. The State of Tamil Nadu and ors.