The court's censure underscores tensions between federal investigative bodies and state authorities, particularly concerning jurisdictional boundaries and the principles of federal governance. The Supreme Court's directive effectively halts the ED's ongoing probe into TASMAC, providing temporary relief to the state-run entity.
The ED's investigation, initiated under the Prevention of Money Laundering Act , was based on multiple FIRs registered by the Directorate of Vigilance and Anti-Corruption in Tamil Nadu between 2016 and 2021. These FIRs alleged a range of corrupt practices, including inflated pricing by liquor manufacturers, manipulation of tender processes, and the collection of bribes for staff transfers and postings within TASMAC.
In March, the ED conducted extensive searches across various TASMAC offices, distilleries, and breweries in Tamil Nadu. The agency claimed to have uncovered irregularities amounting to over ₹1,000 crore, including unaccounted cash transactions and evidence of kickbacks involving distillery companies. The ED's actions, however, drew criticism for their execution, with reports indicating that TASMAC employees were detained for extended periods during the raids without being informed of the reasons for the searches.
The Tamil Nadu government and TASMAC challenged the ED's actions in the Madras High Court, arguing that the agency's conduct violated the principles of federalism and infringed upon the state's autonomy. The petitioners contended that the ED failed to provide necessary documentation, such as the Enforcement Case Information Report , and accused the agency of harassing TASMAC employees.
Initially, the Madras High Court provided temporary relief by restraining the ED from proceeding with its investigation and directing the agency to furnish the required documents. However, in April, the High Court dismissed the Tamil Nadu government's plea, upholding the legality of the ED's raids and allowing the investigation to continue under the PMLA.