ED investigation against Tamil Nadu's TASMAC stayed till PMLA review is decided: Supreme Court

The Supreme Court of India has ordered that the stay on proceedings initiated by the Enforcement Directorate’s (ED) against Tamil Nadu State Marketing Corporation (TASMAC) shall continue to be in place till the review petitions against the 2022 Vijay Madanlal Choudhary judgment is decided.

A bench of CJI BR Gavai and Justice Vinod Chandran ordered thus after Senior Advocate Kapil Sibal, appearing for TASMAC, submitted that ED had not supplied the Enforcement Case Information Report, which the Vijay Madanlal decision held that need not be supplied to the parties.

Senior Advocate Sibal further argued that State Vigilance had filed 47 FIRs against liquor outlet operators over allegations of corruption however, ED entered the scene in 2025 and raided the TASMAC Headquarters and took the phones and devices of the officers.

On the other hand, Additional Solicitor General SV Raju told the bench, "Rampant malpractices at TASMAC, unaccounted cash was found at retail shops..now we have found evidence of money laundering..we are investigating the predicate side of the offence..the state is finding ways to scuttle the proceedings and show the door to the ED..".

ASG further told court that FIRs have been registered against TASMAC selling liquor at excess amount and collecting cash from customers who paid through debit or credit cards.

Notably in May, the Supreme Court had issued notice and stayed proceedings in a plea filed by the State of Tamil Nadu challenging the Enforcement Directorate’s (ED) searches at the Tamil Nadu State Marketing Corporation (TASMAC) Headquarters.

Chief Justice of India B.R. Gavai and Justice A.G. Masih had strongly criticised the ED's actions, particularly questioning the agency’s authority to initiate proceedings against a government-owned corporation. CJI Gavai had observed, “You may register against an individual, but a Corporation? How can you register? Your ED is passing all limits!” Appearing for the ED, ASG Raju had defended the agency’s actions: “We have done nothing wrong. There was cash recovered. I will show. This is a Rs. 1000 crore fraud.” Also Read -

Tamil Nadu filed an SLP through Advocate Misha Rohatgi after the impugned judgment was passed by Madras High Court on April 23, 2025, dismissing the petitions filed by the State government and Tamil Nadu State Marketing Corporation (Tasmac) challenging the Enforcement Directorate’s (ED) searches at its headquarters between March 6 and 8, 2025.

State government has 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.

High Court had 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".

High Court also rejected the state's argument that political motive was at play and search was based on political vendetta. Three writ petitions were filed before the high court. 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.

The State government had argued before high court 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.

Case Title: The State of Tamil Nadu vs. Directorate of Enforcement

Hearing Date: October 14, 2025

Bench: CJI Gavai, Justice Chandran