New Delhi: The Enforcement Directorate is crossing “all the limits” and violating the federal concept of governance, the Supreme Court on Thursday said and stayed the money laundering probe against Tamil Nadu-run liquor retailer TASMAC over alleged corruption in grant of wine shop licences.
Issuing notice to the ED on the plea filed by the Tamil Nadu government and Tamil Nadu State Marketing Corporation (TASMAC), a bench comprising Chief Justice B R Gavai and Justice Augustine George Masih told Additional Solicitor General S V Raju, appearing for the anti-money laundering probe agency, that “Your ED is crossing all the limits.”
The anti-money laundering probe agency has been rapped by several benches of the top court for allegedly misusing the rigors of Prevention of Money Laundering Act (PMLA).
Opposition parties too have protested against the alleged abuse of PMLA provisions by the ED against the government’s political opponents.
Questioning the ED raids over TASMAC, a state government body, CJI Gavai said, “The Enforcement Directorate is violating the federal concept (of governance).”
The CJI-led bench took note of the submissions of senior advocates Kapil Sibal and Amit Anand Tiwari, appearing for the state government and the TASMAC, and stayed ED’s probe against TASMAC in the meantime.
Raju opposed the order, saying the issue involved corruption over Rs 1,000 crore and the ED is not crossing the limits “at least in this case.”
Sibal said that it is the state and the TASMAC, which have launched criminal prosecution into alleged illegalities in granting liquor shop licenses. He said as many as 41 FIRs were lodged against purported wrongdoers in cases related to the allotment of liquor shop licences from 2014 and now the ED jumps in the picture and raids the TASMAC.
“How can you raid the state-run TASMAC?” the bench asked.
The DMK-run state government and TASMAC moved the top court against the raids conducted by the ED at the premises of TASMAC.
The petition challenged an April 23 order of the Madras High Court that upheld the ED’s actions, alleging grave violations of constitutional rights and the federal structure.
“The present petition raises questions of law having wide ramifications including the issue of federalism laid bare by the respondent 1 (ED) exceeding its remit and attempting to usurp the State’s right to investigate offences occurring therein,” state government said.
The plea challenged the legality of the ED’s 60-hour search and seizure operation conducted between March 6 and March 8, 2025.
“On March 6, respondent 1 (ED) conducted a search and seizure proceeding under Section 17 of the PMLA at the headquarters of respondent 2 (TASMAC) which is a 100% owned instrumentality of the petitioner/state,” it said.
TASMAC itself is not named as an accused in any of these FIRs and, in several cases, is the complainant, the plea added.
In the absence of any predicate offence involving TASMAC as an accused, the ED had no jurisdiction to initiate proceedings under the PMLA, it said.
The petitioner also questioned the timing of the search, pointing out the delay in action as the last FIR was registered in 2021.
The ED’s actions amounted to a “roving and fishing enquiry,” rather than a targeted investigation, and that the agency failed to demonstrate the mandatory “reasons to believe” required under Section 17 of the PMLA.
