Today, On 14th October, Supreme Court Questions ED in TASMAC Scam, asking, “Is It Not Encroaching Upon the Right of the State to Probe a Case?” The Court scrutinized the Enforcement Directorate’s role in the alleged Rs. 1,000 crore Tamil Nadu State Marketing Corporation scandal.
The Supreme Court once again scrutinized the Enforcement Directorate (ED) regarding its actions in the alleged Rs. 1,000 crore scandal involving the Tamil Nadu State Marketing Corporation (TASMAC).
The court questioned whether the ED was infringing on the rights of the State police in this matter.
Earlier in May, the Supreme Court criticized the ED for its raids on TASMAC’s headquarters and had put a hold on the money laundering investigation related to the alleged scam.
This intervention was made in response to a petition from the Tamil Nadu government, which challenged a Madras High Court ruling permitting the ED’s investigation.
During today’s resumed hearing, Chief Justice of India (CJI) BR Gavai and Justice Vinod Chandran inquired why the local police could not take charge of the investigation.
CJI Gavai asked,
“What happens to federal structure? Who controls law and order?”
As the discussion continued, he refrained from making any negative remarks about the ED’s investigative methods.
The Court noted,
“In the last 6 years, I have seen many cases of ED. But I do not want to say something, else it will again be reported (in media),”
Additional Solicitor General (ASG) SV Raju, representing the ED, expressed that the media does not typically report favorably about the agency.
He stated,
“Anything in our favour is hardly reported and that is my grievance,”
Senior Advocate Kapil Sibal, representing the State, questioned the legality of raiding a government entity, pointing out that TASMAC itself had initiated the action.
Sibal remarked,
“The managing directors are raided. Once FIR is there, ECIR is there, this matter can be closed in no time at all. We have to decide what to do and what not. What is ED doing? ED has seized computers etc. This is shocking,”
In response, Raju asserted that significant irregularities were present in TASMAC, citing 47 FIRs related to alleged corruption.
Raju explained,
“There are large-scale irregularities, we are on predicate offences and are on scheduled offences for all these officers, there is a conduit of how money is flowing,”
Sibal countered that the ED could share information with the State police following the provisions of the Prevention of Money Laundering Act (PMLA), noting that many FIRs had already been closed.
Raju reiterated that corruption within TASMAC was severe, stating that this issue went beyond mere law and order.
However, CJI Gavai raised concerns about the ED’s authority, asking,
“Is it not encroaching upon the right of the State to probe a case? Whenever you have a doubt that State is not probing, you will go there?”
The Court also highlighted the PMLA’s provisions that allow the ED to share pertinent information with other agencies.
Raju pointed out the State government’s role, saying,
“There are actually 47 FIRs and corruption is rampant in liquor shops and liquor distribution shops. This is a different thing that they are protected by the State.”
The Court reminded that the discussion should not devolve into a debate competition.
Senior Advocate Mukul Rohatgi, representing the Tamil Nadu government, raised concerns about the ED seizing private mobile phones.
Rohatgi argued,
“Can you take someone’s phone and extract data? Is it not violation of Article 21 and such pleas are pending before the court? My phone will have all kinds of information,”
In reply, ASG Raju stated that those individuals whose privacy was allegedly violated were not present in court. He emphasized that allowing the State’s petition could exempt government employees from the PMLA.
He also referred to the allegations and the evidence collected, asserting,
“We did not ransack any office. You can see from the panch witness statements as well. Though it is another thing that ED offices were indeed ransacked by the State police. Now evidence also there for money laundering and district managers etc. of TASMAC were involved.”
CJI Gavai remarked that the State was not inactive in this matter. Raju reiterated that the State’s actions were limited to the predicate offence, calling it a “case of rampant corruption.” He assured that the ED had acted according to proper protocol.
He said,
“Nobody was threatened or coerced. Everything was carried out in an orderly manner,”
The hearing is ongoing and centers on raids conducted by the ED from March 6 to March 8 at TASMAC’s headquarters, following allegations that TASMAC officials were involved in overpricing liquor bottles, manipulating tenders, and engaging in bribery, resulting in financial irregularities exceeding ₹1,000 crores.
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The ED’s investigation is based on claims found in approximately 41-46 FIRs filed by the State government or TASMAC against its officials over the years.
The DMK-led State government and TASMAC have accused the ED of overstepping its authority and labeled the March raids as illegal.
They subsequently challenged the legality of these actions before the Madras High Court, which dismissed their plea, leading to the current proceedings in the Supreme Court.