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‘Are you not encroaching on state’s rights?’: SC asks ED in Tamil Nadu liquor scam case

Posted By: Aditya Gogoi Posted On: Oct 14, 2025Share Article
The Supreme Court on Tuesday asked the Enforcement Directorate whether it was encroaching upon the rights of the Tamil Nadu Police in a money laundering investigation against the Tamil Nadu State Marketing Corporation, Bar and Bench reported. This is the second time in six months that the court has questioned the ED's actions in the matter.The Supreme Court on Tuesday asked the Enforcement Directorate whether it was encroaching upon the rights of the Tamil Nadu Police in a money laundering investigation against the Tamil Nadu State Marketing Corporation, Bar and Bench reported.This is the second time in six months that the court has questioned the ED's actions in the matter.The Tamil Nadu State Marketing Corporation, also known as Tasmac, is a government-owned company that has a monopoly over the wholesale and retail sales of alcoholic beverages in the state.The ED has alleged that Tasmac is at the centre of a Rs 1,000-crore corruption network involving state officials, liquor distilleries and bottling companies. It based its investigation on over 40 cases filed by the state government and Tasmac against officials of the corporation since 2017.

The Supreme Court on Tuesday asked the Enforcement Directorate whether it was encroaching upon the rights of the Tamil Nadu Police in a money laundering investigation against the Tamil Nadu State Marketing Corporation, Bar and Bench reported.

This is the second time in six months that the court has questioned the ED's actions in the matter.

The Tamil Nadu State Marketing Corporation, also known as Tasmac, is a government-owned company that has a monopoly over the wholesale and retail sales of alcoholic beverages in the state.

The ED has alleged that Tasmac is at the centre of a Rs 1,000-crore corruption network involving state officials, liquor distilleries and bottling companies. It based its investigation on over 40 cases filed by the state government and Tasmac against officials of the corporation since 2017.

The ED's case had been filed under the Prevention of Money Laundering Act.

In March, the central agency searched several locations across Tamil Nadu, including the Tasmac headquarters, in connection with the case.

In May, the Supreme Court had stayed the ED's money laundering investigation in the case, stating that the central agency was “crossing all limits” and violating the federal structure of the country.

It had been hearing a petition filed by the Dravida Munnetra Kazhagam-led Tamil Nadu government and Tasmac against the Madras High Court's order in April, which had dismissed their petition against the ED's searches at the liquor corporation's headquarters.

On Tuesday, a bench of Chief Justice BR Gavai and Justice Vinod Chandran resumed the hearing and asked whether the state police could not look into the matter.

“What happens to federal structure?” Bar and Bench quoted Gavai as asking. “Who controls law and order.”

Advocate Kapil Sibal, representing the state government, had earlier questioned how a government-owned company could be raided when it was Tasmac itself that had ordered the action – referring to the FIRs filed by the state government and Tasmac against officials of the corporation.

“The managing directors are raided,” Bar and Bench quoted Sibal as saying on Tuesday. “…We have to decide what to do and what not. What is ED doing? ED has seized computers etc. This is shocking.”

However, Additional Solicitor General SV Raju, representing the central agency, claimed that there was large-scale irregularities within Tasmac, adding that there were 47 first information reports filed in the matter.

Sibal, in response, said that the ED was required to share any information with the state police in accordance with the provisions of the Prevention of Money Laundering Act, adding that a majority of the FIRs in the matter had been closed, Bar and Bench reported.

When Raju reiterated that there was large-scale corruption in Tasmac, Gavai responded: “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?”

Advocate Mukul Rohatgi, also representing the Tamil Nadu government, highlighted that the ED had seized private mobile phones during their searches.

“Can you take someone's phone and extract data?” Bar and Bench quoted Rohatgi as asking. “Is it not violation of Article 21 and such pleas are pending before the court. My phone will have all kind of information.”

Article 21 of the Constitution pertains to the fundamental right to life and personal liberty.

In response, Raju said that those persons “whose so called privacy is at stake” are not before the bench.

He also claimed that that the ED had acted in accordance with the norms. “Nobody was threatened or coerced,” the additional solicitor general said. “Everything was carried out in an orderly manner.”

During the hearing, Gavai also remarked that he had seen several cases handled by the ED in the last six years. “But I do not want to say something, else it will again be reported [in the media],” he added.

In response, Raju claimed that the media did not usually report in the ED's favour, Bar and Bench reported.

The central agency has claimed that during the investigation, it had found manipulation in the tender process, with transport contracts worth Rs 100 crore allegedly awarded to bidders who failed to meet the eligibility criteria.

The ED alleged that leading liquor manufacturers – SNJ, Kals, Accord, SAIFL and Shiva Distillery – along with bottling entities such as Devi Bottles, Crystal Bottles and GLR holding, engaged in a “well-orchestrated scheme of unaccounted cash generation and illicit payments”.

It alleged that distilleries inflated expenses and fabricated purchase orders through bottle-making companies to siphon off more than Rs 1,000 crore in unaccounted cash. The funds were allegedly then used for kickbacks to secure increased supply orders from Tasmac.

The ED also alleged that Tasmac shops routinely overcharged customers by Rs 10 to Rs 30 per bottle.

The ruling DMK has accused the Centre of misusing investigative agencies for political vendetta.

Tamil Nadu Home Secretary Dheeraj Kumar alleged that the ED's sole intention was to “malign and tarnish the reputation of Tasmac and the state government in the eyes of the public by making baseless allegations and misrepresenting facts.

The Bharatiya Janata Party has demanded a thorough probe into the corruption allegations.

Also read: How the Modi government has weaponised the ED to go after India's Opposition

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For many Gen Z workers, work-life balance isn't just talk; it is a clear boundary. They are open about burnout, take mental health breaks
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For many Gen Z workers, work-life balance isn't just talk; it is a clear boundary. They are open about burnout, take mental health breaks, and do not hesitate to say “no" when needed. Now, a WhatsApp chat between an employee and his manager is making waves for showing exactly that: how Gen Z

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