The Supreme Court has once again raised concerns regarding the Enforcement Directorate's (ED) investigation into the Tamil Nadu State Marketing Corporation (TASMAC), questioning whether the central agency is overstepping its authority and encroaching upon the rights of the state police. This marks the second time in six months that the apex court has scrutinized the ED's actions in this matter.
The case revolves around an alleged ₹1,000 crore liquor scam within TASMAC, a government-owned entity holding a monopoly over alcohol sales in Tamil Nadu. The ED has alleged that TASMAC is at the center of a widespread corruption network involving state officials, liquor distilleries, and bottling companies. The agency initiated its investigation based on over 40 cases filed by the state government and TASMAC against corporation officials since 2017, invoking the Prevention of Money Laundering Act (PMLA). In March 2025, the ED conducted searches across Tamil Nadu, including TASMAC headquarters.
However, the Supreme Court has expressed reservations about the ED's involvement, particularly regarding the federal structure of the country. A bench led by Chief Justice B.R. Gavai and Justice Vinod Chandran questioned whether the ED's probe infringes upon the state's right to investigate. The court highlighted that the state vigilance had already filed 47 FIRs related to the alleged corruption between 2014 and 2021. Senior Advocate Kapil Sibal, representing TASMAC, questioned the necessity of the ED's intervention, asking, "Who is ED to investigate corruption?". He further argued that corruption is an offense within the state's jurisdiction.
The Supreme Court has extended its stay on the ED's money laundering investigation against TASMAC. This decision effectively freezes the probe until the court resolves a long-pending review of key PMLA provisions. The court had previously stayed the ED's investigation in May 2025, rebuking the agency for "crossing all limits" and violating the federal structure.
The ED's counsel, Additional Solicitor General S.V. Raju, defended the agency's actions, asserting that the ED is only investigating the money laundering aspect of the case, not the corruption itself. He argued that the predicate offenses, established by the state's FIRs, justify the ED's probe under the PMLA. Raju also accused the Tamil Nadu government of shielding corrupt officials.
The Supreme Court's intervention also hinges on the fate of the 2022 Vijay Madanlal Choudhary judgment, which strengthened the PMLA, including provisions for warrantless arrests and the secrecy of Enforcement Case Information Reports (ECIRs). TASMAC has argued that it was not provided with a copy of the ECIR in the ED cases. The court has directed that the matter be taken up after the review petitions challenging the 2022 judgment are decided.
The ongoing legal battle underscores the tension between central agencies and state governments, particularly in cases involving alleged corruption. The Supreme Court's stance suggests a commitment to preserving the federal structure and preventing potential overreach by central agencies.
