Supreme Court stays ED probe into TASMAC, slams violation of federal principles

Insight Online News

New Delhi, May 22 : The Supreme Court on Thursday stayed the Enforcement Directorate’s money laundering probe into Tamil Nadu’s state-run liquor corporation, TASMAC, expressing strong disapproval of what it described as overreach by the central agency.

A bench comprising Chief Justice of India (CJI) B.R. Gavai and Justice A.G. Masih criticised the ED for “crossing all limits” and violating the federal structure of the country.

“Your ED is crossing all limits. You are totally violating the federal structure. How can there be an offence against the corporation?” CJI Gavai questioned Additional Solicitor General (ASG) S.V. Raju, who appeared for the ED.

The apex court was hearing petitions filed by the Tamil Nadu government and TASMAC challenging the Madras High Court’s April 23 order, which dismissed their plea against ED’s raids on TASMAC headquarters and allowed the investigation under the Prevention of Money Laundering Act (PMLA) to proceed.

Senior Advocate Kapil Sibal, appearing for the Tamil Nadu government, informed the court that the state had already taken action on allegations of corruption.

“The state has filed 41 FIRs between 2014 and 2021 against individuals accused of taking bribes for allotment of liquor outlets. These were criminal acts by individuals, not by the corporation itself,” Sibal argued.

He further alleged that despite this, the ED entered the scene in 2025, raided the TASMAC head office, and seized phones and other electronic devices from officials.

“Everything was cloned. This is a clear overreach,” he said.

Sibal urged the court to prohibit the ED from using any data extracted from these devices, calling it a serious violation of privacy.

Senior Advocate Mukul Rohatgi, representing TASMAC, echoed these concerns and accused the ED of breaching the privacy of officials by cloning their phones without due cause.

In response, ASG Raju claimed the matter involved a scam worth Rs 1,000 crore, alleging that the ED was probing large-scale corruption in which state officials and politicians were complicit.

He contended that distillery companies had allegedly siphoned off large amounts of unaccounted cash and bribed their way into securing lucrative supply contracts from TASMAC.

Furthermore, TASMAC retail outlets were allegedly selling liquor at prices higher than the Maximum Retail Price (MRP), he said.

However, the bench remained unconvinced. CJI Gavai questioned the basis of ED’s jurisdiction in this case, asking, “Where is the predicate offence? The State is already investigating. Why should the ED unnecessarily interfere?”

The top court’s interim relief comes as a major setback to the ED, which had conducted raids on March 6 and 8 this year.

The Tamil Nadu government had opposed the Central agency’s move, citing political vendetta and misuse of power.

Previously, the Madras High Court had rejected the state’s and TASMAC’s arguments, stating that money laundering was “a crime against the people of the nation”.

The High Court dismissed allegations of harassment as “inadequate and highly disproportional,” and warned against attributing political motives to investigative agencies.

“If such claims of harassment are entertained, it would open the floodgates of litigation, with every accused challenging legitimate investigations,” the High Court had said in its ruling.

It also dismissed the state’s claim of political motivation behind the ED’s actions, stating that courts cannot become “partakers in the political game” or evaluate “political forces at play.”

Despite this earlier verdict, the Supreme Court’s intervention now halts the ED’s probe, at least temporarily, and raises serious questions about the limits of Central investigative powers in cases involving state-run entities.

ASG Raju has assured the court that the ED will file a detailed reply.