SC adjourns hearing on Chhattisgarh govt's plea challenging PMLA

The Supreme Court on Monday adjourned hearing on the plea filed by the Chhattisgarh government challenging the constitutional validity of the Prevention of Money Laundering Act.

A bench of Justice Sanjiv Khanna and Justice MM Sundresh deferred the matter to August after a letter for adjournment was circulated by the state.

Additional Solicitor General SV Raju appeared for the Enforcement Directorate in the matter.

The Chhattisgarh government in its plea alleged that central investigating agencies are being misused to "intimidate", "harass" and "disturb" the normal functioning of non-BJP state governments.

The Bhupesh Baghel-led Congress government filed the original suit challenging the law under Article 131 of the Constitution that empowers a state to move the Supreme Court directly in matters of dispute with the Centre or any other state.

Chhattisgarh has become the first state to challenge the money laundering act and its provisions. Earlier, private individuals and parties had challenged the law on various grounds but its validity was upheld by a three-judge bench of the apex court last year. The suit said several complaints are being received by the state government on behalf of its officials as well as residents of the state that the Enforcement Directorate is "torturing, abusing, and manhandling" them in the garb of conducting a probe.

Because of this "blatant and excessive misuse" of powers, Chhattisgarh is being forced to approach the court, it said. "It is imperative to state that this is not the first occasion wherein the ED (Enforcement Directorate) has resorted to an illegal modus operandi. On multiple occasions, the approach has been employed concerning various states that hold a political stance opposite to the one in power at the Centre.

"Such conduct amounts to a severe misappropriation and arbitrary use of power, which goes against the constitutional mandate. Investigative agencies are expected to be entirely independent and uninfluenced," it said.

A bench of Chief Justice DY Chandrachud and Justice PS Narasimha was earlier told by senior advocate Mukul Rohatgi and advocate Sumeer Sodhi, appearing for the Chhattisgarh government, that the issue is of constitutional importance and requires an urgent hearing. The suit, filed through Sodhi, said the "present case is a perfect example of how the central investigation agencies are being misused by those in power in order to intimidate, harass and disturb the normal functioning of an opposition government in the state of Chhattisgarh".

It said Chhattisgarh is seeking interference of the court under its original jurisdiction bestowed by virtue of Article 131 of the Constitution in light of a dispute that has arisen between the state and the defendants -- Union of India, the state of Karnataka and the Directorate of Enforcement -- involving questions of law and facts that affect the legal and constitutional rights of the state.

Giving the details of a particular case, which prompted it to approach the top court, the Chhattisgarh government said an FIR was registered at Kadugodi police station in Bengaluru against a person named Suryakant Tiwari for offences punishable under various sections of the Indian Penal Code including assault or criminal force to deter a public servant from discharging his duty and destruction of evidence.

"The complainant in the FIR is (the) Income Tax Department and the allegation pertains to alleged illegal collection on levy of coal as well as attempts to influence public servants through corrupt and illegal means in the state of Chhattisgarh," the suit said.

It said the Enforcement Directorate, on the basis of the predicate offence, registered an Enforcement Case Information Report (ECIR) dated September 29, 2022, and started conducting its investigation.

"The said investigation has resulted in indiscriminate surveys and raids at various departments and offices of the state government, and arrests of state officials," the Chhattisgarh government said. Referring to the provisions of the Prevention of Money Laundering Act, it said that a criminal investigation process must adhere to the principles of openness, transparency and established legal procedures.

It said certain amendments have been carried out to the provisions of the Prevention of Money Laundering Act by way of finance acts of 2015, 2016, 2018 and 2019. These amendments through the finance act route are liable to be struck down, being colourable uses of legislative power, violative of Article 110(1) of the Constitution.