TASMAC probe: Madras HC questions ED’s powers to ‘seal’ premises under PMLA, slams ‘overreach’

Chennai, June 17 (IANS) In a strong oral observation, the Madras High Court on Tuesday questioned the powers exercised by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002, stating that while the law is evolving, “it is actually the ED officials who are evolving day by day by expanding their powers”.

Justice M.S. Ramesh, who heads a division bench also comprising Justice V. Lakshminarayanan, made the oral observation while hearing a batch of writ petitions filed by film producer Akash Baskaran and his associate Vikram Ravindran, challenging ED actions in connection with a money laundering investigation linked to alleged irregularities in the Tamil Nadu State Marketing Corporation (TASMAC).

The judges specifically took exception to the ED’s move to “seal” – or effectively restrict access to – two premises, one a commercial office in Semmenchery and the other a rented flat in Poes Garden, without clear legal authority.

According to Ravindran, both premises were locked when ED officials attempted a search on May 16, and in his absence, they pasted notices on the doors, allegedly preventing entry until further instructions from the agency.

Appearing for the ED, Special Public Prosecutor (SPP) N. Ramesh denied that the premises were sealed and clarified that the officers had merely posted notices requesting the petitioner’s cooperation.

However, the court noted that the language in the notices essentially barred entry without the ED’s permission.

Justice Lakshminarayanan questioned the legal sanctity of such notices, stating: “Even assuming the words used in the notice do not amount to sealing, from where do you get the power to prevent an individual from entering his home or office?”

He added that no reasonable person would risk ignoring such a notice out of fear of facing punitive action.

The ED’s counsel argued that Section 17 of the PMLA empowers the agency to conduct search and seizure operations and even break open locks, if necessary. “However, we did not want to take the drastic step of breaking open the locks, and so we stuck the notices,” the SPP said, adding that the notices could be withdrawn immediately if the court allowed it.

However, the bench observed that the ED’s actions lacked clarity on legal backing and noted the psychological impact such notices could have on individuals not yet formally accused.

The court was also informed that neither of the petitioners had been named as accused in the TASMAC-linked money laundering case so far. The ED had only received credible information suggesting that potentially incriminating materials could be in their possession.

Ramesh reiterated that the petitioners must cooperate with the probe and that the agency was merely acting on the basis of intelligence inputs.

In response, the bench granted the ED time until Wednesday to submit relevant documents justifying its actions.

The hearing will continue on Wednesday, as the court considers whether the agency overstepped its statutory limits under PMLA.

–IANS

aal/vd