Madras High Court
Tamil Nadu State Marketing Corporation ... vs Directorate Of Enforcement on 23 April, 2025
Author: S.M.Subramaniam
Bench: S.M.Subramaniam
2025:MHC:1037
W.P.Nos.10348, 10352 & 10355 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 21.04.2025
PRONOUNCED ON : 23.04.2025
CORAM
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
AND
THE HONOURABLE MR. JUSTICE K.RAJASEKAR
W.P.Nos.10348, 10352 & 10355 of 2025
and
W.M.P.Nos.11654, 11655, 11657 to 11659 & 12695 of 2025
W.P.No.10348 of 2025:
Tamil Nadu State Marketing Corporation Limited,
(TASMAC)
Represented by the Managing Director,
CMDA Towers-II, IV Floor,
Gandhi Irwin Bridge Road,
Egmore, Chennai 600 008. ... Petitioner
Vs.
Directorate of Enforcement,
Represented by Assistant Director,
Chennai Zonal Officer II,
No.2, 5th and 6th Floor,
BSNL Administrative Building,
Kuskumar Road, Nungambakkam,
Chennai 600 034. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India to
issue Writ of Mandamus, directing the respondent, their men, employees,
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W.P.Nos.10348, 10352 & 10355 of 2025
subordinates, agents or any other persons claiming or acting through or
under them Not to Harass the officials/employees of the petitioner under the
guise of investigation under the Prevention of Money Laundering Act, 2002.
For Petitioner : Mr.Vikram Chaudhri
Senior Advocate
Assisted by Mr.Stalin Abhimanyu
Additional Government Pleader
For Respondent : Mr.S.V.Raju
Additional Solicitor General of India
Assisted by Mr.Zoeb Hussain and
Mr.AR.L.Sundaresan
Additional Solicitor General of India
Assisted by Mr.N.Ramesh
Special Public Prosecutor (ED)
W.P.No.10352 of 2025:
Tamil Nadu State Marketing Corporation Limited,
(TASMAC)
Represented by the Managing Director,
CMDA Towers-II, IV Floor,
Gandhi Irwin Bridge Road,
Egmore, Chennai 600 008. ... Petitioner
Vs.
Directorate of Enforcement,
Represented by Assistant Director,
Chennai Zonal Officer II,
No.2, 5th and 6th Floor,
BSNL Administrative Building,
Kuskumar Road, Nungambakkam,
Chennai 600 034. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India to
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W.P.Nos.10348, 10352 & 10355 of 2025
issue Writ of declaration, in so far as it relates to the search and seizure
proceedings conducted under Section 17 of the Prevention of Money
Laundering Act, 2002 from 06.03.2025 to 08.03.2025 as without jurisdiction,
illegal and arbitrary.
For Petitioner : Mr.Vikas Singh
Senior Advocate
Assisted by Mr.Stalin Abhimanyu
Additional Government Pleader
For Respondent : Mr.S.V.Raju
Additional Solicitor General of India
Assisted by Mr.Zoeb Hussain and
Mr.AR.L.Sundaresan
Additional Solicitor General of India
Assisted by Mr.N.Ramesh
Special Public Prosecutor (ED)
W.P.No.10355 of 2025:
1.The State of Tamil Nadu,
Represented by the Additional Chief Secretary to Government,
Home, Prohibition and Excise Department,
Secretariat, Fort St. George,
Chennai 600 009.
2.Tamil Nadu State Marketing Corporation Limited,
(TASMAC)
Represented by the Managing Director,
CMDA Towers-II, IV Floor,
Gandhi Irwin Bridge Road,
Egmore, Chennai 600 008. ... Petitioners
Vs.
Directorate of Enforcement,
Represented by Assistant Director,
Chennai Zonal Officer II,
No.2, 5th and 6th Floor,
BSNL Administrative Building,
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W.P.Nos.10348, 10352 & 10355 of 2025
Kushkumar Road, Nungambakkam,
Chennai 600 034. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India to
issue Writ of declaration, that the power of the respondent, so far as it
relates to investigation, enquiry etc. of an offence of money laundering in
relation to a predicate offence arising out of and within territorial limits of a
State without the consent of the concerned State, is violative of basic
structure of federalism and separation of powers, and therefore, such
enquiry, investigation etc., by the respondent can be carried out only at the
request of the State Agencies / State Government, or by or under the
directions of the Constitutional Courts.
For P1 : Mr.P.S.Raman
Advocate General
Assisted by Mr.Edwin Prabhakar
State Government Pleader and
Mrs.E.Ranganayaki
Additional Government Pleader
For P2 : Mr.Vikram Chaudhri
Senior Advocate
Assisted by Mr.Stalin Abhimanyu
Additional Government Pleader
For Respondent : Mr.S.V.Raju
Additional Solicitor General of India
Assisted by Mr.Zoeb Hussain and
Mr.AR.L.Sundaresan
Additional Solicitor General of India
Assisted by Mr.N.Ramesh
Special Public Prosecutor (ED)
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W.P.Nos.10348, 10352 & 10355 of 2025
COMMON ORDER
S.M.SUBRAMANIAM, J.
Three writ petitions have been filed. The writ petition in
W.P.No.10348 of 2025 has been filed by the Tamil Nadu State Marketing
Corporation Limited (TASMAC), seeking the issuance of writ of mandamus,
to direct the respondent, their men, employees, subordinates, agents or any
other persons claiming or acting through or under them not to harass the
officials/employees of the petitioner under the guise of investigation under
the Prevention of Money Laundering Act, 2002 [hereinafter referred to as
'PMLA'].
2. The second writ petition in W.P.No.10352 of 2025 filed by
TASMAC seeking a writ of declaration, in so far as it relates to the search
and seizure proceedings conducted under Section 17 of Prevention of
Money Laundering Act, 2002 from 06.03.2025 to 08.03.2025, were without
jurisdiction, and therefore, illegal and arbitrary.
3. The third writ petition in W.P.No.10355 of 2025 has been filed by
the State of Tamil Nadu, seeking a writ of declaration that the power of the
respondents so far as it relates investigation, inquiry etc., of an offence of
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money laundering in relation to a predicate offence arising out of and within
the territorial limits of the State without the consent of the concerned State,
is violative of basic structure of federalism and separation of powers.
Therefore, such inquiry, investigation, etc., by the respondent can be carried
out only at the request of the State Agencies/State Government or by or
under the directions of the Hon'ble Constitutional Courts.
4. The said Original prayer sought to be amended in
W.M.P.No.12695 of 2025 as follows: (i) To Read down and/or read into the
expression “person” occurring in Section 2(1)(s) of the PML Act and hold
that the same envisages a particular class and category to be included in its
ambit, sweep and scope which certainly does not extend to any Authority,
Regulator or Officer of Central or State Governance etc., (ii) To Hold and
declare that the only obligation on the officers of any State Government
under the Act is to assist the authorities in the enforcement thereof, (iii) To
direct the respondent Enforcement Directorate to call upon only those
officers of the State who have been authorised and notified under Section
54(1)(j) of PML Act thereof by the Central Government to assist them for
enforcement of the provisions thereof, (iv) To Direct the respondents to
request such assistance from the State Government or its Officers only in
terms of Section 54 and not under Section 17 or 50 etc., (v) To Direct the
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respondents not to enter into and exercise any power of search and seizure
in terms of Section 17 of the PML Act at any premises of the Government of
the State of Tamil Nadu be it any office of any Corporation under it as well,
(vi) To hold and declare the action of the respondents in entering into the
premises of the Tamil Nadu State Marketing Corporation Limited (TASMAC)
to be illegal, unconstitutional and invalid and accordingly, set aside the
proceedings carried out in pursuance thereto.
5. The brief facts in these writ petitions are that the TASMAC is a
company incorporated under the Companies Act, 1956, on 23.05.1983. It is
wholly owned by the Government of Tamil Nadu, with its Registered Office
in Chennai. TASMAC has been vested with the exclusive privilege of
wholesale supply of Indian Made Foreign Liquor ('IMFL') for the entire State
of Tamil Nadu, as per Section 17(C)(1-A)(a) of the Tamil Nadu Prohibition
Act, 1937 (Tamil Nadu Act X of 1937). It has taken over the wholesale
distribution of IMFL from the Private Sector in the whole State of Tamil Nadu
in May 1983. In addition, TASMAC also engages in retail business.
Currently, the distribution of IMFL and Beer items to the licensees is being
carried out through 43 depots of TASMAC located throughout the State.
TASMAC manages nearly 5,000 retail units across the State of Tamil Nadu.
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6. These writ petitions have been filed consequent to a search
conducted by the Directorate of Enforcement at the TASMAC Headquarters
and its connected locations. The search commenced at 11:55 A.M. on
06.03.2025 (Thursday) and continued for three days until 11:40 P.M. on
08.03.2025 (Saturday). The search was conducted on the 4th and 5th Floors
of the Head Office of TASMAC in Egmore, Chennai, by several officers of
the respondent, including two Assistant Directors and other Enforcement
Officers.
7. The Enforcement Directorate (ED) in their counter has stated that
multiple F.I.Rs have been registered by the Tamil Nadu Department of
Vigilance and Anti-Corruption on the issue that TASMAC shops are
collecting excess amount than the actual Market Retail Price (MRP). That
the staff are selling some foreign liquors, which rarely come in the market at
exorbitant prices i.e., upto Rs.500/- excess than the actual rate. Further,
some supervisors also admitted that they are collecting the excess amount
than the MRP depending upon the brand of the liquor from Rs.10/- to
Rs.100/-; and that they not only collect the excess amount from the cash
purchasers, but also collect the excess amount even from customers, who
purchased the liquor through credit and debit cards etc.
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8. F.I.Rs were registered by the Tamil Nadu Department of Vigilance
and Anti-Corruption, alleging that during various joint surprise checks,
unaccounted cash was found at the Retail Vending Shops and District
Manager Offices of TASMAC. It was also alleged that officers at the level of
District Managers and Senior Regional Managers are indulging in high level
of corruption by collecting illegal gratification or bribe from the retail
TASMAC shops through the shop supervisors of the TASMAC shops, for
favouring them by way of not conducting surprise inspection and allowing
them to sell liquor at higher rates than the prescribed rates fixed by the
Government. Regional Managers of TASMAC are indulging in collection of
bribes for transfer and posting of TASMAC Staff.
9. F.I.Rs have been registered on the issue of representatives of
breweries approaching the officials of TASMAC to take off high stake from
their respective companies by way of illegal gratification. Also F.I.Rs have
been registered on the issue of daily bribes being paid to District Managers,
Supervisor, etc.
10. The F.I.Rs are registered mainly under Sections 7, 12 and 13 of
Prevention of Corruption Act, 1988, which are also the Scheduled offence
under PMLA.
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11. Based on the same, the Enforcement Directorate had conducted
search and seizure at TASMAC Headquarters and other connected
locations by invoking Section 17 of PMLA. The search and seizure
procedures are well contemplated within the ambit of Prevention of Money
Laundering Act, 2002. Section 17 has clearly detailed about it and the same
has been upheld in Vijay Madanlal Choudhary and Others vs. Union of
India and Others1.
12. Section 17 (1) reads as follows;
“(1) Where 1[the Director or any other officer
not below the rank of Deputy Director authorised by
him for the purposes of this section,] on the basis of
information in his possession, has reason to
believe (the reason for such belief to be recorded in
writing) that any person-
(i) has committed any act which constitutes
money-laundering, or
(ii) is in possession of any proceeds of crime
involved in money-laundering, or
(iii) is in possession of any records relating to
money-laundering,2[or]
2[(iv) is in possession of any property related to
crime,]
then, subject to the rules made in this behalf, he may
1. 2022 SCC Online SC 929
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authorise any officer subordinate to him to-
(a) enter and search any building, place, vessel,
vehicle or aircraft where he has reason to suspect
that such records or proceeds of crime are kept;
(b) break open the lock of any door, box, locker,
safe, almirah or other receptacle for exercising the
powers conferred by clause (a) where the keys thereof
are not available;
(c) seize any record or property found as a
result of such search;
(d) place marks of identification on such record
or2[property, if required or] make or cause to be made
extracts or copies therefrom;
(e) make a note or an inventory of such record
or property;
(f) examine on oath any person, who is found to
be in possession or control of any record or property,
in respect of all matters relevant for the purposes of
any investigation under this Act:”
13. Section 17 in explicit terms has clearly mentioned under clause
(a), that on authorisation, the concerned officer can enter and search any
building based on adequate reasons of suspicion that such records or
documents are kept. Further clause (b) holds legal seizure of any record or
property found as a result of such search and clause (f) allows examination
on oath any person who is found to be in possession of any record or
property in respect of all matters relevant to the investigation under the Act.
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14. And the said provision has been already discussed in detail in
Vijay Madanlal's case cited supra. Further Section 17 has been upheld in
Vijay Madanlal's case. Hence, the vires of this provision is not the point of
contention in the present case.
15. Mr.Vikram Chaudhri, the learned Senior Counsel appearing for
the Petitioner has relied on the judgement in Arvind Kejriwal vs
Directorate of Enforcement2, where the Hon’ble Supreme Court has
elaborately dealt with the Power to arrest under Section 19 of the PMLA.
The argument of the learned senior counsel for the petitioner that Section
17 is no less rigorous in its procedural thresholds than Section 19 cannot be
accepted. It is impossible to draw a comparison between search and arrest.
Such strict parameters as laid down in Section 19 cannot be applied across
all the provisions. Section 19 is far more serious as it pertains to the
personal liberty of an individual being curtailed. But under Section 17, it
deals with a premature exercise of only search and seizure which cannot be
measured in the same scales as arrest.
16. Search is conducted in different circumstances from that of arrest.
The arrest demands more degree of certainty and actual materials to carry
2. 2024 INSC 400
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out the arrest of a person. But in terms of search there is lower degree of
certainty required to effectuate a search.
17. The comparison as submitted by the learned Senior counsel for
the petitioner between Section 17 and Section 19 in no terms can be
entertained as the grounds and powers of arrest is completely different from
search and seizure as contemplated under Section 17 of the Act. Arrest is
deprivation of one’s right to personal liberty, whereas in search and seizure,
the scope is tested vis-a-vis right to privacy and freedom of movement. So a
tabular comparison of these both Sections cannot yield justice to the
legislative intent set out under both these Sections. Arrest is several
notches higher when compared to a search conducted. The intent itself
differs, hence the principles as envisaged under Section 19 cannot find
place under Section 17.
18. It is to be noted that the preconditions set out in Section 17 has
self bridled itself in operation. Moreover safeguards under Sections 17 and
62 ensure a mechanism to cut down the misuse of the provision, if any.
Further Section 17 of PMLA has been already upheld in Vijay Madanlal's
case cited supra. So the vires of this provision need not be tested in the
present case.
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19. The only question for consideration is, Whether the
preconditions set out in Section 17 has been complied with or not?
20. The condition precedent for launch of investigation under PMLA is
primarily presence of scheduled offence. The ED in their counter have
submitted that investigation was taken up against TASMAC based on
multiple F.I.R’s registered across the State of Tamil Nadu, on the
malpractice of corruption, against many officers/staff/employees of
TASMAC for the offences committed by them under Prevention of
Corruption Act which is a scheduled offence under the schedule appended
to PMLA.
21. And a search was conducted based on the above input.
According to the Panchnama, the actual search began at 11:55 A.M. on
06.03.2025 and ended on 11:40 P.M. on 08.03.2025.
22. Section 17 states that the PMLA authority should have ‘reason to
believe' and those reasons to believe have to be recorded in writing. In the
instant case, the ED in their counter have stated as follows: “The petitioner's
allegation that "reasons to believe" were not properly documented in writing
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as required under Section 17 of PMLA is categorically denied. The search
authorization dated 05.03.2025 is on the basis of written reasons to believe,
as mandated by Section 17(1) of the PMLA.
23. It is submitted that the said "reasons to believe" documentation is
an internal, confidential investigative record that cannot be disclosed at this
stage of investigation as it would prejudice ongoing investigation and
potentially alert other suspects”.
24. In the case of Radhika Agarwal vs Union of India3, the ambit of
judicial review pertaining to arrest under Special legislations was dealt with.
This Court is not placing absolute reliance on this judgment as it mainly
deals with arrest under Section 19 PMLA. But we are limiting ourselves to
referring to this judgment only to the extent of examining the contours of the
term 'reasons to believe'.
25. In the Radhika Agarwal's case supra, in the judgment rendered
by Justice Sanjiv Khanna, reliance was on Arvind Kejriwal judgment cited
supra and stated that reason to believe must not only be recorded in writing
but also the nexus between the materials in possession and reason to
believe must be ascertained on judicial review. Also in the same case, in the
3. 2025 SCC Online SC 449
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concurring judgment rendered by Justice Bela Trivedi, it was observed that
Sufficiency or adequacy of materials on the basis of which such belief is
formed by the authorising officer, would not be a matter of scrutiny by the
Courts at such a nascent stage of inquiry or investigation.
26. So the fair question that arises is what is the extent to which the
scope of Judicial review can travel in ascertaining the contours of “reasons
to believe” set out in Section 17.
27. Going by the observations made in the concurring judgment
rendered by Justice Bela Trivedi, this Court is of the opinion that when the
parameters of arrest itself is as much as only to ensure the recording of
reasons to believe in writing and not to go further into scrutiny of sufficiency
or adequacy of materials based on which belief is formed, then here the
threshold of Section 17 search being much lesser than arrest, then the only
point of scrutiny by Courts is to ensure whether procedure of 'reasons to
believe' to be recorded in writing is complied with or not. And such reason to
believe must be formed based on some information in possession. And in
the absence of any malafideness there is no need for further scrutiny by the
Court at this nascent stage.
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28. Therefore, the Courts need not go into the merits or scrutinies the
reasons. The fact that the authority had recorded the reasons to believe in
writing as explicitly mandated under Section 17 based on information in
possession is sufficient to conduct search. Sufficiency or adequacy of the
information cannot be gone into by the Court at this stage of search and
seizure which involves collection and gathering of evidence.
29. This point further finds agreement on the premise that the object
of conducting search itself is to gather evidence, then how can there be a
precondition that the ED should be in possession of credible material
evidence before conducting search. That would defeat the object of search
under Section 17. It is only after a search is conducted that credible
evidence be gathered to establish the offence of money laundering. If the
DoE has all the relevant material evidence even before conducting the
search then there is no requirement to conduct such search operation at all.
Hence the requirement of actual material evidence before forming reasons
to believe as contemplated under Section 19 cannot be accorded to Section
17 of PMLA.
30. On the point of judicial scrutiny of subjective satisfaction of the
authority recording reasons to believe, it is well settled that the merits of the
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subjective satisfaction arrived at by the authorising officer cannot be gone
into by the Courts. Courts cannot substitute their own belief with that of an
investigating officer. The judicial review powers of the Courts is limited only
to the extent as to whether the reasons to believe is recorded in writing
before conducting search. The scope of Judicial review is limited to this
alone and cannot go beyond or examine the subjective satisfaction of the
investigating officer.
31. In the instant case, to verify the recording of the reasons to
believe, the respondent DoE had submitted in a sealed cover the copy of
'reasons to believe' for conducting the search before this Court. This Court
did not go into the merits of the reasons but merely verified whether the
reasons to believe authorising the search is recorded in writing and after
being satisfied with the same returned the sealed cover to the Learned
Special Public Prosecutor appearing for DoE. Further it is also pertinent to
note that the DoE in their counter have specified that the information in
possession includes F.I.R's alleging commission of scheduled offences by
public servants. Hence the information is not mere hearsay or unrelated
information but is relevant to the belief formed and hence the standard as
required under Section 17 satisfied.
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32. Once the reasons to believe under Section 17(1) is recorded, the
second part of Section 17 permits authorisation of officers to conduct search
on the basis of reasons to suspect, a significantly lower threshold.
33. Section 17 (a) explicitly states that an authorised officer may enter
and search any building, place, vessel, vehicle or aircraft where he has
reason to suspect that such records or proceeds of crime are kept.
34. The learned Additional Solicitor General of India relying upon an
internal note titled "Why TASMAC head office is covered u/s 17 of PMLA"
demonstrated that the head office of TASMAC was specifically covered
under Section 17 of PMLA because it is a central repository, and custodian
of records relating to key operational domains, retail sales, supply orders,
tender processes, staff transfers, and inspections all of which were
implicated in the predicate offences. Hence reasons for search being
conducted at TASMAC headquarters has been explained by the DoE and
hence needs no further review.
35. Mr.Vikas Singh, learned Senior Counsel contended that the ED
has not disclosed the FIR which forms the basis for the registration of the
ECIR. It was submitted that since jurisdiction of the ED is entirely derivative,
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it is imperative for the ED to disclose the precise FIR that constitutes the
scheduled offence under the Act, as the offence of money laundering under
Section 3 read with Section 2(1)(u) is inextricably linked to the existence of
a valid and subsisting scheduled offence.
36. A reading of the facts reveals that the precise FIR sought for by
the petitioner is linked to the reasons to believe. On examination of Section
17, there is no explicit procedure stipulated that the copy of reasons to
believe must be served on the person on whom search is conducted. And
ED have argued that the disclosure of the reasons to believe can lead to
concealment of evidence and may jeopardise the investigation. This court
feels that search is a preliminary stage and is not as serious as an arrest as
in the case of arrest there is a curb on right to personal liberty Though in the
case of search, right to privacy is curbed to a certain extent, it should also
be understood that search and seizure procedure under any laws in force
including Criminal Procedure Code can be conducted only by curbing right
to privacy to a limited extent. So search and seizure is a preliminary process
only and under Section 17 there is an inbuilt mechanism whereby clause 2
states as follows:
“17(2) The authority, who has been authorised
under sub-section (1) shall, immediately after search
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and seizure 3 [or upon issuance of a freezing order],
forward a copy of the reasons so recorded along with
material in his possession, referred to in that sub-
section, to the Adjudicating Authority in a sealed
envelope, in the manner, as may be prescribed and
such Adjudicating Authority shall keep such reasons
and material for such period, as may be prescribed.”
Hence, the Petitioner can approach the Adjudicating authority for
appropriate remedies if necessary.
37. The reason this Court cannot order the copy of reason to believe
to be produced is:
(A) Such omnibus direction that all search must be conducted by
serving a copy of reason to believe might lead to concealment or destruction
of evidence thereby jeopardising the investigation.
(B) Further Section 17 is a preliminary stage where based on some
information in possession the ED search is conducted and if no prima facie
case is made out, automatically all action is dropped, but if any incriminating
evidence is found then the matter moves towards trial and always the issue
of reasons to believe can be tested before the trial court.
(C) There is an alternate mechanism under the Act whereby the
Adjudicating authority can be approached, to whom the reasons to believe
recorded in writing will be served and appropriate remedy can be sought
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thereunder.
(D) The reasons to believe under arrest is different and more serious
as compared to a search, hence the same thresholds of arrest cannot be
applied here.
38. And the contention that Enforcement Case Information Report
(ECIR) was not shared with the Petitioner finds no merit as this proposition
is already settled in Vijay Madanlal's case whereby ECIR was held to be an
internal document and need not be shared.
39. In Vijay Madanlal's case, it was held as under,
...........
“458. The next issue is : whether it is necessary
to furnish copy of ECIR to the person concerned
apprehending arrest or at least after his arrest?
Section 19(1) of the 2002 Act postulates that after
arrest, as soon as may be, the person should be
informed about the grounds for such arrest. This
stipulation is compliant with the mandate of Article 22
(1) of the Constitution. Being a special legislation and
considering the complexity of the inquiry/investigation
both for the purposes of initiating civil action as well as
prosecution, non-supply of ECIR in a given case
cannot be faulted. The ECIR may contain details of
the material in possession of the Authority and
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recording satisfaction of reason to believe that the
person is guilty of money-laundering offence, if
revealed before the inquiry/investigation required to
proceed against the property being proceeds of crime
including to the person involved in the process or
activity connected therewith, may have deleterious
impact on the final outcome of the
inquiry/investigation. So long as the person has been
informed about grounds of his arrest that is sufficient
compliance of mandate of Article 22(1) of the
Constitution. Moreover, the arrested person before
being produced before the Special Court within
twenty-four hours or for that purposes of remand on
each occasion, the Court is free to look into the
relevant records made available by the Authority about
the involvement of the arrested person in the offence
of money-laundering. In any case, upon filing of the
complaint before the statutory period provided in 1973
Code, after arrest, the person would get all relevant
materials forming part of the complaint filed by the
Authority under Section 44(1)(b) of the 2002 Act
before the Special Court.
459. Viewed thus, supply of ECIR in every case
to person concerned is not mandatory. From the
submissions made across the Bar, it is noticed that in
some cases ED has furnished copy of ECIR to the
person before filing of the complaint. That does not
mean that in every case same procedure must be
followed. It is enough, if ED at the time of arrest,
contemporaneously discloses the grounds of such
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arrest to such person. Suffice it to observe that ECIR
cannot be equated with an FIR which is mandatorily
required to be recorded and supplied to the accused
as per the provisions of 1973 Code. Revealing a copy
of an ECIR, if made mandatory, may defeat the
purpose sought to be achieved by the 2002 Act
including frustrating the attachment of property
(proceeds of crime). Non-supply of ECIR, which is
essentially an internal document of ED, cannot be
cited as violation of constitutional right. Concededly,
the person arrested, in terms of Section 19 of the 2002
Act, is contemporaneously made aware about the
grounds of his arrest. This is compliant with the
mandate of Article 22(1) of the Constitution. It is not
unknown that at times FIR does not reveal all aspects
of the offence in question. In several cases, even the
names of persons actually involved in the commission
of offence are not mentioned in the FIR and described
as unknown accused. Even, the particulars as
unfolded are not fully recorded in the FIR. Despite
that, the accused named in any ordinary offence is
able to apply for anticipatory bail or regular bail, in
which proceeding, the police papers are normally
perused by the concerned Court. On the same
analogy, the argument of prejudice pressed into
service by the petitioners for non-supply of ECIR
deserves to be answered against the petitioners. For,
the arrested person for offence of money-laundering is
contemporaneously informed about the grounds of his
arrest; and when produced before the Special Court, it
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is open to the Special Court to call upon the
representative of ED to produce relevant record
concerning the case of the accused before him and
look into the same for answering the need for his
continued detention. Taking any view of the matter,
therefore, the argument under consideration does not
take the matter any further.”
40. The submission that TASMAC officials were forced to
acknowledge the search warrant cannot be appreciated. It is in fact the duty
of the officials, being public servants, that they ought to cooperate with an
investigating agency when they want to conduct search in a TASMAC office.
41. Also, in the Prevention of Money laundering (Forms, Search and
Seizure or Freezing and the Manner of Forwarding the Reasons and
Materials to the Adjudicating Authority, Impounding and Custody of Records
and the Period of Retention) Rules, 2005, Rule 3(4) explains the Procedure
relating to search and it reads as follows:
“Any person charge of, or, in any building,
place, vessel, vehicle or aircraft shall, on
production of the authorisation, allow the authority
free ingress thereto and afford all reasonable
facilities for search therein.”
42. And as per this Rule, on production of authorisation, it is the duty
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of the person in-charge of the building to allow the authority to conduct
search. Further the Panchnama also states that in the present case, the
authorisation was already shown and explained to one, Shri Ramadurai
Murugan, DRO/General Manager (GM)(R&V) and that the authorisation was
signed at 11.55 Hours as a token of having seen the same.
43. Further Section 17 nowhere obligates giving a copy of search
warrant. It is merely produced to get the authorisation of the person in-
charge of the building before conducting a search. And the Panchnama also
reveals the following;
"The Panchas (independent witnesses) have
confirmed that the Search Authorisation No.
26/2025 was shown and explained to them as well
as one Shri Ramadurai Murugan, District Revenue
officer/General Manager (GM) (R&V) and Shri
Ramadurai Murugan had signed the authorisation
at 11.55 AM and the independent witnesses have
signed on the Search Authorisation at 13:50 hrs."
And subsequently Mr. M. Jothi Shankar, DGM
(Purchase & Sales), entered the premises at
around 16:00 hours as he was in a meeting which
was held on 4th Floor of the same building. Shri M.
Jothi Shankar also signed on the authorisation as
a token of having seen the same".
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It was submitted that a similar practice was even followed at the 4th Floor of
TASMAC office.
44. The petitioner further submitted that the Respondent took oral
statements from their officers including the TASMAC Managing Director,
General Manager (Administration and Wholesale), Deputy General Manager
(Purchase and sale) and also asked 100 questions on tender process, price
fixation of liquor, FL2 licenses, indent details etc. and typed the same and
got signatures. This process according to the petitioner was recorded under
illegal detention, threat and coercion.
45. This submission finds no merit as nowhere has any of the
aforementioned officials filed a complaint stating that they were coerced.
Further the Panchnama also does not reveal any such allegation. How can
both the Government of Tamil Nadu and TASMAC file an affidavit stating
that such coercion happened when there is no material to prove the same.
How does the Government assume that their officials were harassed, if at
all, in the absence of any internal enquiry or complaints from the concerned
officials.
46. The string of allegations levelled out of no viable basis or material
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has caused an illusionary scenario.
47. The PMLA statute empowers the Directorate of Enforcement to
conduct search and seizure according to procedure laid down in Section 17
along with its corresponding Rules. Section 17(1)(f) of PMLA and Rule
3(2)(f) of the Search and seizure Rules permit the Directorate of
Enforcement to examine on oath any person, who is found to be in
possession or control of any record or property, in respect of all matters
relevant for the purposes of any investigation under the PMLA. And Sub
Clause (c) of Sub-Section (1) of Section 17 of PMLA clearly permits seizure
of any record found as a result of the search.
48. The submission of the petitioner downplays a normal search and
seizure operation conducted within the ambit of PMLA. Seizure of relevant
material document which might serve as evidence before courts of law is
part and parcel of procedure established by law. This cannot be termed as
forcible seizure.
49. Moreover, the Panchnama which is prepared after a search
carries details of seized materials and the procedure adopted during search
and also it contains signature of independent Panch witness. In the case on
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hand the Panchnama states that, “the search was conducted in a peaceful
manner and no damage to the person or property was caused during the
course of search. No coercion, threat, inducement, promise or any other
external influence was used against the inmates”. Hence, no procedural
infirmity has been found. It is also to be noted that the Petitioner have
nowhere disputed the credibility of the Panch witness in the Panchnama. So
the validity of the panchnama is not a matter of dispute in the current
petition.
50. It is surprising that certain TASMAC officials had given an affidavit
that they were unlawfully confined during a search operation. The search
operation was conducted by a lawful investigating agency and it is a matter
of procedure that during raids and surprise searches, the employees would
be detained inside the premises to prevent leakage of information and also
prevent any destruction of evidence. Also, it is a government owned
company which is a public place and not a private home. So, the
cooperation of the employees are essential to conduct a smooth search
operation.
51. However, individual affidavits by four officers i.e Dr.S.Visakan,
I.A.S., (Managing Director of TASMAC), Mr. S.P.Santhanam (Chief
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Accounts Officer/ General Manager (Finance) (I/c) in TASMAC),
Mrs.S.Anandpriya (Company Secretary in TASMAC) and Mrs.Madheswari
(Tahsildar/Section officer in TASMAC) were submitted alleging that they
were harassed by the Respondent agency. There are allegations made by
the State of Tamil Nadu and TASMAC that their employees were not
provided food or rest and that their right to life and personal liberty was
infringed by the respondent agency. But there is no sound evidence or
material to prove the same. Such vague allegations especially when
investigation is in progress cannot be entertained. In the absence of
concrete material to prove the same, this court cannot normally interfere
and stall an investigation. The materials produced before the Court shows
that there was a search conducted under Section 17 and in compliance of
the procedural safeguards set out in Section 17 and its Rules. Further, it
appears on the face of it that the employees as an after thought submitted
the affidavits alleging violation of fundamental rights.
52. The Petitioner further submits that the employees of TASMAC
were not allowed to communicate with anyone in the outside world and that
proper rest was not given thereby causing severe physical and
psychological distress. Further the TASMAC in their affidavit on behalf of
their employees claim that several employees were being subjected to
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prolonged detention for nearly 60 hours deprived of basic human
necessities.
53. But the Panchnama reveals no such harassment meted out to
employees. The Panchnama reveals the presence of independent
witnesses throughout the proceedings and they have attested to the
voluntary nature of the statements. The contents also show that adequate
rest was provided. The counter affidavit filed by the DoE in para 25 have
stated that “…Statements under Section 17 of PMLA, 2002 were recorded
in a phased manner, wherein proper rest, food, interpersonal interactions,
leaving or entering premises were ensured. The perusal of the statements
recorded would prove the same…”
54. Also the Directorate of Enforcement has categorically denied the
petitioner allegations. In the counter affidavit it has been stated that the
process of voluntary statements under Section 17 of PMLA did not last for
continuous 60 hours, as alleged. Required periodical breaks for health, food
and rest were given. Some of the TASMAC officials stayed back in the
premises on their own and not at the instance of the ED officials. And more
specifically it was submitted that GM Admin was asked to leave on
07.03.2025 after completion of her statement, however, she stayed back as
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per her own will and choice. It was also submitted that, certain TASMAC
employees requested the ED officers to retain their subordinates for their
assistance citing various reasons and therefore the Directorate did not
object to the same. Hence they stayed back as per their free will and
convenience. Also it was submitted that medical accommodations was
made for Shri.M.Jothi Shankar due to his cardiac condition, allowing him to
leave the premises early.
55. Further violation of such fundamental rights of individuals cannot
be proved without them filing formal complaints and such individuals ought
to have filed separate writ petitions for any such infringement. This Court
cannot take a vague allegations against a Central investigating agency.
Moreover the allegations that in a government company which is also a
public place visited by general public, there is absence of basic human
necessities is too far-fetched an argument.
56. It is noteworthy that in our country, lakhs of general public from all
walks of life visit government offices each day to fight for their basic rights.
They wait for hours in government offices to get their work done. In fact for
even giving a petition in a government office, a common man have to wait
for hours, sometimes days together they have to repeatedly visit the office
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inspite of other important commitments to get even a basic work done. But
these are unavoidable delays and our general public bears with it. But here
an entire government machinery has come forward to file a writ petition
stating that a few public officers were made to wait for hours in their offices,
which we believe has adequate facilities and definitely has basic human
necessities. And moreover this Court is of the view that it is the duty of the
TASMAC officials to cooperate with the investigating agencies. In fact they
should be more inclined to cooperate with the investigation to get rid of any
such corruption or money laundering that might have happened. That is the
duty of every public servant. Instead making such flimsy arguments is
unpalatable. Our country also sees the operation of Criminal Procedure
Code where search and seizure provisions find place. But we don’t see
much litigations where general public states that there fundamental rights
are affected during search by local police or other State investigating
agencies. That doesn’t mean that there is no such violation but it is just that
common man considers it his duty to cooperate with the Police. But it is only
in offences of high economic transactions like money laundering that even
for a basic exercise of searching a building does all forms of litigation
alleging violation of fundamental rights crops in. And even a normal search
is made to look like all hell broke loose.
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57. Also, this Court is unable to understand as to why the State of
Tamil Nadu and the TASMAC had chosen to file this writ petition. The
aggrieved could have filed individual writ petitions if their fundamental rights
are under threat. But the Tamil Nadu government has filed the writ petition
stating that their employees were harassed. Normally it is the individuals
aggrieved who approach the Court. Neither the Tamil Nadu Government nor
TASMAC are the aggrieved party here. It is shocking that a State
Government filed a petition stating that they have been aggrieved. How can
a peoples’ government be aggrieved because of a search operation
conducted in one government owned company? In fact the search operation
was conducted to unearth any case of money laundering, if any and to
ensure a corruption free operation of TASMAC for which the State
government must cooperate with the investigation agency. This raises
questions as to whether this present petition was filed to obstruct the
smooth conduct of the investigation. The fallacy in the submissions made
raises several doubts.
58. These kind of vague and improper writ petitions by Government
institutions alleging inhumanity against a statutorily empowered
investigating agency ought not to be entertained. This will lead to utter
chaos whereby it will lead to complete dilution of the statute itself. Moreover
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the allegations on the face of it are whimsical and such allegations without
any material or proof will obstruct any lawful investigation in future. Also the
prayer sought for is shocking whereby the Government of Tamil Nadu has
sought for “to Direct the respondents not to enter into and exercise any
power of search and seizure in terms of Section 17 of PML Act at any
premises of the government of the State of Tamil Nadu be it any office of
any Corporation under it as well”. This is clearly unjustifiable and devoid of
any valid reasoning. Further such a prayer implies that the petitioners are in
essence seeking a declaration from a Court of Law that the Government of
Tamil Nadu alone be exempted from PML Act.
59. The submission of the petitioner company that women were
detained during night hours and released at unsafe hours without adequate
safety measures has been categorically denied by the Directorate of
Enforcement. A perusal of the Panchnama reveals that,
“Further no female staff was forced to stay during the night and were
allowed to go home in night keeping all safety measures”
60. The Directorate of Enforcement also submitted that there was no
illegal detention of anybody on the searched premises and that several
employees of TASMAC opted to go home on the very first day and were
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permitted to leave. Rather few persons chose to remain on the searched
premises despite an option to leave.
61. Further, the TASMAC office where the search under Section 17
was conducted is in the heart of the Chennai City. It is a Government
company and during search, several other employees of TASMAC were
present. Also there were independent witnesses who witnessed the entire
proceedings and at no point of time during the search was the issue of
safety and harassment raised.
62. The Enforcement Directorate submitted that several higher/senior
officials [other than the Managing Director, General Manager
(Administration and Wholesale) General Manager (Retail Vending)] namely
Mr.Jothi Shankar (Deputy General Manager, Purchase and Sales),
Mr.S.P.Santhanam (General Manager, Finance) etc., chose to exercise their
right and option to leave the searched premises without any kind of
hindrance from the authorities of DoE conducting the search. Further, it was
contended that the averment that only the clerical and the lower-level staff
including the women employees were allowed to leave office while keeping
the higher officials detained is ex-facie false, especially since the three
individuals who chose to remain in the premises exercised their right under
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Sub Rule (8) Rule 3 of the PMLA Search Rules, 2005 to remain on the
premises and attend the search proceedings.
63. It is also imperative to examine the terms "custody", "detention"
and "arrest" as discussed in detail by the Hon'ble Supreme Court in
Sundeep Kumar Bafna v. State of Maharashtra4, wherein it was held as
under:
.......
“16. It appears to us from the above
analysis that custody, detention and arrest are
sequentially cognate concepts. On the
occurrence of a crime, the police is likely to carry
out the investigative interrogation of a person, in
the course of which the liberty of that individual
is not impaired, suspects are then preferred by
the police to undergo custodial interrogation
during which their liberty is impeded and
encroached upon. If grave suspicion against a
suspect emerges, he may be detained in which
event his liberty is seriously impaired. Where the
investigative agency is of the opinion that the
detainee or person in custody is guilty of the
commission of a crime, he is charged of it and
thereupon arrested. In Roshan Beevi [Roshan
Beevi v. State of T.N., 1984 Cri LJ 134: (1984)
15 ELT 289 (Mad)] , the Full Bench of the High
4. 2014 16 SCC 623
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Court of Madras, speaking through S. Ratnavel
Pandian, J. held that the terms "custody" and
"arrest" are not synonymous even though in
every arrest there is a deprivation of liberty is
custody but not vice versa. This thesis is
reiterated by Pandian, J. in Deepak Mahajan
[Directorate of Enforcement v. Deepak Mahajan,
(1994) 3 SCC 440: 1994 SCC (Cri) 785] by
deriving support from Niranjan Singh v.
Prabhakar Rajaram Kharote [Niranjan Singh v.
Prabhakar Rajaram Kharote, (1980) 2 SCC 559:
1980 SCC (Cri) 508]. The following passages
from Deepak Mahajan [Directorate of
Enforcement v. Deepak Mahajan, (1994) 3 SCC
440: 1994 SCC (Cri) 785] are worthy of
extraction: (SCC p. 460, para 48)
"48. Thus the Code gives power of
arrest not only to a police officer and a
Magistrate but also under certain
circumstances or given situations to
private persons. Further, when an
accused person appears before a
Magistrate or surrenders voluntarily,
the Magistrate is empowered to take
that accused person into custody and
deal with him according to law.
Needless to emphasise that the arrest
of a person is a condition precedent for
taking him into judicial custody thereof.
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To put it differently, the taking of the
person into judicial custody is followed
after the arrest of the person
concerned by the Magistrate on
appearance or surrender. It will be
appropriate, at this stage, to note that
in every arrest, there is custody but not
vice versa and that both the words
'custody' and 'arrest' are not
synonymous terms. Though 'custody'
may amount to an arrest in certain
circumstances but not under all
circumstances. If these two terms are
interpreted as synonymous, it is
nothing but an ultra legalist
interpretation which is under all
circumstances accepted and adopted,
would lead to a startling anomaly
resulting in serious consequences, vide
Roshan Beevi [Roshan Beevi v. State
of T.N., 1984 Cri LJ 134: (1984) 15
ELT 289 (Mad)].
64. An identical averment was raised before the Hon'ble Delhi High
Court in the case of Gautam Thapar Vs. Directorate of Enforcement5,
wherein it was held as under:
....
5. 2021 SCC OnLine Del 4599
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“13. Thus Deepak Mahajan (supra); Roshan
Biwi (supra) and Harbhajan Singh (supra) all in unison
clarify the custody and arrest are not synonymous. In
every arrest there is always a custody but in every
custody there may not be arrest. Even otherwise, if
one look at the scheme of PMLA it shows arrest needs
to be made only under Section 19(1) of the Act after
completion of process under Section 17(1) and 18 (1)
and the accused is to be produced before the
concerned court within 24 hours of his arrest under
Section 19(1).
***
15. A bare perusal of Section 17(1) and Section
18(1) would show under Section 17(1) the officer
authorised in its behalf, has only an information in his
possession whereupon he has a reason to believe that
any person has committed any act of money
laundering etc. Then such person can be searched
and his properties/documents can be seized; per
Section 18(1) which gives power to search such
person if there are reasons to believe he has secreted
about his person or anything under his possession,
ownership or control, any record or proceeds of crime
which may be useful for or relevant to any
proceedings under this Act. It is only thereafter per
Section 19(1) of the Act, if the officer has collected
sufficient material then on the basis of material in his
possession with a reason to believe such person has
been guilty of an offence punishable under this Act,
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the officer may arrest such person and shall inform
him of grounds for his arrest."
65. On examination of facts and materials available on record, this
Court finds it unfortunate that women officers and employees are used as
shields to prevent investigations from proceeding. Courts have time and
again stressed on gender equality in public service. Women are far more
empowered and are more proactive nowadays especially in public service.
We see women progressing across different fields. We have women
officers in Army, Navy and Air Force ready to defend our country under all
situations. We see women parliamentarians stay throughout the night in the
Houses of Parliament to take part in discussions on bills and pass
legislation for the benefit of the people of our Great Nation. We see women
IAS and IPS officers working tirelessly day and night especially during
exigencies and emergencies. Women doctors and nurses during COVID-19
worked round the clock even in night shifts to save lives. Across three
pillars of governance women are showing their capabilities and rising to the
occasion. Let not a government discourage and dis-empower women
especially those in public service. We should not underestimate the
capabilities of women. It is the duty of public officials to aid and assist in
investigations and it is also the responsibility of both the investigation
agencies and State Government officials in-charge to protect and ensure
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the safety of women. In spite of that, if the woman as an individual feels that
her right has been infringed she is fully within her rights to approach the
competent court of law. But let not a government try to discourage a woman
from moving towards the path of empowerment. We must get rid of the age
old stereotypes and ensure a level playing field for women.
66. Moreover it is the duty of the government to ensure a safe and
secure environment for women in public places as well as at nights as we
see more women going for night shift work and we should encourage and
ensure safe movement and secure transport system for women 24/7 rather
than tell them that they should refrain from going out at night. Women are
equal partakers in Nation building process and especially women in public
service are contributing a lot towards the national growth.
67. Gender of public officials should not be used as an excuse to
prevent a lawful agency from doing its duty. The DoE has also recorded in
their counter that all safety measures was undertaken and women
employees were asked to leave at night.
68. Also in counter filed by Directorate of Enforcement, it has been
stated that three key officers of TASMAC- Shri.Visakan, MD,
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Smt.Sangeetha, GM, and Shri.Jothi Shankar, DGM were examined under
oath under Section 17 of PMLA during search proceedings. After 10 days of
search all the officers have sent letters to the joint Director/ Assistant
director, ED requesting for more time to submit the documents. Nowhere in
these letters had there been any mention of irregularities in search
proceedings and no retraction of statements under Section 17 have been
made by them. Instead they had voluntarily sent letters to Directorate of
Enforcement requesting for more time to submit requisite documents ,
thereby implying that they abide by their statements recorded during search
proceedings. No allegations of violation of fundamental rights or coercion
was raised by them in those letters to Directorate of Enforcement. Hence,
the Directorate of Enforcement contended that this entire petition filed on
behalf of TASMAC company is an abuse of process of law.
69. On the submissions that right to privacy has been infringed, it is
well settled that right to privacy under Article 21 is subject to reasonable
restrictions. And PMLA being statute in force, it is well within its ambit to
conduct search and Directorate of Enforcement derives the search and
seizure power from Section 17 of the Act. This cannot be termed as breach
of privacy.
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70. Moreover, the Hon'ble Supreme Court in the decision being relied
upon by the petitioner i.e., KS Puttaswamy & Another. Vs. Union of
India6, itself holds that the right to privacy is not an absolute right and
would be subject to reasonable restrictions under the law, one such
reasonable restriction being crime detection. In this regard, certain
observations of the Hon'ble Supreme Court in KS Puttaswamy (supra) are
extracted hereunder:
....
“200. In Investigating Directorate : Serious
Economic Offences v. Hyundai Motor Distributors (Pty)
Ltd. [Investigating Directorate : Serious Economic
Offences v. Hyundai Motor Distributors (Pty) Ltd.,
2000 SCC OnLine ZACC 14 : (2001) 1 SA 545 (CC)]
(2001), the Court was concerned with the
constitutionality of the provisions of the National
Prosecuting Authority Act that authorised the issuing
of warrants of search and seizure for purposes of a
“preparatory investigation”. Langa, J. delivered
judgment on the right to privacy of juristic persons and
held that:
“… privacy is a right which becomes more intense the
closer it moves to the intimate personal sphere of the
life of human beings, and less intense as it moves
away from that core. This understanding of the right
flows… from the value placed on human dignity by the
6. (2017) 10 SCC 1
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Constitution. Juristic persons are not the bearers of
human dignity. Their privacy rights, therefore, can
never be as intense as those of human beings.
However, this does not mean that juristic persons are
not protected by the right to privacy. Exclusion of
juristic persons would lead to the possibility of grave
violations of privacy in our society, with serious
implications for the conduct of affairs.”
***
310. While it intervenes to protect legitimate
State interests, the State must nevertheless put into
place a robust regime that ensures the fulfilment of a
threefold requirement. These three requirements apply
to all restraints on privacy (not just informational
privacy). They emanate from the procedural and
content-based mandate of Article 21. The first
requirement that there must be a law in existence to
justify an encroachment on privacy is an express
requirement of Article 21. For, no person can be
deprived of his life or personal liberty except in
accordance with the procedure established by law.
The existence of law is an essential requirement.
Second, the requirement of a need, in terms of a
legitimate State aim, ensures that the nature and
content of the law which imposes the restriction falls
within the zone of reasonableness mandated by Article
14, which is a guarantee against arbitrary State action.
The pursuit of a legitimate State aim ensures that the
law does not suffer from manifest arbitrariness.
Legitimacy, as a postulate, involves a value judgment.
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Judicial review does not reappreciate or second guess
the value judgment of the legislature but is for deciding
whether the aim which is sought to be pursued suffers
from palpable or manifest arbitrariness. The third
requirement ensures that the means which are
adopted by the legislature are proportional to the
object and needs sought to be fulfilled by the law.
Proportionality is an essential facet of the guarantee
against arbitrary State action because it ensures that
the nature and quality of the encroachment on the
right is not disproportionate to the purpose of the law.
Hence, the threefold requirement for a valid law arises
out of the mutual interdependence between the
fundamental guarantees against arbitrariness on the
one hand and the protection of life and personal
liberty, on the other. The right to privacy, which is an
intrinsic part of the right to life and liberty, and the
freedoms embodied in Part III is subject to the same
restraints which apply to those freedoms.
311. Apart from national security, the State may
have justifiable reasons for the collection and storage
of data. In a social welfare State, the Government
embarks upon programmes which provide benefits to
impoverished and marginalised sections of society.
There is a vital State interest in ensuring that scarce
public resources are not dissipated by the diversion of
resources to persons who do not qualify as recipients.
Allocation of resources for human development is
coupled with a legitimate concern that the utilisation of
resources should not be siphoned away for
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extraneous purposes. Data mining with the object of
ensuring that resources are properly deployed to
legitimate beneficiaries is a valid ground for the State
to insist on the collection of authentic data. But, the
data which the State has collected has to be utilised
for legitimate purposes of the State and ought not to
be utilised unauthorisedly for extraneous purposes.
This will ensure that the legitimate concerns of the
State are duly safeguarded while, at the same time,
protecting privacy concerns. Prevention and
investigation of crime and protection of the revenue
are among the legitimate aims of the State. Digital
platforms are a vital tool of ensuring good governance
in a social welfare State. Information technology—
legitimately deployed is a powerful enabler in the
spread of innovation and knowledge.
***
313. Privacy has been held to be an intrinsic
element of the right to life and personal liberty under
Article 21 and as a constitutional value which is
embodied in the fundamental freedoms embedded in
Part III of the Constitution. Like the right to life and
liberty, privacy is not absolute. The limitations which
operate on the right to life and personal liberty would
operate on the right to privacy. Any curtailment or
deprivation of that right would have to take place
under a regime of law. The procedure established by
law must be fair, just and reasonable. The law which
provides for the curtailment of the right must also be
subject to constitutional safeguards.”
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71. Additionally, it is well settled that privacy right is a personal right
and cannot be asserted vicariously by a company or Government on behalf
of its employees. No such employee has come forward claiming a breach of
privacy. Moreover, extraction of information from a mobile phone for the
purpose of investigation into a crime cannot be objected to on the ground of
privacy even in terms of the judgment in K.S. Puttaswamy (supra).
72. The action of conducting search under constitutionally valid
provisions of the PMLA and for the purpose of collection of evidence to
detect and prosecute the offence of money laundering amounts to a
reasonable restriction on the right to privacy.
73. The seizure of mobile phone is directly and inextricably related to
the investigation and search under PMLA for the purpose of collection of
evidence for gathering material to unearth the offence of money laundering
and prosecute the offenders. Therefore, since the governmental
interest/legitimate state aim of crime detection as held in Puttaswamy is a
valid and reasonable restriction on the right to privacy.
74. Also the argument of the petitioner that seizure of mobile phone
during a search under the PMLA is violative of the Right to Speech is as
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absurd as saying that impounding of a vehicle under the Motor Vehicles Act
is violative of the Right to Freedom of Movement.
75. With reference to seizure of mobile phones, the Panchnama
reveals the following:
"During the course of search proceedings, the
officer informed us the panchas that the mobile
phones used by Shri. Visakan & Smt Sangeetha
contains certain crucial information related to the
ongoing enquiry under PMLA and they intend to
take dump of the said mobile phones by calling
Digital Forensic Analysts. At around 03:00 PM of
06.03.2025, one person Shri Maniratnam
Saravanan came to the premises and informed
that he is a Digital Forensic Analyst. Before
entering the premises, he also offered his personal
search which was declined by Shri. Visakan. At
around 03.30 PM on 06.03.2025, Ms Jina came to
the premises and informed that she is a Digital
Forensic Analyst. Before entering the premises,
she also offered her personal search which was
declined by Shri. Visakan. Thereafter, Shri
Maniratnam Saravanan and Ms Jina started taking
data backup of 4 mobile phones - three belonging
to Shri. Visakan and one belonging to Smt
Sangeetha, 4 Emails, and one Oracle Server
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database in our presence and in the presence of
Shri. Visakan & Smt Sangeetha."
76. On the point of ensuring data integrity and documentation of data
with hash values, details regarding the same is recorded in the
Panchanama,
"... the Digital Forensic Analyst have generated
hash value reports, digital evidence certificate as
per section 63 (4) (c) of the BSA, 2023, has been
obtained and the same is attached as Annexure-A
to this Panchanama. We, the Panchas along with
Shri Visakan and Smt Sangeetha, have signed the
forensic reports which have been annexed with the
Panchanama and marked as Annexure -- A.
“...The Digital Forensic Analysts also
informed that they have generated hash value
report of the said digital devices 4 mobile phones
and one Oracle Server data as mentioned in below
Table -1 to this Panchanama."
77. Also there is a procedure contemplated whereby on completion of
search proceedings, the Respondent will have to file an application under
Section 17(4) of PMLA, 2002, requesting for retention of such records or
property seized under Section 17(1) before the Adjudicating Authority
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(PMLA).
78. The respondents have submitted that there was a necessity for
seizure of documents as it contains crucial evidence of financial
transactions that form part of proceeds of crime and it requires forensic
examination. It was submitted that there was a reasonable apprehension of
tampering, concealment, or destruction of these documents if left in the
custody of the Petitioner.
79. Moreover, TASMAC is a fully government owned Company. The
affidavit filed by the TASMAC itself states as follow; “TASMAC is a
company incorporated under the Companies Act, 1965 on 23.06.1983”. In
the PML Act, Section 2 (s)(iii) states that “person” includes a company. So
when the language of the Section is express and clear and the TASMAC
has admitted that it is a company registered under companies Act, there is
no necessity for the court to read down this provision. It is settled law that
when the plain language of the provision is clear and unambiguous, it does
not warrant reading down of the said provision.
80. Further, Section 70 deals with Offences by companies. Sub
Section (1) states that where a person committing a contravention of any of
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the of the provisions of PMLA or of any Rule, direction or Order made
thereunder is a company, every person who, at the time the contravention
was committed, was in-charge of, and was responsible to the company,
shall be deemed to be guilty of the contravention and shall be liable to be
proceeded against and punished accordingly. Further, the explanation 2 to
Section 70 states that for the removal of doubts, it is hereby clarified that a
company may be prosecuted, notwithstanding whether the prosecution or
conviction of any legal juridical person shall be contingent on the
prosecution or conviction of any individual.
81. Also the contention of the petitioners that ED has to call upon only
those officers of the State who have been authorised and notified under
Section 54(j) of PML Act thereof by the Central government to assist them
for enforcement of the provisions is clearly unacceptable. This a complete
wrong interpretation of the PMLA provisions. Section 50 of the PMLA
contemplates the Power of authorities regarding summons, production of
documents and to give evidence etc. It is relevant to note that Sub Section
(2) to Section 50 enables the Director, Additional Director, Joint Director,
Deputy Director or Assistant Director to issue summon to any person whose
attendance he considers necessary for giving evidence or to produce any
records during the course of any investigation or proceeding under PMLA.
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In order to achieve these purposes the ED authorities are empowered to get
the assistance of the authorities under Section 54 or such authorities under
the said Section is empowered to assist the authority., Section 54 pertains
to authorities who have duty to assist the enforcement of PMLA, which is
distinct from the respondent's powers of search and seizure under Section
17. Further the PMLA operates within its own Statutory frame work and
does not require the consent of the State Government to exercise its powers
under Sections 17 and 50. In essence, Section 54 casts a responsibility on
such authorities to assist the ED. Therefore, this provision does not state
that ED must seek assistance from the State government officers only. No
such meaning can be derived from the plain language of this provision.
82. The learned Advocate General appearing on behalf of the State
submitted that the absence of predicate FIR disclosing a scheduled offence
under the PML Act, 2002 render the entire action taken by the DoE
including the search conducted on 6th March 2025, without jurisdiction and
unsustainable in law. It was contended that according to the scheme of
PMLA, every proceeding initiated by the ED must be rooted in a scheduled
offence, and any search or seizure must be in connection with proceeds
derived from such offence. The AG emphasised that in the absence of a
proper FIR satisfying the statutory requirements, the impugned proceedings
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are liable to be quashed on this ground alone.
83. The learned Assistant Solicitor General of India in his reply
argued that there is no requirement for registration of FIR to initiate actions
under PMLA specifically regarding provisional attachment and search. He
relied on the Vijay Madanlal's case wherein the Supreme Court confirmed
that provisional attachment can occur without the need for FIR registration
under Section 17 PMLA. PMLA is a self contained legislation and the
requirement of an FIR or Section 157 report under the Criminal Procedure
Code does not apply to searches under PMLA.
84. It is to be noted that prior to 2019 amendment, Section 17
required that no search could be conducted without an FIR or a report being
forwarded to a Magistrate. This provision was deleted in 2019, removing the
FIR requirement for conducting search and seizure under PMLA.
85. This Court is of the view that by deleting the proviso to Section 17
stipulating that no search can be conducted with respect to a scheduled
offence without forwarding a report to Judicial Magistrate under Section 157
Criminal Procedure Code, reliance cannot be placed on such deleted
requirements. The imperative portion of Vijay Madanlal judgement is
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extracted below:
“311. .....However, for strengthening the
mechanism, including regarding prevention of money-
laundering, the Parliament in its wisdom deemed it
appropriate to drop the proviso in sub-section (1) of
Section 17 of the 2002 Act, thereby dispensing with
the condition that no search shall be conducted unless
in relation to the scheduled offence a report has been
forwarded to a Magistrate under Section 157 of the
1973 Code or a complaint has been filed before a
Magistrate in regard to such offence. As it is
indisputable that the 2002 Act is a special Act and is a
self-contained Code regarding the subject of searches
and seizures in connection with the offence of money-
laundering under the 2002 Act, coupled with the fact
that the purpose and object of the 2002 Act is
prevention of money-laundering; and the offence of
money-laundering being an independent offence
concerning the process and activity connected with
the proceeds of crime, the deletion of the first proviso
has reasonable nexus with the objects sought to be
achieved by the 2002 Act for strengthening the
mechanism of prevention of money-laundering and to
secure the proceeds of crime for being dealt with
appropriately under the 2002 Act."
86. In any event, in the facts of the present case DoE submitted that,
the FIRs containing the scheduled offence have all been sent to the
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concerned Judicial Magistrate in terms of Section 157 of Criminal Procedure
Code by the concerned Police and therefore the contention of the petitioner
that the proviso to Rule 3(2) of the PMLA, Search and Seizure Rules, 2005
has been breached cannot be accepted.
87. Moreover, Paragraph 467 (viii) of Vijay Madanlal, clearly holds
that after the amendment of Section 17 of PMLA, the pre-conditions in the
proviso to Rule 3(2) cannot be imported into Section 17 of PMLA:
"(viii) The challenge to deletion of proviso to
sub-section (1) of Section 17 of the 2002 Act stands
rejected. There are stringent safeguards provided in
Section 17 and Rules framed thereunder. Moreover,
the pre-condition in the proviso to Rule 3(2) of the
2005 Rules cannot be read into Section 17 after its
amendment. The Central Government may take
necessary corrective steps to obviate confusion
caused in that regard."
88. The respondents submitted that there are 41 F.I.Rs registered in
the present case which involve corruption and illegal gratification in the
TASMAC operations. These F.I.R's have been registered between 2017
and 2024. The contention that the monetary threshold applicable to offences
specified under Part-B of the Schedule would bar investigation under PMLA
is ex facie inapplicable for the reason that the offences under Part-B (with
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the exception of Section 132 of the Customs Act) have been inserted into
Part-A with effect from 15.02.2013 which does not have any monetary
threshold. Thus, the petitioner's argument finds no merit.
89. On conclusion, this Court feels that there is a strong
disconnection between the averments and the relief sought for in the writ
petition. It is imperative that a broader view of the issue needs to be taken at
times, where the rights of people at large will be affected. It is without doubt
that the prima facie allegations and complaints against the Tamil Nadu
State Marketing Corporation (TASMAC) are grave in nature. It definitely
warrants deeper investigation. But these present writ petitions are filed
challenging the very initial step of search conducted based on certain
information on record. To find out the truthfulness in the allegations, the
primary step is to conduct a search, gathering evidences available and then
the natural course of investigation shall progress based on the materials
gathered. If there is some evidence, automatically the investigation gains
momentum else the Investigating Agency drops all further action. But to
even come out with an argument that conducting a search itself is
harassment, this is challenging the very foundation of criminal justice
system. How can a State Government would file a writ petition stating that
an Investigating Agency cannot enter and conduct a search in a
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Government Company, that too when allegations are so serious in nature.
In fact, it is the Tamil Nadu Directorate of Vigilance and Anti-Corruption,
which has registered multiple First Information Reports (F.I.Rs) regarding
malpractices of corruption ongoing in TASMAC.
90. Further, the argument that there must be a precondition of getting
the consent from the State Government before conducting searches is
completely illogical and bereft of conscience. How can a raid or search be
conducted in a State Government owned company in a surprise manner if
permission is to be obtained beforehand. How can a search by an
investigating agency even hold good if such absurd conditions are made. It
is against basic principles of criminal justice system. It is common
understanding that on commission of any crime, a search is conducted to
gather evidence and other relevant materials viable for investigation to
progress. Similarly in cases involving PMLA offences, there is the offence of
money laundering involved and searches have to be conducted to seize
digital evidences and other records in pursuit of the offence. More so in
money laundering case, the crime modus is often through digital medium
and devices have to be seized to check and trace the movement of money
and the nature of laundering can be deduced only through the study of such
digital evidences. Moreover, TASMAC is a State owned company and
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getting prior consent of the State government is an endeavour which may
not successful. On paper, it is a good argument but practically, a reasonable
man can be sure that the State government will not consent to an
investigating agency conducting searches in their own company.
91. It is by anticipating such procedural and technical difficulties that
PMLA has inbuilt within itself a mechanism to investigate and cull out the
perpetrators holding such proceeds of crime. This Court is of the view that
the Petitioners are embarking on a mission to defeat the very core of PMLA
and criminal justice system. Section 1 of PMLA clearly states that the Act
extends to the whole of India. The concept of federalism cannot be applied
here. Our Constitution is quasi federal in nature but the traces of federalism
is applied only for the benefit of the people and not to their detriment. PMLA
are legislation to prevent crimes affecting National economic growth. How
can concept of federalism be argued in cases concerning offences against
National economy. This Court is of the view that the argument of federalism
in Special Criminal Legislation like PMLA is untenable and unjustifiable.
Federalism though present in limited doses in our Constitution should be
utilised only in issues concerning upliftment of the people and not to prevent
investigation into crimes or offences which are committed against the Nation
and its people. The State Governments should in fact be open to allow any
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investigating agency to weed out any offences that is plaguing the State.
Instead proposing unrealistic conditions which goes against the very
operation of criminal procedures defies the object of the PMLA and the
Constitution.
92. A raid or a search by an investigating agency must be discreetly
planned and executed to ensure that the offenders are caught off guard. In
the present case, it is argued that the petitioner employees were asked to
stay and that their mobile phones were seized and hence they were unable
to contact their family. But that is how normally a surprise check is
conducted. How can an investigating agency conduct a fair and safe search
if all the employees are allowed to leave the premises. Any reasonable man
would know that if the employees are allowed to go, there is high chance of
destruction or concealment of evidence, which would defeat the very
purpose of such a search. It is a due process of law, which is well within the
ambit of Article 21, that the employees be detained to prevent any untoward
methods that may be aimed to sabotage the investigation. This cannot be
termed as harassment. Moreover there arises a relevant question as to
even going by the petitioner's averment that this is harassment, the relief
sought for in the present petition is incommensurate with this argument. The
petition alleges that few officers were harassed as they were detained
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during a search, but the relief sought for is to direct the respondents not to
enter and conduct search at any premises of Government of Tamil Nadu.
How can such a petition even be maintainable. If there are charges of
harassment, how can one file a petition to state that a search must be
declared illegal and that in essence prohibits any future searches as well.
This is highly alarming and such petitions ought to be dismissed at
threshold. It raises pertinent question as to the intention behind filing such
writ petitions, whether is it a strategy to prolong and protract the
investigation is a legitimate query that arises.
93. It is without doubt that any structural system in a country with a
humongous population as ours struggles with certain unavoidable delays
and inconveniences. But can we throw away an entire system for the same.
It is impractical to expect a highly comfortable and pleasant ambience for
anybody who has to comply with the laws of a country. Laws are made to
ensure an order in a society and prevent chaos. It is a by-product that in the
pursuit of compliance with such laws there is bound to be some
inconvenience for the people. Similarly in legislations where investigation by
an authorised agency is one of its facet, inconveniences are bound to arise,
but it is expected that fullest cooperation is rendered to ensure that a fair
and speedy justice is delivered. But it is unfortunate that in the present case,
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a mere search was conducted and the petitioners with complete whimsical
arguments have approached this Court seeking for declaring the search
itself as illegal. It is agonising that public servants who ought to work for the
welfare of the people, have approached this Court stating that they were
detained by an investigating agency while conducting a search and that this
amounts harassment. How can a procedure established by law be termed
as harassment. This is a challenge to the very ethos of criminal justice
system.
94. If this court accepts that such a search conducted by an
investigating agency is harassment, then it can lead to a floodgate of
litigations where each and every citizen of this country bound by the rule of
law start alleging harassment on every procedure detailed under our
criminal procedure system. Thousands of litigants in this country wait for
years with patience praying for Justice which is their constitutional right. But
it is unfortunate that the government officers who are public servants cannot
tolerate a few hours of detention to ensure a smooth investigation to be
conducted. In fact it is their condition of service that they cooperate with any
such lawful investigation conducted in their office premises. The officers
nowhere have alleged any physical torture. Mere detention and seizing of
cell phones which is normal procedure adopted for conducting a search.
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95. Also the offence of money laundering is a crime against the
people of our Nation. The arguments of officers being detained for hours
during search and that the employees being sent home at odd hours when a
search is in progress is inadequate and highly disproportional, when
compared to the rights of millions of people of our Great Nation. The search
conducted is for the interest and benefit of this Nation. Can a few
inconveniences which is product of ‘procedure established by law’ as
embedded in Article 21 be equated against the economic rights of the
people of this country. It is the mandate of the Constitution to secure to all
its citizens Economic Justice. And legislations such as PMLA serve this
object by ensuring that offences which jeopardise our National economic
growth is dealt with strictly in accordance with law.
96. Finally the submission that has been stressed throughout is that
political motive is at play. That this search is based on political vendetta. But
whether a Court can go and examine the political forces at play or be a
partaker in the political game. Definitely not. That is not the duty of a Court
of law. 'A' party comes to power. Then 'B' party alleges that politically
motivated action is taken on them. Then B party comes to power and A
alleges that politically motivated action is pressed on them. But are Courts
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the place to decide this. We can only see the materials before us, the
offence committed irrespective of whether it is A or B and apply the laws
and ensure Justice is served. The right place to place this submission is
before the people of this country. They witness the actions of the persons in
power and so the best Judges to decide the case of politics would be the
people of our Great Nation. Eventually, what matters the most is the 'Will of
the People'.
97. In fine, all the three Writ Petitions are dismissed. The Directorate
of Enforcement is at liberty to proceed with all further actions under PMLA.
Consequently, all Writ Miscellaneous Petitions are closed and
W.M.P.No.12695 of 2025 is dismissed. There shall be no order as to costs.
[S.M.S., J.] [K.R.S., J .]
23.04.2025
JENI/GD
Index : Yes
Speaking order
Neutral Citation : Yes
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To
The Assistant Director,
Directorate of Enforcement,
Chennai Zonal Officer II,
No.2, 5th and 6th Floor,
BSNL Administrative Building,
Kuskumar Road, Nungambakkam,
Chennai 600 034.
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S.M.SUBRAMANIAM, J.
and
K.RAJASEKAR, J.
JENI/GD
W.P.Nos.10348, 10352 & 10355 of 2025
23.04.2025
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