New Delhi, May 22 (UNI) In a scathing rebuke to the Enforcement Directorate (ED), the Supreme Court on Thursday stayed further proceedings against the Tamil Nadu State Marketing Corporation (TASMAC), observing that the central agency was "crossing all limits" and encroaching upon the federal structure of the country.
A Bench of Chief Justice of India BR Gavai and Justice AG Masih was hearing petitions filed by the State of Tamil Nadu and TASMAC challenging the Madras High Court’s April 23 order that had upheld the ED's search operations at TASMAC headquarters.
During the hearing, CJI Gavai questioned the very basis of ED’s case against a government-run corporation.
“Your ED is crossing all limits. How can there be an offence against the corporation?” he asked Additional Solicitor General (ASG) SV Raju.
“You are totally violating the federal structure of the country,” he added sternly.
Senior Advocate Kapil Sibal, representing the Tamil Nadu government, argued that the State had already filed 41 FIRs between 2014 and 2021 against individuals running liquor outlets for corrupt practices.
“The State acted. Yet in 2025, the ED entered and raided the TASMAC headquarters, seized devices, cloned phones all without a case made out against the corporation itself,” Sibal said.
Senior Advocate Mukul Rohatgi, for TASMAC, contended that the ED's actions violated the privacy of state officials, alleging that the agency had cloned all phones without legal justification.
In response, ASG Raju asserted that the ED was probing a Rs 1000 crore liquor scam and that officials and politicians were being shielded. He said distilleries allegedly funneled unaccounted money to gain supply orders through TASMAC, and the ED acted based on FIRs filed by the Directorate of Vigilance and Anti-Corruption (DVAC).
However, the Bench remained unconvinced.
“You may go after individuals, but a criminal case against a government corporation? Where is the predicate offence?” the CJI asked, emphasising that the ED’s actions were undermining constitutional boundaries.
The Court issued notice on the petition and granted interim relief, “In the meantime, there shall be stay of further proceedings qua the petitioners,” the Bench ordered.
The controversy traces back to raids conducted by the ED in March 2025, including searches at TASMAC offices and the residences of its Managing Director S. Visakan and film producer Akash Baskaran.
The ED alleged that TASMAC shops were inflating MRP, accepting bribes, and manipulating employee transfers accusations originally detailed in FIRs filed by Tamil Nadu’s own DVAC.
TASMAC and the State contended in both the High Court and Supreme Court that the ED’s investigation lacked legal backing under the Prevention of Money Laundering Act (PMLA) and was politically motivated to damage reputations ahead of the Tamil Nadu elections. They argued that ED began a "roving and fishing inquiry" without satisfying the legal threshold of a scheduled offence under the PMLA.
On April 23, the Madras High Court had rejected these arguments, stating that ED's searches were procedural and not unconstitutional. The Court also dismissed allegations of harassment during raids as an "afterthought."
Following the Supreme Court’s intervention, the ED is bound to halt all proceedings against TASMAC.
The further hearings will resume after the Court’s summer vacation.
UNI SNG GNK BM