Can ED Compel State Police to File FIRs? Madras High Court Scrutinizes Jurisdictional Boundaries

CHENNAI – The Madras High Court has raised fundamental questions about the powers of the Enforcement Directorate (ED), specifically questioning whether the central financial investigation agency can seek a judicial directive to compel a state police force to register a First Information Report (FIR). The developing legal battle, which pits the ED against the State of Tamil Nadu, strikes at the heart of cooperative federalism and the procedural architecture of the Prevention of Money Laundering Act (PMLA).

A division bench, comprising Chief Justice Maniindra Mohan Shrivastava and Justice G Arul Murugan, is presiding over a writ petition filed by the ED. The petition seeks a mandamus directing the Tamil Nadu Director General of Police to register FIRs based on information provided by the ED concerning a large-scale illegal sand mining operation. The ED also requests a directive for the state to cooperate with its ongoing PMLA investigation.

"Our only question is whether you can yourself come here and ask this relief to another agency," the Chief Justice remarked during the hearing, framing the core constitutional and procedural dilemma. "We're not saying that the materials are not there. But the challenge is only that unless a case is registered, can you investigate?"

The court's pointed query highlights the critical dependency of the ED's jurisdiction on the existence of a "scheduled offence," which must first be registered and investigated by a primary law enforcement agency, typically the state police.

A Contentious History and the Predicate Offence Hurdle

This is not the first time the ED's investigation into Tamil Nadu's sand mining industry has faced legal roadblocks. The current proceedings are shadowed by a recent and definitive legal loss for the agency. The ED had initially registered an Enforcement Case Information Report (ECIR) based on four prior FIRs related to sand mining. This led to the issuance of provisional attachment orders under the PMLA.

However, in a significant setback for the agency in July 2023, the Madras High Court quashed these attachment orders. The High Court had ruled that the original FIRs did not constitute a "scheduled offence" under the PMLA, rendering the entire money laundering investigation unsustainable. The court's logic was clear: without the valid registration of a predicate offence and the subsequent detection of proceeds of crime, the ED lacks the jurisdiction to initiate its own investigation.

The ED's appeal against this decision met a dead end last month when the Supreme Court dismissed its Special Leave Petition, effectively cementing the High Court's position. It is in this context that the ED has now adopted a new legal strategy: instead of relying on existing FIRs, it seeks to compel the state to create new ones based on its findings.

ED's Argument: A Statutory Obligation to Act

Representing the ED, Special Public Prosecutor N Ramesh argued that the agency had unearthed substantial evidence of large-scale illegal mining, causing significant loss to the state exchequer. He contended that despite sharing this detailed information with the state government, no action was taken, leaving the ED with no option but to seek judicial intervention.

The ED's legal foundation rests heavily on the Supreme Court's landmark judgment in Vijay Madanlal Choudhary v. Union of India . The counsel pointed to the apex court's observation that when an authorized officer, under Section 66(2) of the PMLA, shares information regarding a potential scheduled offence with the jurisdictional police, the police are "obliged to register the case by way of an FIR."

According to the ED, this interpretation transforms the sharing of information from a mere suggestion into a trigger for a mandatory procedural obligation on the part of the state police. This argument posits the ED not merely as a parallel investigative body but as an entity that can initiate the very predicate process upon which its own jurisdiction depends.

State's Rebuttal: Allegations of Overreach and Political Bias

Advocate General PS Raman, appearing for Tamil Nadu, mounted a multi-pronged and spirited defence against the ED's petition. He firmly asserted that the registration of an FIR is a matter of state prerogative and cannot be dictated by a central agency.

"Merely because ED had shared information, the State could not act like a post office and register FIRs," Raman argued, emphasizing that law enforcement requires independent application of mind, not mechanical compliance. He also highlighted the recent dismissal of the ED's SLP by the Supreme Court, suggesting that the state's inaction was justified pending the final outcome of that case.

The Advocate General then significantly widened the scope of his argument, accusing the ED of political targeting and selective prosecution. He made the explosive claim that scams of a much larger magnitude were occurring in other states but were being ignored by the central agency.

"Four times more scams are happening in UP, Gujarat, and Bihar. Have they taken any case against them? There are scams happening all over India. But they (ED) have eyes only on Tamil Nadu," the AG declared in open court.

He questioned the ED's "pick and choose attitude" and posed a provocative hypothetical to the bench: if the court were to grant the ED's plea, could the State of Tamil Nadu then file petitions in other High Courts directing the ED to register ECIRs based on scheduled offences occurring in those states?

"If we're allowing this, can my State go and file cases in Gujarat, UP and Bihar saying that these are the scheduled offences happening here and therefore you (ED) should register ECIR?" Raman asked, challenging the very notion of a one-way street of federal authority.

The Court's Conundrum: A Statutory Void

Caught between these diametrically opposed positions, the bench expressed its concern over the apparent friction between two state instrumentalities. The court noted that both the ED and the state police are investigative agencies that ought to cooperate rather than quarrel.

Crucially, the bench identified a potential lacuna in the PMLA itself. The judges observed that the statutory framework is silent on the recourse available if a state police force declines to register an FIR despite receiving information from the ED under Section 66(2). This legislative gap leaves a critical question unanswered: who holds the ultimate authority to oversee and enforce this inter-agency process?

While cautioning the ED against overstepping its role, the court also had a message for the state. The bench remarked that the Tamil Nadu government "could not sit over the materials" shared by the ED indefinitely. This signals that while the court is hesitant to grant the ED's specific prayer for a mandamus, it may not condone perpetual inaction from the state either.

The court has directed the State of Tamil Nadu to file a detailed counter-affidavit and has adjourned the matter for three weeks. The outcome of this case, Directorate of Enforcement v. The State of Tamil Nadu and Others , will be keenly watched by legal practitioners and constitutional experts, as it promises to deliver a crucial pronouncement on the operational dynamics between central and state agencies in the increasingly contentious landscape of financial crime investigation.