Supreme Court says ED crossing all limits, stays TASMAC investigation

CJI BR Gavai criticises the ED for breaching federal principles as SC stays investigation into TASMAC over a ₹1,000 crore liquor scam in Tamil Nadu

The Supreme Court on Thursday slammed the Enforcement Directorate (ED) for conducting raids at Tamil Nadu State Marketing Corporation (TASMAC) headquarters, asking why it was acting against the government-run liquor retailer when the cases were filed against individuals.

 

While staying the investigation, the apex court said the ED was “crossing all limits” and “totally violating the federal structure of the country”. 

“How can (there be) an offence against corporation?... You may register (case) against individuals. How corporation in criminal matter?” Chief Justice BR Gavai asked.

 

The bench, comprising CJI Gavai and Justice AG Masih, was hearing petitions filed by the State of Tamil Nadu and TASMAC challenging Madras High Court’s rejection of a plea against searches conducted by the ED on the TASMAC headquarters.

 

Appearing for the state, senior advocate Kapil Sibal said the corporation has found that some people who were allotted liquor outlets were taking cash.

 

“This is a corporation giving liquor outlets. And we found some of the people to whom outlets have been given are actually taking cash. So, the state itself filed 41 FIRs from 2014-21 against individuals, not against the corporation. The ED comes into picture in 2025 and raids the corporation (TASMAC) and the head-office. All phones taken, everything taken. Everything cloned," Sibal said.

 

On this CJI Gavai said to Additional Solicitor General SV Raju, “Your ED is crossing all limits. How can there be an offence against the corporation?”

 

 

Senior Advocate Mukul Rohatgi, appearing for the TASMAC, also said that the ED has taken the cloned copies of the phones of the TASMAC officials, violating their privacy.

 

The bench issued notice on the petition to the ED.

 

“In the meantime, there shall be a stay of further proceedings,” the bench said in the order. ASG Raju was given time of 14 days to file a reply.

 

The DMK-run state government and TASMAC had moved the Supreme Court against the searches conducted by the ED on the TASMAC premises.

 

The challenge was against the April 23 order of the Madras High Court dismissing their pleas and giving the go ahead to the ED to proceed with its action under the Prevention of Money Laundering Act (PMLA).

 

The case is about an alleged ~1,000 crore liquor scam in Tamil Nadu. After ED conducted searches in March, allegations surfaced that distillery companies siphoned off the alleged amount in the form of unaccounted cash and the same was used to obtain more supply orders from state-run liquor marketing body TASMAC. While TASMAC senior officials were accused of corruption, its shops were alleged to be collecting amounts in excess of actual MRP.