SC slams ED for overreach, stays money laundering probe in Tamil Nadu’s TASMAC liquor scam

The Supreme Court on May 22 delivered a stern rebuke to the Enforcement Directorate (ED), staying its ongoing money laundering investigation into Tamil Nadu’s state-run liquor retailer, Tamil Nadu State Marketing Corporation (TASMAC), amid allegations of a massive Rs 1,000 crore scam.

“The ED is violating the Constitution. They are really crossing all limits,” the bench, led by Chief Justice of India BR Gavai and Justice AG Masih, declared during proceedings. “You may investigate individuals, but probing a corporation like this without proper jurisdiction—your ED is passing all limits! Issue notice, returnable after vacation.”

The court’s intervention came on a petition filed by the Tamil Nadu government challenging the Madhya Pradesh High Court’s refusal to restrain the ED from conducting raids within the state without the state government's consent.

Senior Advocate Kapil Sibal, representing Tamil Nadu, emphasized that the state government itself has registered 41 FIRs against liquor outlet operators on corruption charges between 2014 and 2021. However, the ED unexpectedly entered the case in 2025, raiding TASMAC headquarters and seizing phones and devices of its officials — actions that the state government claims amount to overreach.

TASMAC had earlier sought protection from the Madhya Pradesh High Court against what it described as “harassment” of its officials by the ED. The High Court rejected the plea, dismissing the argument that ED requires state consent for such actions. It held that seeking prior permission would render surprise raids impossible and justified the seizure of mobile phones as “directly linked to evidence gathering” under the Prevention of Money Laundering Act (PMLA).

The ED’s multi-location raids, conducted between March 6 and 8 at 20 TASMAC sites including its Chennai headquarters, form part of a large-scale probe into alleged financial irregularities within the liquor corporation. The investigation is based on over 40 FIRs registered by the Tamil Nadu Vigilance Department.

The political fallout was immediate. DMK leader RS Bharathi condemned the ED’s probe and welcomed the Supreme Court’s stay, calling the investigation a “blow” to the BJP’s alleged attempts to malign the Tamil Nadu government. He labeled the ED a “blackmailing organization” used by the BJP to target states not governed by the party.

The Court’s sharp censure of the ED underscores the ongoing tensions between central agencies and state governments over jurisdictional limits and federal autonomy, especially in politically sensitive corruption cases.