SC extends stay on ED probe into TASMAC, questions 'encroachment' on state govt's right

New Delhi, Oct 14 (IANS) The Supreme Court on Tuesday extended its stay on the ED (Enforcement Directorate)’s money laundering probe against Tamil Nadu’s state-run liquor corporation TASMAC.

A bench comprising Chief Justice of India (CJI) B.R. Gavai and Justice K Vinod Chandran said that it would take up the matter after the review pleas against the PMLA judgment are decided.

The apex court was hearing petitions filed by the Tamil Nadu government and TASMAC challenging the Madras High Court’s April 23 order, which had dismissed their plea against ED’s raids on TASMAC headquarters and allowed the investigation under the Prevention of Money Laundering Act (PMLA) to proceed. During the hearing, the CJI Gavai-led Bench questioned if the ED probe amounted to an “encroachment” on the state’s right to investigate the matter.

In response, Additional Solicitor General (ASG) SV Raju, representing the ED, said that the federal anti-money laundering agency found “large-scale corruption,” which was sought to be concealed behind arguments of federalism.

“The panchnamas conducted post searches would show rampant corruption,” ASG Raju said, adding that the Tamil Nadu government was closing all the FIRs registered in predicate offences to obstruct the ED’s probe.

“Last six years, we have had the opportunity to deal with many cases of ED. I don't want to say more. Last time I said something, it was reported everywhere," said CJI Gavai, referring to his previous remarks where he had castigated the ED for “crossing all limits” and violating the federal structure of the country.

"When something is said in favour of the ED, it is hardly reported. That is my grievance," responded the Centre’s law officer.

On the other hand, senior advocate Kapil Sibal, appearing for the Tamil Nadu government, argued that the “corruption” can be investigated by the state government, but the ED was encroaching on its jurisdiction.

To this, ASG Raju responded that the ED was not investigating corruption charges but rather the money laundering aspect of the matter.

In an earlier hearing, the Supreme Court had expressed strong disapproval of what it described as overreach by the ED.

“Your ED is crossing all limits. You are totally violating the federal structure. How can there be an offence against the corporation?” the CJI Gavai-led Bench questioned the federal anti-money laundering agency.

Senior advocate Kapil Sibal contended that the state government 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 had urged the apex 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, 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 apex court 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?”

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 Madras 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 Madras High Court had said in its ruling.

It also dismissed the state government’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.”

--IANS

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