TASMAC Money Laundering Probe: Supreme Court Declines To Examine Legality Of ED Searches At This Stage

The Bench of Chief Justice of India Surya Kant and Justice V. Mohana upheld the Madras High Court's order declining to examine the legality of the search proceedings at that stage, noting that the Adjudicating Authority had already confirmed the attachment under Section 8 of the Prevention of Money Laundering Act, 2002 (PMLA), and the petitioner had availed the statutory remedy before the Appellate Tribunal.

Rajesh Kumar had sought quashing of the search and seizure proceedings conducted by the ED at his residence in Chennai's Adyar locality on May 16, 17 and 18, 2025.

The Madras High Court had closed his petition, holding that it was unnecessary at that stage to examine the validity of the search proceedings and expressly leaving open all grounds to be urged before the Appellate Tribunal.

Challenging the High Court's order, counsel for the petitioner argued before the Supreme Court that the central issue was whether the searches had been conducted in compliance with Section 17 of the PMLA, which governs search and seizure powers of the ED.

The petitioner contended that a search under Section 17 could be undertaken only after the authorised officer recorded "reasons to believe" that a person had committed money laundering, possessed proceeds of crime or was in possession of records or property connected with money laundering, and obtained authorisation in the prescribed form.

It was argued that no valid authorisation existed for the searches conducted at Rajesh Kumar's residence.

The petitioner further submitted that he was neither named in the Enforcement Case Information Report (ECIR) nor in the predicate offence and that the searches yielded nothing except three mobile phones.

According to the petitioner, the High Court ought to have examined whether the mandatory statutory safeguards under Section 17 had been complied with instead of relegating him to proceedings arising from confirmation of attachment under Section 8 of the PMLA.

Counsel also submitted that the issue concerning the legality of the searches was already pending before the Supreme Court in petitions filed by TASMAC arising from the same ECIR and involving similar challenges to the ED's search operations.

It was argued that the scope of Section 17, dealing with search and seizure, and Section 8, relating to adjudication and confirmation of attachment, was entirely distinct and that the authorities could not be permitted to enter a person's premises and seize material without first satisfying the statutory preconditions prescribed under the PMLA.

The Bench, however, was not persuaded to interfere.

"Thank you. No question. Dismissed," Chief Justice Surya Kant observed after briefly hearing the submissions.

Following the dismissal, the petitioner's counsel sought permission to withdraw the petition with liberty to raise all objections before the Appellate Tribunal.

Rejecting the request, the Chief Justice observed that the Madras High Court's order had already protected the petitioner's right to raise all available grounds before the Tribunal.

"The High Court order is very clear. We are only upholding the High Court order. Please read the High Court order. It says so," the CJI remarked.

The ED's money laundering case stems from multiple FIRs registered by the Tamil Nadu Directorate of Vigilance and Anti-Corruption (DVAC) concerning alleged corruption in TASMAC, the State-run liquor retailer.

The probe relates to an alleged ₹1,000 crore liquor scam in Tamil Nadu. The ED has alleged that certain distillery companies siphoned off unaccounted cash, which was then used to secure additional supply orders from TASMAC. Senior TASMAC officials have also been accused of corruption, while several TASMAC outlets are alleged to have collected amounts in excess of the actual Maximum Retail Price (MRP).

The ED registered the money laundering case based on 41 FIRs lodged by the DVAC. The searches at Rajesh Kumar's residence formed part of the wider investigation, under which similar searches were also conducted at the premises of several individuals, including film producer Akash Bhaskaran.

The Madras High Court had recently closed Bhaskaran's challenge to the same search operation, noting that statutory remedies remained available to the affected parties.