Institute of Legal and Management Studies

The Supreme Court today (May 22) stayed the investigation and raid of the Enforcement Directorate against the Tamil Nadu State Marketing Corporation (TASMAC).

"Your ED is crossing all limits. How can there be the offence against the corporation?", Chief Justice of India BR Gavai asked Additional Solicitor General SV Raju.

"ED is crossing all limits. You are totally violating the federal structure of the country," CJI Gavai said.

A bench of Chief Justice of India BR Gavai and Justice AG Masih was hearing the petitions filed by the State of Tamil Nadu and TASMAC challenging Madras High Court's rejection of its plea against searches conducted by the Enforcement Directorate on the TASMAC headquarters.

Senior Advocate Kapil Sibal, for the State, said that the State itself has filed 41 FIRs against liquor outlet operators over allegations of corruption from 2014-21. However, ED entered the scene in 2025 and raided the Headquarters and took the phones and devices of the officers, Sibal said.

"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.

At this point, CJI Gavai asked ASG how the offence was made out against the corporation. "You may register against the individuals, but against the corporation a criminal matter? Your ED is crossing all limits, Mr. Raju" CJI said.

The bench ordered notice on the petition to the ED. "In the meantime, there shall be stay of further proceedings qua the petitioners," the bench observed in the order.

Senior Advocate Mukul Rohatgi, for the TASMAC, said that the ED has taken the cloned copies of the phones of the TASMAC officials, violating their privacy. Sibal said that the Court should restrict the ED from using the data they have taken from phones and devices. "This is an issue of privacy!" Sibal said. CJI Gavai said that the Court has already given the interim relief and can't pass further directions.

ASG Raju claimed that it was a case of Rs 1000 crore fraud. CJI BR Gavai pointed out that the State has already registered FIRs and was taking action. "Why should ED unnecessarily...where is the predicate offence?" CJI Gavai said. ASG said that there was a major fraud which the ED was investigating and politicians were being protected.

At this point, CJI Gavai said that ED was crossing all limit and violating the federal structure of the country. ASG denied and said that he will file a detailed reply.

To recap briefly, the case pertains to an alleged Rs.1000 crores liquor scam stated to have taken place in Tamil Nadu. After ED conducted raids 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 TASMAC (a state-run liquor marketing body). While TASMAC senior officials were accused of corruption, its shops were alleged to be collecting amount in excess of actual MRP.

On April 23, a Division Bench of the High Court dismissed pleas filed by the State of Tamil Nadu and TASMAC challenging ED's searches of the latter's headquarters.

Through its judgment, the High Court also rejected the allegations made by TASMAC that its employees and officials were harassed by ED while conducting searches at the State agency's headquarters in Chennai. The bench said that it was a matter of procedure for employees to be detained during raids and surprise checks, to prevent the destruction of evidence. The allegations of violation of employees' fundamental rights appeared to be an afterthought, said the Court.

Recently, ED conducted fresh searches at multiple locations in Tamil Nadu, including the houses of TASMAC Managing Director S Visakan and film producer Akash Baskaran. Reportedly, the TASMAC MD was also questioned at length for about 10 hours.

Before the High Court, TASMAC accused ED of conducting a roving and fishing inquiry without any materials. It was contended that authorities could not prosecute someone on mere assumption that a scheduled offence had been committed. TASMAC also claimed that ED had concealed data by not providing the 'reasons to believe' and the searches at its headquarters seemed to be to get details of the scheduled offence. T

ASMAC also argued that the action was in connection with the upcoming Tamil Nadu Elections, as ED wanted to tarnish the image of people involved in the election. It was further urged that ED did not have original jurisdiction to investigate a case and its jurisdiction would start only if an offence, which is a scheduled offence under the PMLA, is committed.

Case Details: THE STATE OF TAMIL NADU v DIRECTORATE OF ENFORCEMENT AND ANR.|SLP(Crl) No. 7958/2025 and TAMIL NADU STATE MARKETING CORPORATION LIMITED, (TASMAC) v DIRECTORATE OF ENFORCEMENT| SLP(Crl) No. 8048-8049/2025