The Supreme Court on Thursday put an interim stay on all ongoing investigations by the Enforcement Directorate (ED) into alleged financial irregularities at the Tamil Nadu State Marketing Corporation (TASMAC), the state’s official liquor distribution entity.
A bench comprising Chief Justice of India BR Gavai and Justice AG Masih not only stayed the ED’s probe but also strongly criticised the agency’s conduct. The court expressed serious concerns over the ED’s recent pattern of investigation, remarking that the agency was “crossing all limits.”
The stay was issued in response to a Special Leave Petition (SLP) filed by TASMAC, challenging an April 23 ruling by the Madras High Court. The high court had dismissed three writ petitions—filed by the Tamil Nadu government and TASMAC—that sought to declare illegal a search and seizure operation conducted by the ED at TASMAC’s Chennai headquarters between March 6 and 8, 2025. The operation was part of an ongoing investigation into a suspected money laundering case.
During the hearing, the Supreme Court bench raised significant concerns about the legal basis of the ED’s actions. It specifically questioned the validity of initiating a case against a corporate entity such as TASMAC.
“How can you register a case against a corporation? You may register [a case] against individuals, but how [can you do so] against a corporation?” the bench asked Additional Solicitor General (ASG) SV Raju, who was representing the ED.
The court further pointed out that while the ED had registered First Information Reports (FIRs) against several senior TASMAC officials, it had failed to clarify the existence of a predicate offence—an essential legal requirement under the Prevention of Money Laundering Act (PMLA). “Where is the predicate offence?” the bench pressed.
In response, ASG Raju contended that the predicate offence pertained to a multi-crore money laundering case and insisted that the ED had not violated any laws. However, the bench was not satisfied with the explanation and reiterated its concerns about the agency’s conduct.
“We are saying this again. Your ED has been crossing all limits, Mr Raju,” the Chief Justice said bluntly.
Senior advocates Kapil Sibal and Mukul Rohatgi, appearing for TASMAC and its employees, argued that the ED had far exceeded its lawful authority. They pointed to invasive actions by the agency, such as cloning mobile phones and seizing personal devices, all without following proper legal procedures.
“There is something called privacy,” Rohatgi asserted, emphasising the constitutional rights of individuals. Sibal added that the court should ensure that no data obtained from the seized devices be used by the agency moving forward.
This is not the first legal challenge mounted by the Tamil Nadu government in connection with the ED's investigation. Last month, the Supreme Court had refused to entertain a separate plea by the state seeking the transfer of the case—pertaining to the ED’s raids and seizures—from the Madras High Court. In that earlier ruling, the high court had issued a stern warning to the state government, accusing it of “forum shopping” and “insulting” the judiciary.
With the Supreme Court’s latest intervention, the ED’s investigation into TASMAC remains paused until further judicial review, signaling a significant development in the ongoing tussle between the central agency and the Tamil Nadu government.
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