Enforcement Directorate vs State Of Kerala
2021 Latest Caselaw 16561 Ker

WP(C) No.13112/2021                       1 / 15

                        IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                        PRESENT
                      THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
            Wednesday, the 11th day of August 2021 / 20th Sravana, 1943
                            WP(C) NO. 13112 OF 2021(L)
   PETITIONER:

          ENFORCEMENT DIRECTORATE, THROUGH THE DEPUTY DIRECTOR OF
          ENFORCEMENT,COCHIN ZONAL OFFICE, AK SESHADRI ROAD, COCHIN 682 011.

   RESPONDENTS:

      1. STATE OF KERALA,THROUGH CHIEF SECRETARY, SECRETARIAT,
         THIRUVANANTHAPURAM 695 001.
      2. DEPARTMENT OF HOME, REPRESENTED BY ADDITIONAL CHIEF SECRETARY, ROOM
         NO. 357(A) & 358, GROUND FLOOR, MAIN BLOCK, SECRETARIAT,
         THIRUVANANTHAPURAM, CITY-695 001, TEL. 0471 2333174/2518455/ FAX.
         0471 2327395.
      3. DEPARTMENT OF GENERAL ADMINISTRATION, STATE OF KERALA, THROUGH ITS
         PRINCIPAL SECRETARY, ROOM NO. 394, 1ST FLOOR MAIN BLOCK,
         SECRETARIAT, THIRUVANANTHAPURAM CITY 695 001 PH. 0471 2320311,
         2518669 M 9447744200.
      4. SHRI. PINARAYI VIJAYAN, OFFICE OF THE CHIEF MINISTER, 3RD FLOOR,
         NORTH BLOCK, SECRETARIAT, THIRUVANANTHAPURAM , KERALA 695 001. TEL.
         O471 -2333241, FAX 0471 2333489.
      5. COMMISSION OF INQUIRY, HON'BLE MR. JUSTICE (RETD), V.K. MOHANAN,
         VALIYAPARAMBIL HOUSE, HOUSE NO. 7/252-C, THIRUVATHIRA, AMBADIMUKKU ,
         KAKKANAD KOCHI 20.
      6. UNION OF INDIA REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE,
         DEPARTMENT OF REVENUE, 128-A/ NORTH BLOCK, NEW DELHI 110001.

        Writ petition (civil) praying inter alia that in the circumstances
   stated in the affidavit filed along with the WP(C) the High Court be
   pleased to stay the operation , implementation of Notification dated
   7-5-2021 bearing No. Home-SSA2/67/2021-HOME and restrain the 5th
   respondent Commission to exercise any power or to take any action in
   exercise of the said powers conferred upon it under the provisions of
   Commission of Inquiry Act, 1952.
        This petition coming on for admission upon perusing the petition and
   the affidavit filed in support of WP(C) and upon hearing the arguments of
   SRI.TUSHAR MEHTA,SOLICITOR GENERAL OF INDIA,& SRI. P.VIJAYAKUMAR ASSISTANT
   SOLICITOR GENERAL OF INDIA for the petitioner, and of ADVOCATE GENERAL,
   SRI.GOPALAKRISHNA KURUP, SRI.P.NARAYANAN, SENIOR GOVERNMENT PLEADER,
   SRI.S.KANNAN, GOVERNMENT PLEADER, SRI.V.MANU, SENIOR GOVT. PLEADER,
   SRI.P.NARAYANAN, SENIOR GOVT. PLEADER, for respondents 1, 2 & 3 and
   of SRI. K.M. NATARAJ, ADDITIONAL SOLCITOR GENERAL OF INDIA and SRI.SUVIN
   R.MENON, CENTRAL GOVEDRNMENT COUNSEL for respondent 6, the court passed
   the following:-

                                                         P.T.O.
 WP(C) No.13112/2021                2 / 15

                       APPENDIX OF WP(C) 13112/2021
Exhibit P1            COPY OF NOTIFICATION DATED 07.05.2021 NO. HOME-
                      SSA2/67/2021-HOME ISSUED BY THE HOME DEPARTMENT,
Exhibit P2            GOVERNMENT OF KERALA, UNDER THE PROVISIONS OF
                      COMMISSION OF INQUIRY ACT 1952.
                      COPY OF THE JUDGMENT DATED 16-04-2021 PASSED BY THIS
                      HON'BLE COURT IN WRIT PETITION (C) NO.7641 OF 2021 AND
                      8920 OF 2021 IN THE CASE OF P.RADHAKRISHNAN VS STATE OF
                      KERALA AND OTHERS.
Exhibit P6            TRUE COPY OF THE IMPUGNED FIR (CRIME NO. 98 OF 2021).
 WP(C) No.13112/2021                          3 / 15




                                P.B.SURESH KUMAR, J.

                            -------------------------------------
                              W.P.(C) No.13112 of 2021
                            --------------------------------------
                      Dated this the 11th day of August, 2021



                                           ORDER

This writ petition is instituted by the Directorate of

Enforcement established by the Central Government,

challenging Ext.P1 notification issued by the State

Government, in exercise of power under Section 3 of the

Commissions of Inquiry Act, 1952 (the Act), in terms of which

a Commission of Inquiry consisting of a former Judge of this

Court has been appointed to inquire into the question whether

the contents of a voice clip and a letter stated to have been

issued by the accused persons in a gold smuggling case

investigated by the various central agencies would reveal any

conspiracy to falsely implicate the leaders of the political front

of the State. The Terms of Reference, as mentioned in the

notification read thus:

"1. To enquire into the facts stated in the voice clip, alleged to be that of Smt.Swapna Prabha Suresh, an under trial WP(C) No.13112/2021 4 / 15

W.P.(C). No.13112 of 2021 ..2..

prisoner housed in the Women's Prison, Thiruvananthapuram circulated first through the digital news platform "The Cue" and later through other visual, print and social media, revealing an attempt to falsely implicate the Honourable Chief Minister of the State of Kerala in serious criminal offences.

2. To enquire into the facts and circumstances leading to the letter dated 5th March, 2021, widely circulated in the media, written by Shri.Sandeep Nair, S/o.Harikesavan Nair, an under trial prisoner and an inmate of Central Prison, Thiruvananthapuram, addressed to the Sessions Judge, Ernakulam and forwarded through the Superintendent of the said Prison, revealing an attempt to falsely implicate the Honourable members of the Council of Ministers of the State of Kerala and the Honourable presiding dignitary of the Kerala Legislative Assembly in serious criminal cases.

3. To enquire as to whether the contents of the aforementioned voice clip and letter, as well as the circumstances leading to the same and the facts relating to the same, reveal any conspiracy to falsely implicate the leaders of the political front of the State in serious criminal offences.

4. If the enquiry of the Commission finds any such conspiracy, to identify the persons who have thus conspired and attempted to implicate the leaders of the political front of the State in serious criminal offences.

5. To enquire into any other facts incidental, ancillary or connected therewith as the commission deems fit and proper."

The Officers of Enforcement in the Directorate of Enforcement

are investigating the case registered under the Prevention of

Money-Laundering Act, 2002 (the PML Act) in connection with WP(C) No.13112/2021 5 / 15

W.P.(C). No.13112 of 2021 ..3..

the gold smuggling referred to in the notification. The

Explanatory Note to the notification recites that the contents of

the voice clip and letter issued by the accused persons in the

case referred to in the Terms of Reference confirmed that the

various central agencies conducting investigation in the case

are diverting the investigation from its original purpose, for the

purpose of falsely implicating the leaders of the political front

in the State in serious criminal cases. The Explanatory Note to

the notification reads thus:

Explanatory Note

(This does not form the part of the notification, but it

is intended to indicate its general purport.)

"Various Central Agencies have been conducting investigation in the case of gold smuggling from July, 2020 onwards. But the investigations are diverted from the original purpose for which it has been ordered. This has been confirmed with the revealing of the accused Smt.Swapna Prabha Suresh and Sri. Sandeep Nair, in the gold smuggling case. Central Agencies like Customs, Enforcement Directorate etc. are falsely implicating the leaders of the political front of the State in serious criminal cases. These actions of the Central Agencies clearly shows the unprofessional approach in conducting investigation of cases. In order to examine the matter objectively and to submit a report in this respect, Government have decided WP(C) No.13112/2021 6 / 15

W.P.(C). No.13112 of 2021 ..4..

to appoint a Commissions of Inquiry under Commission of Inquiry Act, 1952.

The notification is intended to achieve the above object."

2. Sri.Tushar Mehta, the learned Solicitor General

of India appeared for the petitioner and submitted that the

subject matter of the inquiry being one relatable to the Entries

enumerated in List-I of the Seventh Schedule to the

Constitution, the State Government is incompetent to order an

inquiry into the same under Section 3 of the Act. It was also

submitted by the learned Solicitor General that the subject

matter of the inquiry being one relating to the investigation of

offences by the designated agencies authorised and

empowered to conduct the investigation, there cannot be any

inquiry into the same by any authority other than the Court,

under whose supervision the investigation is conducted. It was

pointed out by the learned Solicitor General that two First

Information Reports lodged earlier by the Crime Branch Wing

of the State Police alleging criminal conspiracy against Officers

of Enforcement in the Enforcement Directorate on the basis of WP(C) No.13112/2021 7 / 15

W.P.(C). No.13112 of 2021 ..5..

the contents of the voice clip and letter referred to in the

notification have been quashed by this Court in terms of Ext.P2

judgment, holding that only the Special Court, under whose

supervision the investigation of the case is conducted, is

authorised and empowered to examine the correctness of the

allegations in the First Information Reports. Placing reliance on

the said judgment, the learned Solicitor General has contended

that the inquiry ordered under the Act is wholly without

jurisdiction. It was also submitted by the learned Solicitor

General that inquiries of the instant nature would impede and

derail the investigations conducted in respect of serious

offences.

3. Sri.Gopalakrishna Kurup , the learned Advocate

General who appeared for the State as also respondents 2 and

3 at the time of admission of the matter raised preliminary

objections as to the locus standi of the petitioner to institute

the writ petition and also as to the maintainability of the writ

petition. The objection raised as to the locus standi of the

petitioner is that the Enforcement Directorate is only a WP(C) No.13112/2021 8 / 15

W.P.(C). No.13112 of 2021 ..6..

Department of the Central Government, and a Department of

the Central Government cannot file a writ petition, for it is not

a juristic person which can sue or be sued. The learned

Advocate General relied on the decision of the Apex Court in

Chief Conservator of Forests, Govt. of A.P. v. Collector

and others, (2003) 3 SCC 472, in support of the said

contention. The objection raised by the learned Advocate

General as regards the maintainability of the writ petition is

that if it is a case where the Central Government is aggrieved

by the impugned notification, only the remedy provided for

under Article 131 of the Constitution could be invoked for

redressal of the same.

4. Sri.K.M.Nataraj, Additional Solicitor General of

India who appeared for the sixth respondent supported the

arguments advanced by the learned Solicitor General of India.

5. It is seen that the Directorate of Enforcement

is a statutory body established by the Central Government

under Section 36 of the Foreign Exchange Management Act,

1999 in terms of a notification issued on 01.06.2000. Section WP(C) No.13112/2021 9 / 15

W.P.(C). No.13112 of 2021 ..7..

36 of the said Act reads thus:

"36. Directorate of Enforcement.--

(1) The Central Government shall establish a Directorate of Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called Officers of Enforcement, for the purposes of this Act.

(2) Without prejudice to provisions of sub-section (1), the Central Government may authorise the Director of Enforcement or an Additional Director of Enforcement or a Special Director of Enforcement or a Deputy Director of Enforcement to appoint Officers of Enforcement below the rank of an Assistant Director of Enforcement.

(3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act."

The notification issued by the Central Government on

01.06.2000 reads thus:

MINISTRY OF FINANCE (Department of Revenue) NOTIFICATION New Delhi, the 1st June, 2000

S.O.534(E)- In exercise of the powers conferred under sub- section (1) of Section 36 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Central Government hereby establishes a directorate called the Directorate of Enforcement with the following officers as "Officers of Enforcement" for the purposes of this Act, namely-

WP(C) No.13112/2021 10 / 15

W.P.(C). No.13112 of 2021 ..8..

(a) Director of Enforcement;

(b) Special Director of Enforcement;

(c) Additional Director of Enforcement;

(d) Deputy Director of Enforcement;

(e) Deputy Legal Adviser;

(f) Assistant Director of Enforcement; and

(g) Assistant Legal Adviser.

[Notification No.10/2000/F. No.1/2/2000-Ad. I-C] Abhay Thirpathy, Dy.Secy. "

It is seen that it is by virtue of the various notifications issued

by the Central Government in exercise of the powers under

Section 49 of the PML Act that the Officers of Enforcement in

the Directorate of Enforcement are exercising the powers of

the authorities under the PML Act.

6. Insofar as the Directorate of Enforcement is a

statutory body, the contention that it is only a Department of

the Central Government is only to be rejected. The proposition

that a statutory body is entitled to file a writ petition invoking

Article 226 of the Constitution cannot be doubted. In other

words, the Directorate of Enforcement is certainly entitled to

institute a writ petition in its name.

7. That apart, in Chief Conservator of Forests WP(C) No.13112/2021 11 / 15

W.P.(C). No.13112 of 2021 ..9..

relied on by the learned Advocate General itself, it is clarified

by the Apex Court that where an official of the Government

acting as a statutory authority sues or pursues further

proceedings in its name, it will not be a suit or proceedings for

or on behalf of a State/Union of India, but by the statutory

authority as such. The relevant paragraph in the said judgment

reads thus:

"13. The question that needs to be addressed is, whether the Chief Conservator of Forests as the appellant-petitioner in the writ petition/appeal is a mere misdescription for the State of Andhra Pradesh or whether it is a case of non-joinder of the State of Andhra Pradesh -- a necessary party. In a lis dealing with the property of a State, there can be no dispute that the State is the necessary party and should be impleaded as provided in Article 300 of the Constitution and Section 79 CPC viz. in the name of the State/Union of India, as the case may be, lest the suit will be bad for non-joinder of the necessary party. Every post in the hierarchy of the posts in the government set-

up, from the lowest to the highest, is not recognised as a juristic person nor can the State be treated as represented when a suit/proceeding is in the name of such offices/posts or the officers holding such posts, therefore, in the absence of the State in the array of parties, the cause will be defeated for non-joinder of a necessary party to the lis, in any court or tribunal. We make it clear that this principle does not apply to a case where an official of the Government acts as a statutory authority and sues or pursues further proceeding in its name because in that event, WP(C) No.13112/2021 12 / 15

W.P.(C). No.13112 of 2021 ..10..

it will not be a suit or proceeding for or on behalf of a State/Union of India but by the statutory authority as such. (underline supplied)

As seen from the notification issued by the Central

Government under Section 36 of the Foreign Exchange

Management Act, Deputy Director of Enforcement in the

Directorate of Enforcement is a statutory authority in terms of

the provisions of the said Act. Section 48 of the PML Act which

deals with the authorities under the said Act reads thus:

"48. Authorities under the Act.-There shall be the following classes of authorities for the purposes of this Act, namely:-

(a) Director or Additional Director or Joint Director,

(b) Deputy Director,

(c) Assistant Director, and

(d) such other class of officers as may be appointed for the purposes of this Act."

As evident from the extracted provision, the Deputy Director is

one of the statutory authorities under the PML Act. It is seen

that in terms of a notification issued on 13.09.2005, Deputy

Director of Enforcement in the Directorate of Enforcement has WP(C) No.13112/2021 13 / 15

W.P.(C). No.13112 of 2021 ..11..

been notified as Deputy Director for the purposes of PML Act.

The said notification reads thus:

MINISTRY OF FINANCE (Department of Revenue) ORDER New Delhi, the 13th September, 2005 xxxxxx xxxxxxxxxxx S.O.1274(E)- In exercise of the powers conferred by sub-section (1) of Section 49 of the Prevention of Money-Laundering Act, 2002 (15 of 2003), the Central Government hereby appoints, with effect from the first day of July, 2005, the Deputy Director holding office immediately before the said date under the Foreign Exchange Management Act, 1999 (42 of 1999), as the Deputy Director for the purpose of the prevention of Money- Laundering Act, 2002.

[F.No.6/2/2005-E.S.] ANUJA SARANGI, DIRECTOR

In other words, Deputy Director of Enforcement is a statutory

authority under the PML Act and in that capacity, he is

certainly entitled to file a writ petition. As such, even assuming

that the Directorate of Enforcement is not entitled to institute a

writ petition in its name, it cannot be said that the Deputy

Director of Enforcement has no locus standi to institute the writ

petition. Of course, the Deputy Director of Enforcement is not WP(C) No.13112/2021 14 / 15

W.P.(C). No.13112 of 2021 ..12..

shown as the petitioner in the writ petition. Instead, the

Directorate of Enforcement represented by the Deputy Director

of Enforcement is shown as the petitioner in the writ petition.

This is a trivial defect which can be rectified by amending the

cause title. In matters of this nature, what is to be seen by the

Court is the substance, not the form [see Management of

Borpukhurie Tea Estate v. Presiding Officer, Industrial

Tribunal, Assam, (1978) 2 SCC 667 and Alappat Home

Furniture Decors v. V.A. Ramesh Chandran, 2017 (2) KHC

975].

8. Coming to the merits of the matter, as noted,

the inquiry is ordered into the question whether the contents of

a voice clip and a letter stated to have been issued by the

accused persons in a gold smuggling case investigated by the

various central agencies including Directorate of Enforcement

in terms of the provisions of the PML Act would reveal any

conspiracy to falsely implicate the leaders of the political front

of the State. As held by this Court in Ext.P2 judgment, the

question of conspiracy in a case of this nature is one to be WP(C) No.13112/2021 15 / 15

W.P.(C). No.13112 of 2021 ..13..

examined by the Special Court supervising the investigation. If

parallel investigations and inquiries are conducted into

questions of the said nature, I am of the prima facie view that

the same would impede and derail the investigation and would

ultimately go to the benefit of the accused, defeating the

object of the legislation under which the accused are booked.

In the said view of the matter, I am inclined to admit

the writ petition and pass an interim order as prayed for in the

matter. Ordered accordingly. Notice to respondents 4 and 5

is dispensed with.

Sd/-

P.B.SURESH KUMAR JUDGE ds

11-08-2021 /True Copy/ Assistant Registrar