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.
Chennai: On Thursday, the Enforcement Directorate (ED) told the Madras High Court that the Tamil Nadu government and the State-run TASMAC (Tamil Nadu State Marketing Corporation) are wrongly alleging that their staff were harassed during ED’s raids at the TASMAC headquarters in March.
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Representing the ED, Additional Solicitor General (ASG) SV Raju strongly denied the harassment claims. He pointed to official search documents (called panchnama) to prove that no TASMAC employee was forced to stay for extended hours during the raid.
According to Raju, the panchnamas, which record the details of the search, show that everything was conducted properly and with the cooperation of TASMAC officers.
“This (the panchnama) has been signed by officers of TASMAC. No endorsement was made that any female officer was harassed or not allowed to go back. No objection was raised. They accepted the proceedings. It is not their case that panchnama proceedings were falsely drawn. And a female officer from our side was also there…They (TASMAC, State) are also relying on this panchnama! Panchnama is part of the writ petition. This shows that the harassment claim is a false bogey created by them!”
“They (later) have made a bald statement that panchnama is untrue. What is untrue? There are no specifics…It (claim that TASMAC employees were harassed) was an afterthought, probably on legal advice they raised all this.”
These statements were made before a bench of Justices SM Subramaniam and K Rajasekar, who are hearing petitions filed by the DMK-led Tamil Nadu government and TASMAC against the ED’s raids held from March 6 to March 8.
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The Court said it was planning to reserve its judgment after ASG Raju’s arguments. However, it agreed to continue the matter on Monday to hear rejoinder arguments from Senior Advocate Vikas Singh, representing TASMAC.
“Only to hear learned senior counsel Vikas Singh, matter is directed to be listed on Monday despite the fact that court proposed to reserve orders today. It is made clear that any other submissions made be by written arguments. Court will not permit further oral arguments,” the bench clarified.
During the hearing, the Court also examined a sealed cover submitted by the ED. The sealed cover contained the ED’s “reasons to believe” that money laundering had occurred, which justified the raid at TASMAC’s head office.
ASG Raju said the raid was not politically motivated or aimed at discrediting anyone, but was based on earlier First Information Reports (FIRs) filed by the State government itself, dating as far back as 2017. These FIRs reportedly involve bribery, liquor overpricing, and manipulation in the tender process.
“(The FIRs) revealed a fraud of Rs. 1,000 crore. This was not a search to discredit somebody but a search to collect evidence,” he said.
He explained that under Section 17 of the Prevention of Money Laundering Act (PMLA), the ED has the right to search if there is a reason to believe money laundering is involved.
“The outcome of search need not determine its validity. Incriminating material may be removed, a clever crook may (hide evidence), but it will not invalidate search.”
He also clarified why the ED searched the head office and not just the local shops, as most FIRs involved regional managers connected to the headquarters.
“Regional Managers accused are connected to the TASMAC head office. Therefore, it required search at the TASMAC head office…We had to search where the records were kept, which was with the custodian at the head office …Data will be at the head office. Inspection reports, all that will be at the head office, not local shops. Tender details also would be at the head office.”
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Meanwhile, on Wednesday, Senior Advocate Vikram Chaudhary, representing TASMAC, asked the Court to allow them to see the ED’s “reasons to believe” document—even if in a redacted form—to ensure fair argument.
“That is the only way I can effectively, meaningfully, and purposefully argue. Are you scared I will expose your (ED’s) bogey, that I will be able to assist the Court? Sunlight is the best infectant and that ought to be followed.”
Tamil Nadu Advocate General PS Raman also supported this demand and warned that any misuse of power could affect other state agencies in the future.
“This is a thin edge…It is TASMAC today (that is being targeted by ED), it will be Tamil Nadu Cooperative Society or Aavin tomorrow.”
Background
The issue is related to Enforcement Directorate (ED) raids carried out between March 6 and March 8 at the offices and premises of TASMAC (Tamil Nadu State Marketing Corporation) — the State-run liquor distributor.
The ED claims there are financial irregularities in TASMAC’s operations involving more than Rs.1,000 crore, including:
- Tender manipulations
- Unaccounted cash transactions
- 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.
In response, the Tamil Nadu government and TASMAC accused the ED of overstepping its powers. They alleged that the ED entered the TASMAC offices without the State’s consent and kept TASMAC officials detained for over 60 hours under the pretext of conducting an investigation.
The matter was initially taken up by a Bench of Justices MS Ramesh and N Senthilkumar on March 20, but they later recused themselves from the case.
The matter is now set to be heard again on Monday, solely for the rejoinder by TASMAC’s counsel.
