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Synopsis

The Madras High Court on April 23, 2025, dismissed the petitions filed by the State government and Tamil Nadu State Marketing Corporation (Tasmac) challenging the Enforcement Directorate’s (ED) searches at Tasmac headquarters between March 6 and 8, 2025. The petitioners had alleged procedural violations and an attempt to malign the State’s image.

However, the division bench of Justices S.M. Subramaniam and K. Rajasekar noted that in the present case, a mere search was conducted and the petitioners "with complete whimsical arguments" approached it seeking to declare the search itself as illegal.

"It is agonising that public servants who ought to work for the welfare of the people, have approached this Court stating that they were detained by an investigating agency while conducting a search and that this amounts harassment. How can a procedure established by law be termed as harassment. This is a challenge to the very ethos of criminal justice system," it said.

Court stressed, "Can a few inconveniences which is product of ‘procedure established by law’ as embedded in Article 21 be equated against the economic rights of the people of this country. It is the mandate of the Constitution to secure to all its citizens Economic Justice. And legislations such as PMLA serve this object".

Court also rejected the state's argument that political motive was at play and search was based on political vendetta. The division bench said,"But whether a Court can go and examine the political forces at play or be a partaker in the political game. Definitely not. That is not the duty of a Court of law".

The ED must be allowed to investigate money laundering, which affects public interest, the judges noted while ordering that the ED will be at liberty to proceed with all further actions under PMLA.

Three writ petitions were filed. The first, jointly submitted by the State government and Tasmac, sought a declaration that the ED’s search operations at the Tasmac headquarters in Chennai, were unconstitutional as they lacked the State’s consent, violating the principle of federalism. It also requested the ED to disclose a copy of the Enforcement Case Information Report (ECIR), which formed the basis of the search.

The other two petitions, filed solely by Tasmac, challenged the legality of the search and sought protection for its employees from alleged harassment under the guise of investigation. Tasmac also sought a court order directing the ED to furnish a copy of the search authorization issued by Joint Director Piyush Yadav and an interim injunction to prevent further intimidation of its officials.

In an affidavit supporting the petitions, Tamil Nadu Home Secretary Dheeraj Kumar stated that Tasmac, which operates 43 depots and 4,829 retail liquor shops across the State, was subjected to an unjustified search operation. The ED officials entered Tasmac’s headquarters at Egmore on March 6 at 11:54 a.m. and continued their search until 11 p.m. on March 8, lasting nearly 60 hours.

He claimed that the search began with a procedural illegality, as Tasmac officials were not given a copy of the search authorization but were only shown the document and forced to acknowledge its contents. During the operation, ED officials allegedly recorded statements from Tasmac Managing Director S. Visakan, General Manager (Administration and Wholesale) Sangeetha, and Deputy General Manager (Purchase and Sale) M. Jothi Shankar. The three were allegedly subjected to prolonged detention and forced to answer nearly 100 questions on topics such as liquor procurement, price fixation, and bar licensing.

The affidavit further alleged that Tasmac officials were coerced into making statements under duress, which would render them legally invalid. Documents related to Tasmac’s bar tenders, transport tenders, and tenderers’ details from the last four years were seized arbitrarily. The ED allegedly conducted the search in a high-handed manner, detaining multiple employees for long hours and depriving them of basic necessities.

The ED officials also recorded panchanamas detailing the data they obtained. This included information from three mobile phones and three Gmail accounts used by Mr. Visakan, one mobile phone and one Gmail account used by Ms. Sangeetha, and data from an Oracle server. The agency also retrieved data from Mr. Shankar’s mobile phone and Gmail, along with information from four desktops at Tasmac headquarters. All the data was transferred to a hard disk.

The State government argued that since no cash was recovered during the search, there were no “proceeds of crime” involved, and the ED had no authority to invoke the PMLA. The Home Secretary further alleged that the ED was conducting a “roving inquiry” into Tasmac’s affairs without any reasonable basis or material evidence suggesting financial wrongdoing.

He also accused the ED of attempting to malign the reputation of both Tasmac and the Tamil Nadu government by making baseless allegations and misrepresenting facts.