Today, On 20th March, The Madras High Court expressed concern over allegations that Enforcement Directorate (ED) officials forcefully entered TASMAC premises and violated privacy during a raid. The court took issue with claims that ED personnel restrained TASMAC employees and failed to inform them of the reason for the searches. These actions, if proven, could raise serious legal and procedural questions. The court’s response signals possible scrutiny of ED’s conduct in the case.
The Madras High Court expressed its disapproval on Thursday regarding the conduct of Enforcement Directorate (ED) officials during raids at the Tamil Nadu State Marketing Corporation (TASMAC) premises.
A bench comprising Justices MS Ramesh and N Senthilkumar specifically criticized the ED officials for allegedly restraining TASMAC employees and failing to inform them of the reasons behind the search and raids.
The bench remarked,
“Is it not an alarming situation? We can understand if you have specific input. But can you keep the entire office under your control for hours? If you have reason to believe, should you not convey it to them? That is their grievance; they do not know why the ED searched and raided the TASMAC premises,”
This statement came after TASMAC approached the court, arguing that the ED’s actions were excessive and exceeded its jurisdiction.
The State has also filed a plea in this matter, asserting that the ED unlawfully entered TASMAC’s premises and infringed on the rights of its employees, including invading their privacy by seizing their mobile phones.
The counsel for TASMAC alleged,
“Some individuals were made to sit for 60 hours! Some of them, from morning until midnight; they were allowed to go home for just 6 hours specifically the women and then asked to return. This process continued for three days,”
representing the State government, Advocate General PS Raman, added,
“Female employees were permitted to leave at 1 AM, provided they returned by 8 or 9 in the morning,”
The TASMAC counsel questioned,
“You can’t barge into my premises under Section 17! You must present your authorization because you are not a director. You need to demonstrate that it is directly related to the four contingencies outlined in the Prevention of Money Laundering Act. You are seizing everything, including mobile phones! Is this not a violation of the right to privacy?”
The ED counsel asserted,
In response, the Additional Solicitor General (ASG), representing the ED, strongly denied these allegations. “No one was kept captive; everyone was allowed to come and go,”
The bench remarked,
“If a few officials filed this writ petition, we could understand. But the organization has filed this. Their primary contention is that you have restricted access to everyone—from the watchman to all others,”
The ASG maintained,
“It is firmly disputed that they were not allowed to leave. Everyone was allowed to go back,”
The Court ultimately directed the ED to respond to the petitions filed by the State and TASMAC.
Additionally, the Court orally instructed the ED not to take any coercive measures against TASMAC officials for the time being.
The order stated,
“The ASG acknowledges this and requests time to file a counter. The ASG is also required to present the FIR related to the predicate offense, as well as the ECIR, along with any other materials they may rely on,”
The Court remarked,
“Until Monday (the next hearing date, which was later set for Tuesday), do not take any action. Don’t make us issue an order,”
The matter is scheduled for another hearing on March 25, Tuesday. The Court also suggested reviewing the CCTV footage from the TASMAC premises to clarify the conflicting claims.
The Bench commented during the hearing,
“We will also have the CCTV footage with timestamps,”
The Madras High Court questioned,
“Is it not an alarming situation? Can you keep the entire office under your control for hours?”
On March 6, 2025, the Enforcement Directorate (ED) conducted raids at the TASMAC headquarters in Chennai, as well as several distilleries and bottling units throughout Tamil Nadu.
The agency alleged financial irregularities exceeding Rs.1,000 crore, pointing to issues such as tender manipulation, unaccounted cash transactions, and overpricing at retail outlets.
According to the ED, TASMAC retail outlets were reportedly charging customers Rs.10-30 more per liquor bottle than the mandated maximum retail price (MRP), indicating a systematic strategy of overpricing.
Following the raids, the ED claimed to have uncovered significant evidence of collusion between distilleries and TASMAC officials, allegedly resulting in the misappropriation of State revenue. These findings sparked political tensions, with the opposition Bharatiya Janata Party (BJP) staging protests and demanding transparency and action against corruption.
The ED further alleged that distilleries collaborated with bottling companies to artificially inflate expenses and record fictitious purchases. This scheme purportedly allowed substantial unaccounted funds to be diverted, which were then used to bribe TASMAC officials for favorable supply orders.
The agency also claimed there were irregularities in the allocation of transport and bar license tenders.
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The ruling Dravida Munnetra Kazhagam (DMK) party criticized the ED’s involvement, alleging that the Central government was employing its investigative agencies to pursue a political vendetta. Meanwhile, the BJP dismissed these claims, asserting that the corruption allegations must be thoroughly investigated to ensure accountability.
In response, TASMAC approached the Court seeking directions to prevent the ED from harassing its employees under the guise of investigation. The agency also requested a declaration from the Court stating that the ED’s actions in investigating offenses within the State’s territorial limits violate federalism, arguing that such investigations should only occur at the request of State agencies.
During the hearing, Advocate General (AG) PS Raman, representing the State, criticized the ED for its actions.
He stated that the case extends beyond TASMAC and raises broader issues regarding the territorial jurisdiction of the ED, a central government agency, and the separation of powers between the Central government and the States.
The Advocate General (AG) argued,
“My case is not solely about TASMAC. We are seeking a declaration that the ED’s authority to operate within the State’s territorial limits without the State’s consent violates the principles of separation of powers. Can they simply enter and take over TASMAC premises?”
The TASMAC counsel expressed similar concerns, questioning whether the ED could enter any premises without proper authorization.
He contended,
“We are a Public Sector Undertaking. The Prevention of Money Laundering Act stipulates that certain standards must be adhered to during inquiries. You cannot enter premises unless the officer is a director or authorized by one. They must present that authorization,”
The counsel argued that such actions by the ED represent a total violation of individuals’ privacy.
He stated,
“They (the ED) are entering various premises, seizing items, and even accessing mobile phone calls. This constitutes a complete invasion of the right to privacy for people who may not even have the slightest connection to the offense being investigated,”
The TASMAC counsel also referenced Section 17 (1) of the PMLA, which pertains to search and seizure by the ED.
He stated,
“Search and seizure should only occur when there is reason to believe that a money laundering offense has been committed. The law mandates that these reasons be documented in writing and communicated; otherwise, recording them serves no purpose,”
He further argued that the Enforcement Directorate (ED) cannot indiscriminately seize everything during raids. There must be a clear connection between the items seized and the alleged money laundering offense.
The counsel insisted,
“You can only seize records under four specific circumstances. For example, if I possess a book by Mahatma Gandhi, you can’t just take that. It’s not about seizing everything; it has to have a direct link to the proceeds of crime related to money laundering,”
He also expressed strong objections to how the ED had questioned certain officials for extended periods.
The senior counsel referenced a recent ruling from the Bombay High Court, which criticized the ED for infringing on the rights of those summoned for questioning.
The senior counsel emphasized,
“The Bombay High Court recently addressed this situation, where individuals were held for excessively long durations. The court reprimanded this behavior, stating that the rights to blink and sleep are fundamental rights. The ED itself has issued circulars warning against such practices,”
He noted,
“Some individuals have been made to sit for 60 hours! Some were questioned from morning until 1 a.m.,”
He highlighted that this case will significantly influence the application and development of the Prevention of Money Laundering Act (PMLA).
He submitted,
“There are specific standards outlined in the PMLA. What’s happening across the country and what is being presented before your lordships… This case is poised to set a precedent for the evolution of this law. The PMLA is a work in progress,”
While there should be no impediment to a legitimate investigation, he asserted that privacy and other rights must not be violated under the guise of inquiry. He called for a clear boundary on the ED’s actions.
The Additional Solicitor General (ASG), representing the ED, countered the allegations against the agency.
The ASG replied,
“No one was held captive; everyone was free to come and go. On the 6th, 7th, and 8th, no statements were recorded at night as claimed. We dispute that,”
The Court responded,
“If even one individual claimed this, you could dispute it. But when the organization files a writ petition?”
It clarified that there was no challenge to the ED’s powers, but rather to the manner in which those powers were allegedly exercised.