The Supreme Court has upheld the Madras High Court’s decision to strike down the Enforcement Directorate’s (ED) probe into the alleged multi-crore sand mining scam in Tamil Nadu. Along with the probe, the ED’s move to attach properties of miners and their associates — on the grounds that they were “proceeds of crime” — has also been set aside. A bench of Justices Dipankar Datta and Augustine George Masih dismissed the ED’s appeal against the High Court’s July 16, 2024 order. The Madras High Court had earlier clarified that the core issue was not whether illegal sand mining had taken place in Tamil Nadu, but whether the ED could act under the Prevention of Money Laundering Act (PMLA) without a predicate offence being investigated by another competent agency and without a clear determination of proceeds of crime. The Supreme Court agreed with this reasoning, noting that unless the proceeds of crime are clearly established and linked to a scheduled offence, action under PMLA cannot stand. The court referred to its earlier ruling in the Vijay Madhanlal Choudhary case, stressing that mere possession of unaccounted wealth does not automatically qualify as “proceeds of crime.” In its detailed 66-page order, the Madras High Court bench of Justices M S Ramesh and Sunder Mohan had also observed that while courts normally do not interfere in investigations, they cannot allow citizens to be left vulnerable to arbitrary action by investigating officers. Since the ED’s initiation of proceedings under PMLA lacked proper legal foundation, the bench rejected the agency’s argument that judicial interference was unwarranted.

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