[Gold smuggling case] Kerala High Court reserves verdict on plea by Enforcement Directorate to quash judicial inquiry ordered by State

The Kerala High Court on Thursday reserved its judgment on a plea moved by Enforcement Directorate (ED) (Cochin Zone) to quash the judicial inquiry ordered by the State Government for examining the alleged attempt by the ED and other Central agencies to implicate Chief Minister, Pinarayi Vijayan, in the UAE gold smuggling case. (Deputy Director of Enforcement Directorate Vs State of Kerala and ors.).Single-judge Justice PB Suresh Kumar, heard the case today and stated that he would consider the arguments of all sides in detail before passing any order..Solicitor General Tushar Mehta appeared for the ED while Advocate General Gopalakrishna Kurup K represented the State. .BackgroundEnforcement Directorate is a Central Government Financial Investigation Agency mandated with enforcement of Prevention of Money Laundering Act (PMLA), 2002 and other enactments to prevent financial frauds. .In July 2020, pursuant to an investigation conducted by Enforcement Directorate (ED) into money laundering, illegal financial transactions and massive gold smuggling through diplomatic channels, suspected offenders were arrested and interrogated in Kerala..Two of the accused persons, Swapna Suresh and Sandeep Nair, complained in a voice clip that was later aired by online news platforms, that they were coerced by some officers of ED to sign statements implicating then Principal Secretary to the Chief Minister and Home Minister. .Thereafter, the State Police filed two First Information Reports (FIRs) against the ED. The ED, through its Deputy Director, moved the High Court and the Court quashed the FIRs (P. Radhakrishnan vs State of Kerala and Ors.).Subsequently, in May, 2021, the Kerala Government, under Chief Minister Pinarayi Vijayan established a Judicial commission under the provisions of the Commissions of Inquiry Act,1952 (COI Act) chaired by former Kerala High Court judge, Justice (retd.) VK Mohan. This Commission was constituted to probe the alleged jurisdictional overreach and political bias of the agencies which the State government claimed was attempting to implicate the Chief Minister. According to gazette notification dated May 7, 2021, the Commission was appointed to examine "the matters relating to the diversion of investigation conducted by various Central Agencies in Kerala from July 2020" and to submit a report in this regard..The Ed by way of the present plea moved the High Court to quash this inquiry. .Contentions of Enforcement DirectorateIn the hearing today, Solicitor General Tushar Mehta appeared for the Enforcement Directorate and made his arguments on four grounds..1. Mehta submitted that the State, at the insistence of the Chief Minister, issued the notification to constitute the commission, with the purpose of interfering with the ongoing, legitimate investigation by ED. The issuance of this notification by the State Government was ultra vires Section 3 read with Section 2A of Commission of Inquiry Act (COI Act) wherein the Central Government is the competent authority for matters related to an entry in Central list/ list 1 of the 7th Schedule of the Constitution.2. The Prevention of Money Laundering Act,2002 is traceable exclusively to Entries 1, 10, 14, 93 of List 1 and does not fall under List II or List III. Consequently, Mehta stated that the matter relating to investigation conducted by ED under the this Act cannot also be a subject matter of inquiry pursuant to a COI set up by the State Government. He, therefore, contended that the enquiry commission set up by the State without jurisdiction is ultra vires of the Constitution of India as well for being in violation of the doctrine of federalism..3. Section 3 of the COI Act states that a COI can be appointed "for the purpose of making an inquiry into any definite matter of public importance". However, Mehta submitted that the notification in this case was issued to impede an ongoing investigation against the same executive functionaries who have issued said notification and therefore it serves personal interests..4. The Kerala High Court had, in April this year, quashed the FIRs registered by the state police alleging that unnamed ED officials had coerced the accused in the gold smuggling case to give false incriminating statements to implicate the Chief Minister and other high ranking State Officials. (P. Radhakrishnan vs State of Kerala and Ors.)While issuing the order, the Court had held that a complaint can be registered at a court under Section 340 r/w 195 CrPC only pursuant to an enquiry by the same competent court. The Court had also noted that there was personal vested interest in registering the FIRs and petitioner contended that it is the same personal interest that exists in the instant case.Mehta contended that the commission has been constituted to overreach and circumvent the previous decisions of the Kerala High Court..Response from the State Advocate General Gopalakrishna Kurup K, appearing for the respondent State, questioned the maintainability of the case. He submitted that since a Department of the Central Government is not a legal person, it cannot approach the court directly. .He vehemently protested against the impleading of fourth respondent , Union of India, in this case. .He also pointed out that the voice clip attributed to Swapna Suresh was procured by the media when she was under trial and detained in prison..The AG disagreed with the contention that the contents of the audio clip are not of public interest by citing the judgement of the Kerala High Court in Sajan Varghese Vs. Union of India.In the said judgment, the Court had held that "if the contents of the audio clip which was telecast are something which would disturb or affect the tempo of the life of the community or the tranquility of the society, it is a matter concerning public order".However, as a rejoinder, SG Mehta refuted the question of maintainability by pointing out that it is the Deputy Director of ED , who is a statutory authority under PMLA, who has approached the Court in this instant case..In conclusion ED asserted that the notification "is void 'ab-inito' for being 'fraught by fraud' on executive powers.It was submitted that the notification was malafide exercice of power and also went against the principles of co-operative federalism.