SC raps ED and stays its probe against TN's TASMAC, 'ED crossing all limits'; DMK govt hails order

New Delhi/Chennai, May 22 (PTI) The Supreme Court on Thursday rapped the Enforcement Directorate and stayed its money laundering probe against Tamil Nadu’s state-run liquor retailer TASMAC over alleged corruption in grant of wine shop licences, observing the central agency is "crossing all limits" and violating the federal concept of governance.

“Your ED is crossing all limits,” a bench comprising Chief Justice B R Gavai and Justice Augustine George Masih told Additional Solicitor General S V Raju, appearing for the ED while issuing notice to the anti-money laundering probe agency on a plea filed by the Tamil Nadu government and Tamil Nadu State Marketing Corporation (TASMAC).

Tamil Nadu’s ruling DMK welcomed the court order, saying the stay is a "big blow" to alleged efforts by the BJP to malign the party-led government in the state and that the ED was a "blackmailing organization.” This is not the first time that the ED has come under fire from the top court.

The ED has previously been pulled up by several benches of the apex court for allegedly misusing the provisions of the Prevention of Money Laundering Act (PMLA).

Opposition parties too have protested against the alleged abuse of PMLA provisions by the ED against the government's political opponents.

Questioning the ED raids over TASMAC, CJI Gavai said, “The Enforcement Directorate is violating the federal concept (of governance).” The CJI-led bench took note of the submissions of senior advocates Kapil Sibal and Amit Anand Tiwari, appearing for the state government and the TASMAC, and stayed ED’s probe against TASMAC in the meantime.

Raju opposed the order, saying the issue involved corruption over Rs 1,000 crore and the ED is not crossing limits “at least in this case.” Sibal said that it is the state and the TASMAC which have launched criminal prosecution into alleged illegalities in granting liquor shop licenses. He said as many as 41 FIRs were lodged against purported wrongdoers in cases related to the allotment of liquor shop licences from 2014 and now the ED jumps in the picture and raids the TASMAC.

“How can you raid the state-run TASMAC?” the bench asked.

The DMK government and TASMAC moved the top court against the raids conducted by the ED at the premises of the liquor retailer.

The petition challenged an April 23 order of the Madras High Court that upheld the ED’s actions, alleging grave violations of constitutional rights and the federal structure.

“The present petition raises questions of law having wide ramifications including the issue of federalism laid bare by the respondent 1 (ED) exceeding its remit and attempting to usurp the State’s right to investigate offences occurring therein,” the state government said.

The plea challenged the legality of the ED’s 60-hour search and seizure operation conducted between March 6 and March 8, 2025.

“On March 6, respondent 1 (ED) conducted a search and seizure proceeding under Section 17 of the PMLA at the headquarters of respondent 2 (TASMAC) which is a 100% owned instrumentality of the petitioner/state,” it said.

TASMAC itself is not named as an accused in any of these FIRs and, in several cases, is the complainant, the plea added.

In the absence of any predicate offence involving TASMAC as an accused, the ED had no jurisdiction to initiate proceedings under the PMLA, it said.

The petitioner also questioned the timing of the search, pointing out the delay in action as the last FIR was registered in 2021.

The ED's actions amounted to a "roving and fishing enquiry," rather than a targeted investigation, and that the agency failed to demonstrate the mandatory "reasons to believe" required under Section 17 of the PMLA, it was submitted.

Senior DMK leader R S Bharathi said the recent searches by the ED in the TASMAC probe was timed "7-8 months" ahead of the Assembly elections in Tamil Nadu, "In Tamil Nadu, the M K Stalin-led DMK government that assumed office in 2021 has been gaining popularity ever since and the chief minister's stature has been rising. Unable to digest this and the DMK alliance's electoral triumph after 2021, the ED was used to malign the DMK and the BJP leaders used to make all kinds of charges," he said.

"The SC staying the ED probe against TASMAC is a big blow to such things and is in deference to the sentiments of the people of Tamil Nadu...we welcome the (SC) order." "The union government should stop misusing ED at least after this," the DMK organisation secretary said. PTI SJK AMK SA GSN GSN GSN

Source: PTI