Madras High Court Stays ED Summons to District Collectors In Sand Mining Money Laundering Case .

Madras High Court Stays ED Summons to District Collectors In Sand Mining Money Laundering Case .

Title : Enforcement Directorate v. T.T.V.Dhinakaran

Case : W.P.No.20492 of 2008



The Enforcement Directorate is on appeal against the order of the Hon’ble Single Judge allowing the application under Section 9(5) of the Presidency Towns Insolvency Act 1909, thereby setting aside the insolvency notice issued to the respondent herein.

Fact of the Case

The respondent was accused of violation of the provisions of the Foreign Exchange Regulation Act, 1973. Since the violation amounted to an offence under the provisions of the said Act and it also made him liable for penalty, proceedings were initiated by the appropriate Authority under the Foreign Exchange Regulation Act, 1973 for adjudication of the penalty. The Adjudicating Authority viz., the Special Director of Enforcement by its order in original dated 06.02.1998 imposed a penalty of Rs.31 Crores. Aggrieved the respondent preferred an appeal in A.No.51 of 1998 before the appellate Authority viz., the Foreign Exchange Regulation Appellate Board.

Case Analysis and Judgment

The notice impugned in the writ petition will have to be set aside solely on the ground that it is not competent for the Collector to effect recovery of monies due to the Central Government by invoking the State Act. Here again, court will have to reserve the liberty to the Enforcement Directorate to seek recovery under the provisions of Central Act viz., the Revenue Recovery Act 1 of 1890.

In fine, the OSA is dismissed, and the writ petition will stand allowed. Since court have accepted the contentions of the appellant on the vital issue relating to the effect of the order of the adjudicating Authority, we do not impose costs