Liquor shop licences row: SC says ED crossing all limits, stays probe against TASMAC

PTI, NEW DELHI, MAY 22, 2025 : The Supreme Court on Thursday criticized the Enforcement Directorate (ED) for "crossing all the limits" and violating the federal structure of governance. The Court stayed the ongoing money laundering probe against Tamil Nadu's state-run liquor retailer, TASMAC, in connection with alleged corruption in the grant of liquor shop licenses.

Issuing a notice to the ED on a plea filed by the Tamil Nadu government and TASMAC, a bench comprising Chief Justice B.R. Gavai and Justice Augustine George Masih took a strong stance against the agency’s actions. “Your ED is crossing all the limits,” the Court said, adding that the ED had been previously criticized by several benches for allegedly misusing the rigors of the Prevention of Money Laundering Act (PMLA).

Opposition parties have also raised concerns about the ED’s use of the PMLA provisions against the government’s political opponents. In this case, the Court questioned the ED's decision to raid TASMAC, a state-run entity. Chief Justice Gavai remarked, "The Enforcement Directorate is violating the federal concept (of governance)."

The Court noted the submissions made by senior advocates Kapil Sibal and Amit Anand Tiwari, representing the Tamil Nadu government and TASMAC, and stayed the ED’s probe against TASMAC for the time being. The ED had opposed the order, arguing that the case involved corruption worth over Rs 1,000 crore, and insisted that the agency was not crossing the limits "at least in this case."

Sibal, representing the state, argued that the Tamil Nadu government and TASMAC had already launched criminal prosecutions over alleged illegalities in the liquor license allotment process. He pointed out that 41 FIRs had been lodged against those accused in connection with the liquor shop licenses dating back to 2014. Sibal questioned the ED’s authority to raid a state-run entity like TASMAC, asking, “How can you raid the state-run TASMAC?”

The petition filed by the DMK-led Tamil Nadu government and TASMAC challenged an April 23 order by the Madras High Court, which upheld the ED's actions. The petition contended that the ED’s raid was a grave violation of constitutional rights and the federal structure, exceeding its mandate and usurping the state’s right to investigate offences within its jurisdiction.

The plea also challenged the legality of the ED's 60-hour search and seizure operation conducted between March 6 and March 8, 2025, under Section 17 of the PMLA. According to the petition, TASMAC is a state-owned entity and was not named as an accused in any of the FIRs. In fact, in several cases, TASMAC was the complainant, not the defendant.

The Tamil Nadu government argued that, in the absence of any predicate offence involving TASMAC as an accused, the ED had no jurisdiction to initiate proceedings under the PMLA.