Chennai: The Madras High Court has issued notices to the Tamil Nadu government, Directorate of Vigilance and Anti-Corruption (DVAC) and Directorate of Enforcement (ED) on a petition challenging an ED communication linked to an alleged ₹4.73-crore sand mining scam.
The case relates to a June 13, 2024 communication sent by the ED to the then Director General of Police/Head of Police Force. The communication shared information concerning the alleged irregularities, and the DVAC has now begun a detailed inquiry based on the material.
The petitioner, A. Rajkumar, a partner of Chennai-based R.S. Constructions in Nanganallur, has approached the court seeking to quash the ED communication and prevent the DVAC from registering an FIR or taking coercive action against him.
Court Declines Interim Protection
A First Division Bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan heard the matter on October 7.
While the Bench ordered notices to the concerned authorities, it declined to grant an interim stay on proceedings arising from the ED communication. The court also refused to restrain the DVAC from continuing its detailed inquiry or taking coercive action against the petitioner.
The petition specifically challenges the ED’s 2024 communication and seeks consequential relief against any action by the DVAC based on that communication.
The court’s decision means that the inquiry can continue while the respondents respond to the petitioner’s legal challenge.
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Petitioner Challenges ED’s 2024 Communication
Rajkumar has sought the quashing of the ED communication dated June 13, 2024, which was addressed to the then DGP/Head of Police Force.
According to the petitioner’s senior counsel, A.L. Somayaji, the ED had initiated proceedings against several individuals before 2024 under the Prevention of Money Laundering Act (PMLA), 2002.
The petitioner argued that these proceedings were based on FIRs registered by the State police in connection with sand mining and that there was no sufficient predicate offence to support allegations of money laundering.
The plea also points to earlier judicial proceedings involving the ED’s action in the matter.
Earlier ED Proceedings Had Been Quashed
During the hearing, the petitioner’s counsel told the court that the High Court had earlier quashed proceedings initiated by the ED and set aside provisional attachment orders concerning several properties.
The Supreme Court subsequently declined to entertain an appeal filed by the ED against the High Court’s decision, the petitioner’s counsel submitted.
According to the petitioner, those earlier court proceedings had also taken into consideration the ED’s 2024 communication to the then DGP/HoPF.
The petitioner has now approached the High Court after the DVAC began acting on the same communication.
DVAC Says Inquiry Is Underway
Representing the State, State Public Prosecutor R. John Sathyan told the Division Bench that the DVAC manual provides for two types of inquiries into complaints received by the agency — a preliminary inquiry and a detailed inquiry.
He submitted that the ED had shared the information with the DGP/HoPF in compliance with its statutory obligation under Section 66(2) of the PMLA.
The provision requires the central agency to share relevant information with other law-enforcement agencies in specified circumstances.
According to the State’s submission, the DVAC has now begun a detailed inquiry based on the information contained in the ED’s communication.
Court Questions Challenge to Central Agency Communication
During the hearing, Justice G. Arul Murugan questioned the basis of the petitioner’s request to quash a communication issued by a central agency in compliance with a statutory obligation.
The observation came as the court considered the petitioner’s argument that the 2024 communication should no longer form the basis for further action.
Despite the question raised during the hearing, the Bench decided to issue notices to the Tamil Nadu government, DVAC and ED.
The court, however, did not grant the interim relief sought by the petitioner.
What the Case Means for the Ongoing Inquiry
The latest order does not decide whether the allegations concerning the alleged ₹4.73-crore sand mining scam are established. Instead, the immediate issue before the High Court is the legal validity and consequence of the ED’s 2024 communication and the DVAC’s subsequent inquiry based on the information shared by the central agency.
The court will now hear responses from the concerned authorities before deciding the petitioner’s challenge.
For the DVAC, the order leaves the detailed inquiry open at this stage. For the petitioner, the absence of interim protection means that the agency can continue its inquiry while the legal challenge remains pending.
The proceedings also bring into focus the statutory information-sharing mechanism between central and State enforcement agencies under the PMLA.
A Case at the Intersection of ED and State Vigilance Action
The case is significant because it involves the interaction between the ED’s money-laundering investigation framework and the State-level vigilance mechanism.
The ED’s communication was made in 2024, but the material contained in it has now become the basis for a detailed DVAC inquiry. The petitioner has challenged this subsequent use of the communication, while the State has defended it as part of the statutory information-sharing process.
The Madras High Court’s latest order keeps the issue open for further consideration.
With notices issued to the State government, DVAC and ED, the next stage of the proceedings will focus on the legal objections raised by the petitioner and the authorities’ explanation of the communication and the inquiry that followed.
The case will therefore be closely watched as the High Court examines how information shared under the PMLA can be used by State agencies and what legal consequences may follow from such inter-agency communication.
