The Supreme Court of India on May 22, 2025, issued a stay on the Enforcement Directorate’s (ED) investigation and raids against the Tamil Nadu State Marketing Corporation (TASMAC). This decision came during a hearing on petitions filed by the Tamil Nadu government and TASMAC, challenging the Madras High Court’s dismissal of their plea against the ED’s actions.
Chief Justice of India BR Gavai, heading the bench with Justice AG Masih, made strong remarks questioning the legality of the ED’s move.
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"Your ED is crossing all limits. How can there be the offence against the corporation?" – CJI BR Gavai
Senior Advocate Kapil Sibal, representing the Tamil Nadu government, explained that the state had already acted against corrupt individuals by filing 41 FIRs between 2014 and 2021. However, the ED entered the scene only in 2025 and began raiding TASMAC offices and seizing personal devices.
"The ED comes into picture in 2025 and raids the corporation. All phones taken, everything cloned." – Kapil Sibal
The Court questioned how a criminal offence could be established against a government-run corporation.
"You may register against the individuals, but against the corporation a criminal matter? Your ED is crossing all limits." – CJI Gavai
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The bench issued notice to ED and granted interim relief, stating:
"In the meantime, there shall be stay of further proceedings qua the petitioners."
Senior Advocate Mukul Rohatgi added that ED had cloned devices of TASMAC officials, raising privacy concerns. However, the Court refused further directions, citing the interim stay already granted.
Additional Solicitor General SV Raju, defending ED, alleged a ₹1000 crore scam and claimed political shielding. However, the Court remained unconvinced and questioned the need for ED’s intervention.
"Why should ED unnecessarily... where is the predicate offence?" – CJI Gavai
Background of the Case:
The issue revolves around an alleged ₹1000 crore liquor scam in Tamil Nadu. In March 2025, ED raided TASMAC offices after claims that distillery firms diverted large sums in cash to get additional supply orders. While TASMAC was accused of corruption, stores allegedly collected money above the MRP.
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The ED registered its case based on 41 FIRs filed by Tamil Nadu's Directorate of Vigilance and Anti-Corruption (DVAC). Earlier, on April 23, the Madras High Court dismissed Tamil Nadu and TASMAC’s plea against the raids. The court also rejected claims of harassment by ED during searches, stating:
"Detaining employees during raids is standard procedure to avoid evidence tampering. Allegations of rights violations appear to be an afterthought."
The Tamil Nadu government had also approached the Supreme Court earlier to transfer their case from the Madras High Court, but the plea was not entertained.
Recently, ED carried out fresh raids in Tamil Nadu, including at the residence of TASMAC MD S Visakan and film producer Akash Baskaran. Visakan was reportedly questioned for nearly 10 hours.
TASMAC accused ED of fishing for evidence without material proof and claimed political motives ahead of state elections. They said ED had no original jurisdiction unless a scheduled offence under the PMLA was confirmed.
In contrast, ED cited corruption-related FIRs, bribery, inflated pricing, and staff manipulation as grounds for its action. It also argued that even suspicion was sufficient to conduct a search.
The Supreme Court has now paused ED’s actions, with the matter set for further examination.
Case Details: THE STATE OF TAMIL NADU v DIRECTORATE OF ENFORCEMENT AND ANR.|SLP(Crl) No. 7958/2025 and TAMIL NADU STATE MARKETING CORPORATION LIMITED, (TASMAC) v DIRECTORATE OF ENFORCEMENT| SLP(Crl) No. 8048-8049/2025
Appearances: Senior Advocate Kapil Sibal, AoR Misha Rohatgi (for TN) and Sr Adv Amit Anand Tiwari (alongwith Sibal) and ASG SV Raju for Respondent
