The Supreme Court dismissed businessman P.R. Rajesh Kumar’s plea challenging ED searches at his residence in the TASMAC money laundering probe. The Bench of CJI Surya Kant and Justice V. Mohana upheld the Madras High Court order allowing alternative legal remedies.
The Supreme Court on Thursday refused to interfere with the Enforcement Directorate’s (ED) search and seizure proceedings carried out at the residence of businessman P.R. Rajesh Kumar in connection with the alleged Tamil Nadu State Marketing Corporation (TASMAC) money laundering investigation. The Court upheld an earlier decision of the Madras High Court, which had declined to examine the legality of the searches at that stage and had instead directed the petitioner to pursue available remedies before the appropriate appellate forum.
A Bench comprising Chief Justice of India Surya Kant and Justice V. Mohana dismissed the special leave petition filed by Rajesh Kumar, who had challenged the ED’s search operations conducted at his residence in Adyar, Chennai, between May 16 and May 18, 2025. The petitioner sought quashing of the search and seizure proceedings, contending that the agency had acted without complying with the mandatory safeguards prescribed under the Prevention of Money Laundering Act, 2002 (PMLA).
The dispute traces its origin to the ED’s ongoing probe into the alleged TASMAC liquor scam, a case that has attracted significant public and political attention in Tamil Nadu. The central agency has alleged large-scale financial irregularities involving the State-run liquor retailer, including corruption by officials, irregular supply orders, and the generation of substantial unaccounted cash through liquor sales.
Background of the TASMAC Investigation
The money laundering investigation stems from multiple corruption cases registered by the Tamil Nadu Directorate of Vigilance and Anti-Corruption (DVAC) concerning the functioning of TASMAC, the State-owned corporation responsible for liquor distribution and retail sales across Tamil Nadu.
The ED has alleged that a massive liquor scam involving approximately Rs 1,000 crore took place through a network of corrupt practices. According to the agency, certain distillery companies generated unaccounted cash that was subsequently used to secure favourable supply orders from TASMAC. Investigators have also alleged irregularities in procurement processes and unlawful financial transactions linked to the liquor trade.
The agency’s case is based on 41 FIRs registered by the DVAC, which reportedly disclose offences involving corruption, abuse of official position, and financial misconduct. These allegations subsequently formed the basis for the ED’s money laundering probe under the PMLA.
As part of the investigation, the ED carried out extensive searches across Tamil Nadu in March 2025 and thereafter conducted further raids at the premises of several individuals allegedly linked to the case. Among those subjected to searches was film producer Akash Bhaskaran, whose challenge to the search proceedings was also later closed by the Madras High Court.
The High Court had observed in Bhaskaran’s case that similar issues had already been addressed while disposing of Rajesh Kumar’s petition and that the parties concerned were at liberty to pursue remedies before the appellate forum.
The broader TASMAC controversy has also reached the Supreme Court in separate proceedings. In October 2025, the apex court granted interim protection restraining certain aspects of the ED’s investigation against TASMAC, while larger questions concerning the scope and legality of the agency’s actions remain under consideration.
Madras High Court’s Observation
Rajesh Kumar had earlier approached the Madras High Court questioning the legality of the searches conducted at his residence. However, the High Court declined to undertake a detailed examination of the challenge after noting that the Adjudicating Authority under the PMLA had already confirmed the attachment proceedings under Section 8 of the Act and that the petitioner had availed the statutory remedy before the Appellate Tribunal.
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The High Court had therefore closed the petition while expressly preserving Rajesh Kumar’s right to raise all available legal grounds before the appellate forum. Dissatisfied with that approach, the businessman moved the Supreme Court seeking intervention.
Arguments before the Apex Court and Observations
During the hearing before the apex court, counsel appearing for Rajesh Kumar argued that the central issue involved compliance with Section 17 of the PMLA, which governs search and seizure operations. It was submitted that before conducting a search, ED officials are required to record “reasons to believe” that a person is involved in money laundering, possesses proceeds of crime, or is in possession of records connected with the alleged offence. The counsel argued that these statutory conditions had not been fulfilled in the present case.
The petitioner further contended that there was no valid authorization permitting the ED to conduct searches at his residence. It was emphasized that Rajesh Kumar was neither named in the Enforcement Case Information Report (ECIR) nor in the predicate offences that formed the basis of the money laundering investigation.
According to the submissions made before the Court, the search operation yielded only three mobile phones, and no incriminating material connected with the alleged proceeds of crime was recovered from the petitioner’s premises. The counsel argued that the High Court ought to have independently examined whether the mandatory procedural safeguards under Section 17 had been complied with instead of relegating the petitioner to proceedings concerning attachment of properties.
The petitioner also pointed out that challenges concerning the legality of the ED’s actions in the TASMAC investigation were already pending before the Supreme Court in separate proceedings initiated by TASMAC itself. It was argued that the issues involved in those matters were substantially similar and therefore required judicial scrutiny.
Another key argument advanced on behalf of Rajesh Kumar was that the provisions dealing with search and seizure under Section 17 and the adjudication of attached properties under Section 8 operate in distinct spheres. The petitioner maintained that confirmation of attachment proceedings could not cure or render irrelevant an allegedly illegal search conducted without adherence to statutory safeguards.
Counsel submitted that the ED could not be permitted to enter an individual’s premises, seize materials, and initiate intrusive proceedings without first satisfying the conditions specifically laid down by Parliament under the PMLA. The challenge, therefore, was not merely procedural but went to the very root of the agency’s authority to conduct the search.
However, the Supreme Court was not persuaded by these submissions. After hearing the arguments briefly, the Bench declined to interfere with the order passed by the Madras High Court.
Pronouncing the order, the Chief Justice succinctly observed,
“Thank you. No question. Dismissed.”
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Following the dismissal, the petitioner’s counsel requested permission to withdraw the matter with liberty to raise all objections before the Appellate Tribunal. The Bench, however, declined the request, noting that such liberty had already been expressly preserved by the High Court.
Responding to the submission, the CJI remarked,
“High Court order is very clear only. We are only upholding the High Court order. Please read the High Court order. It says so.”
The Supreme Court’s refusal to interfere effectively means that Rajesh Kumar must now pursue his challenge before the statutory appellate authorities under the PMLA framework, where he remains free to raise all contentions regarding the legality of the search and seizure proceedings.
The ruling does not pronounce upon the legality or validity of the ED’s search operations. Instead, it reinforces the principle that when a statutory appellate mechanism is available and has already been invoked, constitutional courts may decline to undertake parallel scrutiny at an intermediate stage.
By upholding the Madras High Court’s approach, the Supreme Court has effectively directed the petitioner to exhaust the remedies available under the PMLA before seeking further judicial intervention. The decision also underscores the Court’s reluctance to bypass specialized forums established under economic and anti-money laundering legislation.
For now, the legality of the ED’s searches at Rajesh Kumar’s residence remains open for examination before the Appellate Tribunal, where the businessman can continue to challenge the agency’s actions and raise all objections concerning compliance with Section 17 of the PMLA.
Case Title: P.R. Rajesh Kumar v. Enforcement Directorate SLP (Crl.) No. 11553 of 2026.
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