Don’t use gender to block probe’: Madras HC rejects TN’s claims in TASMAC case

In a strongly worded verdict, the Madras High Court on Wednesday, April 23, came down heavily on the Tamil Nadu government for attempting to obstruct the Enforcement Directorate’s (ED) investigation into alleged financial irregularities at Tamil Nadu State Marketing Corporation Limited (TASMAC), the state-run liquor monopoly. A bench of Justices SM Subramaniam and K Rajasekar dismissed the pleas of the government and TASMAC challenging the ED’s raids, questioning how a democratically elected government could claim to be aggrieved over a search intended to root out corruption in its own public corporation.

The ED had conducted a search at TASMAC between March 6 and 8, under the Prevention of Money Laundering Act (PMLA), 2002, in connection with alleged financial irregularities amounting to Rs 1,000 crores. 

Following the raid, the Tamil Nadu government had sought the court’s intervention and claimed that the ED was attempting to conduct a roving enquiry into the affairs of TASMAC without reasonable cause or material evidence suggesting involvement in the commission of offenses under PMLA. TASMAC had also sought to restrain ED from allegedly harassing its officials and to declare the raids as illegal. 

The High Court took strong exception to the Tamil Nadu government's decision to file a writ petition on behalf of TASMAC employees, calling it “improper.” The bench observed that grievances of individual employees, if any, should have been raised through individual legal action rather than through a collective petition by a state-run entity. "How can a people's government be aggrieved because of a search operation conducted in one government-owned company?" the court asked. It further stated that the state should be cooperating with investigative agencies, not obstructing them.

In the writ petition, the state government also argued that during the raid that lasted three days the employees were detained and their phones were confiscated by the investigative agency. The bench held that it was a due process of law to detain the employees in order to prevent any untoward methods that may be aimed to sabotage the investigation. “This cannot be termed as harassment,” the court ruled.

Further, the petitioners had also claimed that women employees were subjected to night-time harassment and detained without rest, food, or access to the outside world. The court rejected these arguments, stating there was no evidence to support the claims, and added that invoking gender as a shield to block legitimate investigation was “unpalatable”.

“Let not a government try to discourage a woman from moving towards the path of empowerment,” the order read, emphasizing that public officials—regardless of gender—had a duty to cooperate with law enforcement.

The court also warned that the petitions appeared to be a deliberate attempt to hinder the investigation. “These kinds of vague and improper writ petitions by government institutions alleging inhumanity against a statutorily empowered investigating agency ought not to be entertained,” the order read. The judges also expressed concern that such litigation could lead to a “complete dilution” of the law’s intent, and that allowing one state government to seek blanket immunity from PMLA procedures would set a dangerous precedent.

The court found the state government’s prayer that ED should be barred from entering any Tamil Nadu government or government corporation office “shocking” and “unjustifiable,” noting it implied that the Tamil Nadu government was seeking de facto exemption from central anti-corruption laws.

The court also ruled that the ED had followed due process under PMLA and rejected the state’s arguments that the search was unconstitutional, arbitrary, and violative of federalism and the rights of public officials. The bench noted that ED’s actions were based on multiple FIRs registered by the Tamil Nadu Vigilance and Anti-Corruption Department, alleging large-scale corruption in TASMAC’s liquor retail operations. These included the collection of money over the fixed MRP and bribery for staff transfers and tender allocations.

Dismissing the government’s argument of the ED not having obtained prior permission to conduct raids, the court held, “How can a search by an investigating agency even hold good if such absurd conditions are made. It is against basic principles of the criminal justice system,” the bench said.

The ED had initiated a money laundering probe under PMLA, based on multiple FIRs registered by the Directorate of Vigilance and Anti-Corruption (DVAC). These FIRs alleged corruption involving TASMAC employees, kickbacks received by officials from liquor manufacturers, and illicit payments linked to staff postings and transfers.