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The Supreme Court on October 14, extended its interim stay on the Enforcement Directorate’s (ED) probe into alleged money laundering by the Tamil Nadu State Marketing Corporation (TASMAC). The SC raised questions about whether the agency’s actions were encroaching on the state’s investigative powers.
A bench comprising Chief Justice of India (CJI) BR Gavai and Justice K Vinod Chandran said that the case would next be heard after the court delivers its verdict on review petitions challenging its 2022 judgment in Vijay Madanlal Choudhary vs Union of India, against several provisions of the Prevention of Money Laundering Act (PMLA).
The apex court was hearing petitions filed by the Tamil Nadu government and TASMAC challenging the Madras High Court’s April 23 order, which had dismissed their plea against ED’s raids on TASMAC headquarters and allowed the investigation under the PMLA to proceed.
During the hearing, the CJI Gavai-led Bench questioned if the ED probe amounted to an encroachment on the state’s right to investigate the matter.
“What happens to the federal structure? Would this not amount to encroachment upon the State’s right to investigate? Can’t the local police look into the matter?,” the bench asked.
In response, Additional Solicitor General (ASG) SV Raju, representing the ED, said that the anti-money laundering agency found large-scale corruption which was sought to be concealed behind arguments of federalism.
“The panchnamas conducted post searches would show rampant corruption,” ASG Raju said, adding that the Tamil Nadu government was closing all the FIRs registered in predicate offences to obstruct the ED’s probe.
“In the last six years, we have had the opportunity to deal with many cases of ED. I don't want to say more. Last time I said something, it was reported everywhere," said CJI Gavai, referring to his previous remarks towards the ED for crossing all limits and violating the federal structure of the country.
"When something is said in favour of the ED, it is hardly reported. That is my grievance," ASG replied.
Senior advocate Kapil Sibal, representing TASMAC, questioned the agency’s raids at government offices. “How can you raid government offices? he asked, further alleging that the ED had failed to share relevant information with state investigators as required under Section 66(2) of the PMLA.
He also contended that the state government had already taken action on allegations of corruption. “The state has filed 41 First Information Report (FIR)s between 2014 and 2021 against individuals accused of taking bribes for allotment of liquor outlets. These were criminal acts by individuals, not by the corporation itself,” Sibal argued.
Raju also alleged that 37 of the 47 FIRs were closed by the state in a short time, calling it an attempt to cut off the ED by closing the FIRs.
Sibal countered that the raids were politically motivated, pointing out that they took place just a year before the 2026 Tamil Nadu Assembly elections.
On March 6, the ED had launched a money laundering probe against TASMAC and raided the headquarters of the state government-run entity. The probe was launched based on the 41 FIRs registered by the Directorate of Vigilance and Anti-Corruption (DVAC) in connection with excess amounts collected from consumers at retail outlets, distillery companies offering kickbacks to the officials of TASMAC for supply orders, and senior officials of TASMAC collecting bribes for transfers and postings.
(With IANS inputs)