
In a significant development, the Supreme Court of India has stayed the Enforcement Directorate’s (ED) investigation into the Tamil Nadu State Marketing Corporation (TASMAC), the state-run liquor retailer, citing concerns over the agency’s overreach and potential violation of federal principles.
Background: Allegations Against TASMAC
TASMAC, established in 1983, holds a monopoly over the wholesale and retail vending of alcoholic beverages in Tamil Nadu. In March 2025, the ED initiated a probe into TASMAC, alleging financial irregularities amounting to ₹1,000 crore. The agency conducted searches at 20 locations, including TASMAC’s headquarters in Chennai, between March 6 and March 8, 2025.
The ED’s investigation focused on alleged corruption in the transport of liquor, grant of bar licenses, and unaccounted cash generated through collusion with bottle-making firms and distilleries.
Legal Proceedings: From High Court to Supreme Court
Following the ED’s actions, the Tamil Nadu government and TASMAC challenged the agency’s authority to conduct such investigations, filing petitions in the Madras High Court. However, on April 23, 2025, the High Court dismissed these pleas, allowing the ED to proceed under the Prevention of Money Laundering Act (PMLA).
Subsequently, the state government and TASMAC approached the Supreme Court, filing a Special Leave Petition (SLP) challenging the High Court’s order.
Supreme Court’s Intervention
On May 22, 2025, a bench comprising Chief Justice of India B.R. Gavai and Justice A.G. Masih heard the matter. The court expressed strong concerns over the ED’s actions, stating that the agency was “crossing all limits” and potentially violating the federal structure of governance. The bench questioned the ED’s authority to investigate a state-run corporation, emphasizing that while individuals could be prosecuted, targeting a corporation in this manner raised constitutional issues.
Consequently, the Supreme Court stayed the ED’s ongoing probe into TASMAC and issued a notice to the agency, seeking its response within two weeks.
Political Reactions
The ruling Dravida Munnetra Kazhagam (DMK) party welcomed the Supreme Court’s decision. Senior DMK leader R.S. Bharathi criticized the Union government, accusing it of misusing central agencies like the ED to target political opponents. He described the court’s ruling as a significant setback to the Bharatiya Janata Party’s (BJP) alleged attempts to tarnish the DMK’s reputation.
Municipal Administration Minister K.N. Nehru also lauded the court’s intervention, asserting that justice had prevailed against the Union government’s purported misuse of the ED.
Ongoing Investigations and Future Implications
Despite the Supreme Court’s stay on the ED’s probe, the Directorate of Vigilance and Anti-Corruption (DVAC) assured the Madras High Court that First Information Reports (FIRs) against TASMAC personnel would remain open. This assurance came in response to a Public Interest Litigation (PIL) seeking a Central Bureau of Investigation (CBI) probe into the alleged ₹1,000 crore scam.
The Supreme Court’s intervention underscores the delicate balance between central investigative agencies and state autonomy. As the ED prepares its response, the case continues to evolve, highlighting the complexities of federal governance and the importance of maintaining constitutional boundaries in investigative processes.
Sources:
- https://m.economictimes.com/industry/cons-products/liquor/sc-stays-ed-probe-against-tamil-nadus-tasmac-slams-agency-for-crossing-all-limits/articleshow/121332716.cms?utm_
- https://indianexpress.com/article/explained/tasmac-case-as-supreme-court-frowns-at-ed-allegations-against-tamil-nadus-liquor-retailer-10022962/?utm_
- https://www.ndtv.com/india-news/crossing-all-limits-supreme-court-raps-enforcement-directorate-over-tamil-nadu-raids-8477387?utm_
- https://www.verdictum.in/court-updates/supreme-court/state-of-tamil-nadu-v-enforcement-directorate-tasmac-ed-cloning-pmla-1578354?utm_
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