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The Supreme Court on Thursday stayed the money-laundering probe initiated by the Directorate of Enforcement (ED) against government-run liquor retailer Tamil Nadu State Marketing Corporation (TASMAC) on the grounds that the Central agency was ‘crossing all limits’ and ‘violating the federal structure’.
The Bench of Chief Justice of India BR Gavai and Justice AG Masih issued notice to ED, asking the agency to file reply within two weeks.
the Apex Court passed the order on a petition filed by the State of Tamil Nadu challenging the ED searches at the TASMAC headquarters.
Senior Advocate Kapil Sibal, representing the Tamil Nadu government, said the corporation found that some people who were allotted liquor outlets were taking cash. The state filed 41 FIRs against such individuals between 2014 and 2021. The ED came into the picture in 2025 and raided the Corporation’s head office.
The Bench asked Additional Solicitor General (ASG) SV Raju, representing ED, to explain how the agency could drag a corporation into a criminal matter. An offence may be registered against individuals, but not against a corporation. ED was crossing all limits, it observed and stayed further proceedings qua the petitioners.
Appearing for TASMAC, Senior Advocate Mukul Rohatgi said the agency had taken the phones of employees and cloned them. Both Sibal and Rohatgi requested the Bench to direct the ED not to use the data collected.
The Bench refused to pass any orders, stating that it had already done enough to protect the petitioners.
ASG Raju said it was a case of fraud worth around Rs 1,000 crore involving politicians.
When the Court enquired about the predicate offence, the ASG said there was nothing mala fide in the ED probe and that he would file an affidavit.
The Bench said it would hear the matter once the reply was filed.
Before closing the hearing, the Court observed that ED was totally ‘violating’ the federal structure. Raju responded by saying that it was not so in the case.
The Central agency had conducted searches at TASMAC offices amid a large-scale investigation into alleged corruption and financial irregularities within the body, which oversees liquor sales in Tamil Nadu. ED officials raided 20 locations, including the corporation’s headquarters in Chennai, between March 6 and 8, 2025.
This article first appeared on India Legal
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