The Supreme Court on Thursday put a temporary hold on the Enforcement Directorate’s (ED) money-laundering investigation into the Tamil Nadu State Marketing Corporation (TASMAC), criticizing the agency for overstepping its mandate and infringing upon the federal structure.
A bench led by Chief Justice of India B R Gavai, along with Justice A G Masih, was hearing the Tamil Nadu government’s petition challenging ED raids at TASMAC’s headquarters earlier this year. The state-run corporation manages liquor distribution across Tamil Nadu.
During the hearing, Senior Advocate Kapil Sibal, appearing for the state, argued that the corporation had already taken action in related matters by filing 41 FIRs between 2014 and 2021 against individuals accused of accepting cash in exchange for liquor outlet allotments. “There were no charges against the corporation itself,” he said. “Yet, in 2025, the ED targets TASMAC’s head office.”
The court took strong exception to the ED’s approach. “How can there be an offence against a corporation in a criminal matter?” CJI Gavai asked, questioning the legal basis of the probe. Addressing Additional Solicitor General S V Raju, who represented the ED, the Chief Justice remarked, “Your ED is crossing all limits, Mr Raju.”
The court issued notice to the ED and gave it two weeks to respond, imposing a stay on further proceedings against the petitioners in the interim.
Senior Advocate Mukul Rohatgi, representing TASMAC, accused the ED of seizing and cloning employee phones, raising concerns about privacy violations. Both Rohatgi and Sibal urged the court to prohibit the use of any data collected during the raids. “They cannot use the data,” said Sibal, while Rohatgi added, “There is something called privacy.”
ASG Raju maintained that the investigation stemmed from a ₹1,000-crore fraud allegedly involving politicians. But the bench remained skeptical. “We have already protected you,” said CJI Gavai. “We cannot grant you more than what you are asking for.”
Highlighting the state’s prior legal action, the CJI questioned the ED’s involvement: “Where is the predicate offence? Why should the ED act unnecessarily?”
Raju denied any malafide intent and promised to submit a detailed affidavit. The court said it would revisit the matter after the ED’s response is filed.
Before adjourning, CJI Gavai reiterated the court’s disapproval. “You are totally violating the federal structure… The ED is crossing all limits,” he said. Raju responded, “It is not so in this case.”
The legal battle follows ED raids conducted in March 2025 as part of a wider probe into alleged financial irregularities at TASMAC. The agency searched 20 sites, including the corporation’s Chennai headquarters, between March 6 and 8.
