The Supreme Court on Thursday stayed the Enforcement Directorate&rsquo;s (ED) investigation into alleged money laundering by the Tamil Nadu State Marketing Corporation (TASMAC) in connection with a purported ₹1,000 crore liquor scam, sharply criticising the agency for overstepping its limits.
The bench, comprising Chief Justice of India BR Gavai and Justice AG Masih, issued a notice to the ED and ordered a halt to all further proceedings until after the court&rsquo;s vacation.&nbsp;
During the hearing, the court observed, &ldquo;ED is violating the Constitution. ED is really crossing all the limits.&rdquo; It added, &ldquo;You may register cases against individuals&hellip; but corporations? Your ED is passing all limits! Issue notice, returnable after vacation.&rdquo;
The Tamil Nadu government had approached the apex court, challenging a decision by the Madhya Pradesh High Court which refused to prevent the ED from conducting searches in the state without obtaining prior consent from the state authorities.
Representing the Tamil Nadu government, Senior Advocate Kapil Sibal argued that the state had already registered 41 FIRs between 2014 and 2021 against liquor shop operators for corruption-related offences. He stated that the ED intervened in 2025 and carried out searches at TASMAC&rsquo;s headquarters, during which the mobile phones and devices of officials were seized.
TASMAC had earlier filed a petition with the Madhya Pradesh High Court, requesting an order to restrain the ED from harassing its officers. However, the court dismissed all pleas and allowed the central agency to continue with its investigation.&nbsp;
In its writ petition, the state argued that the ED&rsquo;s power to conduct searches and inquiries into predicate offences within the jurisdiction of a state, without its consent, undermined the basic structure of federalism.
Responding to this claim, the High Court stated, &ldquo;The argument that there must be a precondition of getting the consent from the state government before conducting searches is completely illogical and bereft of conscience. How can a raid or search be conducted in a state government owned company in a surprise manner if permission is to be obtained beforehand?&rdquo;
The court also upheld the seizure of mobile phones by ED officers, saying, &ldquo;The seizure of mobile phones is directly and inextricably related to the investigation and search under PMLA for the purpose of collection of evidence for gathering material to unearth the offence of money laundering and prosecute the offenders.&rdquo;
The ED conducted searches from March 6-8 at 20 different locations, including TASMAC&rsquo;s headquarters in Chennai, as part of a wide-ranging investigation into suspected financial irregularities and corruption. The probe is based on more than 40 FIRs filed by the Tamil Nadu Vigilance Department.
According to the ED, the March raids revealed &ldquo;multiple irregularities&rdquo; in TASMAC operations and led to the discovery of unaccounted cash amounting to ₹1,000 crore. The agency also claimed to have found &ldquo;incriminating&rdquo; information related to corporate postings, transport and bar licence tenders, and indent orders allegedly favouring select distilleries.&nbsp;
Additionally, the ED alleged it had uncovered evidence of fraudulent pricing involving surcharges of ₹10 to ₹30 per bottle, with TASMAC officials reportedly involved.
Further searches were carried out on May 16, with the agency conducting raids at 10 premises under the Prevention of Money Laundering Act (PMLA). During this round of searches, the ED claimed to have recovered manipulated data suggesting irregularities in the award of tenders.
Tamil Nadu Excise Minister S Muthusamy responded to the developments by accusing the ED of conducting the raids with &ldquo;ulterior political motives.&rdquo; He alleged that the agency was harassing state officials as part of a &ldquo;political vendetta&rdquo; and emphasised that the investigation had produced no evidence to substantiate the charges.&nbsp;
&ldquo;The searches of TASMAC&rsquo;s offices, in Chennai and elsewhere, had ulterior political motives,&rdquo; he stated, affirming that the government stood firmly behind its officials.
The ruling Dravida Munnetra Kazhagam (DMK) welcomed the Supreme Court&rsquo;s intervention. Senior party leader and former Rajya Sabha MP RS Bharathi described the order as a &ldquo;blow&rdquo; to the Bharatiya Janata Party&rsquo;s (BJP) alleged attempts to &ldquo;malign the state government.&rdquo;&nbsp;
The party also accused the ED of acting as a &ldquo;blackmailing organisation,&rdquo; claiming it was being used by the BJP to target non-BJP-ruled states.
The controversy surrounding the alleged TASMAC liquor scam comes at a politically sensitive time, with the DMK and the opposition All India Anna Dravida Munnetra Kazhagam (AIADMK)&mdash;along with the BJP, its occasional ally&mdash;preparing for the upcoming Assembly elections in 2026.
In the midst of the escalating row, BJP leader and former state unit chief K Annamalai levelled serious allegations against state minister V Senthil Balaji, calling him the &ldquo;kingpin&rdquo; of the scam. &ldquo;I have my sources. I believe (the corruption) is over ₹1,000 crore. Senthil Balaji is involved in every single scam. He is the kingpin. Supreme Court has questioned (him),&rdquo; he said, referring to the court&rsquo;s remarks in a separate money laundering case involving the minister.
Minister Senthil Balaji denied all accusations and defended the transparency of TASMAC&rsquo;s operations. &ldquo;Everything is transparent as far as TASMAC is concerned. As far as purchase is concerned... it would be done by calculating the average of the last three months of purchase brand. By taking the average of the last three years and the last month's purchase, TASMAC will give a purchase order. So, we have not shown any discount to anyone on giving purchase orders,&rdquo; he said.
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Supreme Court stays ED’s TASMAC probe, criticises agency for violating constitutional limits and federal norms.

SC: ED ‘Crossing All Limits’ in TASMAC Probe

Supreme Court stays ED’s TASMAC probe, criticises agency for violating constitutional limits and federal norms.

May 22, 2025 | 13:14 IST