ED moves Supreme Court against Madras High Court stay order in sand mining case

The Enforcement Directorate (ED) has moved the Supreme Court against a Madras High Court verdict that quashed money laundering proceedings against some private contractors in connection with the sand mining scam. [Directorate of Enforcement and anr v K Govindaraj and anr].

The High Court had also set aside provisional attachment orders against the contractors and directed that the properties in question be released.

A Bench of Justices Sanjiv Khanna and PV Sanjay Kumar of Supreme Court today asked ED to file a short note on what the 2022 Vijay Madanlal judgment of the top court lays down on provisional attachment of properties.

The Court did not issue formal notice to the respondents.

Additional Solicitor General (ASG) SV Raju appeared for the ED along with advocate Zoheb Hossain.

Senior Advocate Mukul Rohatgi appeared for the contractors.

In the July 2024 ruling under challenge, the High Court had held that the ED overstepped its jurisdiction by probing illegal sand mining in Tamil Nadu since mining is not a scheduled offence under the Prevention of Money Laundering Act (PMLA).

In an order passed on July 16, a bench of Justices MS Ramesh and Sunder Mohan had stayed action by ED against a group of sand mining contractors in Tamil Nadu and also quashed provisions attachment orders against them.

The matter pertains to alleged illegal sand mining across five districts in Tamil Nadu.

The ED has been investigating the matter since September last year and has claimed that illegal sand mining caused a loss of up to ₹4,000 crore to the State exchequer.

Contractors K Govindaraj, Shanmugam Ramachandran, and K Rethinam approached the High Court seeking quashing of the ED proceedings on the ground that the central agency lacked jurisdiction to initiate action under PMLA.

They claimed that the FIRs following which ED had initiated proceedings, did not reveal any proceeds of crime and that the reading of the ECIR and the provisional attachment orders would suggest that the central agency had assumed the role of investigating into illegal sand mining in the absence of any FIR registered for a scheduled offence indicating the generation of proceeds of crime.

The High Court ruled in their favour prompting ED to approach the apex court.