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Madras High Court Rules ED Overstepped Powers Under PMLA in Sand Mining Probe

The Madras High Court recently ruled that the Enforcement Directorate (ED) exceeded its jurisdiction by investigating illegal sand mining activities in Tamil Nadu under the Prevention of Money Laundering Act (PMLA). This decision comes as the court stayed all proceedings initiated by the ED against sand mining contractors and ordered the release of their properties that had been provisionally attached.

Court’s Findings

  1. Jurisdictional Overreach:
    The High Court observed that mining is not a scheduled offence under the PMLA. The ED had proceeded on the assumption that illegal sand mining, which potentially generated proceeds of crime, fell within its purview. However, the court noted that the ED did not specify the exact scheduled offence committed by the contractors, nor did it establish that an FIR for such an offence had been registered.
  2. Lack of Specific Charges:
    The court highlighted that the ED failed to detail the specific proceeds of crime generated by the alleged illegal activities. This lack of clarity and the absence of a scheduled offence meant that the ED could not legitimately initiate action under the PMLA.
  3. Release of Attached Properties:
    Consequently, the court quashed the provisional attachment orders issued by the ED and directed the release of the attached properties. The judges emphasized that the ED could only take action if a scheduled offence was registered and properly investigated, adhering to the legal framework set by the PMLA.

Implications of the Ruling

This ruling underscores the importance of adhering to jurisdictional boundaries and the necessity for clear legal grounds before initiating proceedings under the PMLA. It also reinforces the protection of individuals and entities from overreach by investigative agencies, ensuring that due process is followed.

By curbing the ED’s actions, the Madras High Court has highlighted the need for precise and transparent legal processes, particularly in cases involving significant economic and environmental concerns like illegal sand mining. This decision is a reminder of the checks and balances within the judicial system to prevent misuse of investigative powers.

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