The Supreme Court suspended all the current investigations by the Enforcement Directorate (ED) into suspected financial improprieties at Tamil Nadu’s state-owned liquor distribution outlet, the Tamil Nadu State Marketing Corporation (TASMAC).
A bench of Chief Justice of India B.R. Gavai and Justice A.G. Masih also issued a notice to ED, along with severely criticising the agency for what it had termed an overreach in recent cases. “Your ED has been crossing all limits, Mr. Raju,” the bench said to Additional Solicitor General (ASG) S.V. Raju, who was representing the ED.
The court was considering a Special Leave Petition (SLP) by TASMAC against an April 23 order of the Madras High Court which had rejected three writ petitions presented by the state and the corporation. The petitions sought to invalidate as illegal the ED’s search and seizure operation at TASMAC’s Chennai office from March 6 to 8, 2025, in respect of a money laundering case.
Throughout the proceedings, the Supreme Court bench questioned the jurisdictional basis of the ED’s actions, specifically its move to initiate proceedings against a government-owned corporation. “How can you register a case against a corporation? You may register against individuals, but how against a corporation?” the court questioned.
The judges also observed the lack of a well-defined predicate offence—a statutory requirement for a money laundering case under the Prevention of Money Laundering Act (PMLA). “Where is the predicate offence?” asked the bench sharply.
ASG Raju replied that the predicate offence had a multi-crore money laundering nexus and that due process was followed by the ED. Nevertheless, the bench reiterated its alarms regarding the widening powers of the agency and means.
Senior lawyers Kapil Sibal and Mukul Rohatgi, appearing for TASMAC and its officers, complained against ED for invading privacy and legal procedures by cloning mobile phones and confiscating personal phones in the absence of proper authority. “There is something called privacy,” Rohatgi emphasised. Sibal also asked the court to refrain from allowing the agency to use any information obtained from the confiscated devices.
The Supreme Court’s move follows weeks after it had previously declined to consider a plea by the Tamil Nadu government for the transfer of the case from the Madras High Court. At that time, the High Court had censured the state for “insulting” the judiciary and practicing “forum shopping.”
The case is now scheduled to be heard further, with the ED needing to file its response to the notice served by the court.
