Supreme Court Halts ED’s Action Against TASMAC, Slams Overreach in ₹1,000 Crore Liquor Scam Case
New Delhi | May 23, 2025: In a major development in the Tamil Nadu liquor scam case, the Supreme Court on Thursday sharply criticised the Enforcement Directorate (ED) for overstepping its mandate by targeting the Tamil Nadu State Marketing Corporation (TASMAC), a government-owned entity, in its ongoing probe.
While granting a stay on the ED’s investigation into TASMAC, the apex court bench led by Chief Justice of India (CJI) B.R. Gavai, along with Justice A.G. Masih, noted that the agency’s actions were “crossing all limits” and amounted to a “total violation of the federal structure.”
"Offence against corporation? You register against individuals!" says CJI
During the hearing, CJI Gavai posed a pointed question to Additional Solicitor General S.V. Raju, who was representing the ED:
“How can there be an offence against the corporation? You may register cases against individuals, but how can a corporation be charged in a criminal matter?”
The case stems from ED raids conducted in March 2025 at the TASMAC headquarters in Tamil Nadu, as part of its probe into an alleged ₹1,000 crore liquor scam. According to the ED, several distillery firms allegedly funneled unaccounted cash to obtain additional liquor supply orders from TASMAC.
However, the state government and TASMAC, both run by the DMK-led administration, had challenged the ED’s raids. They approached the Supreme Court after the Madras High Court on April 23 dismissed their pleas and allowed the ED to proceed under the Prevention of Money Laundering Act (PMLA).
Kapil Sibal: “State filed FIRs against individuals, not TASMAC”
Senior advocate Kapil Sibal, appearing on behalf of the Tamil Nadu government, argued that the state itself had already taken action from 2014 to 2021, registering 41 FIRs against individuals involved in cash transactions related to liquor outlets. He emphasised that the corporation itself was not under investigation until the ED suddenly entered the scene in 2025.
“This is a corporation giving liquor outlets. Some people to whom outlets were given were taking cash. The state acted against them. But the ED raided the head office, seized phones, and cloned all data. That’s a clear overreach,” Sibal said.
Mukul Rohatgi: “ED violated privacy of TASMAC officials”
Joining the argument, Senior Advocate Mukul Rohatgi, representing TASMAC, raised concerns about privacy violations. He pointed out that the ED had cloned mobile phones of TASMAC officials without due process, infringing upon their personal rights.
Supreme Court issues stay, notice to ED
Taking note of these submissions, the top court issued a notice to the Enforcement Directorate and granted a stay on further proceedings. The bench directed the ED to respond within 14 days.
“In the meantime, there shall be a stay of further proceedings,” the court observed in its interim order.
Political and legal flashpoint
The case has now become a flashpoint between the Union government and the DMK-led Tamil Nadu government. The Supreme Court’s remarks may add to the ongoing debate about the centre’s alleged misuse of federal agencies to target Opposition-ruled states.
The ED’s probe centres around claims that distilleries routed bribe money through unaccounted channels to secure more supply contracts from TASMAC, which holds a state monopoly over retail liquor distribution in Tamil Nadu. Several top officials of TASMAC have been accused of facilitating the scam, while shops allegedly overcharged consumers beyond the Maximum Retail Price (MRP).
What’s next?
With the Supreme Court’s intervention, the ED cannot proceed with its investigation against TASMAC until the next hearing. The case now awaits a detailed response from the central agency and is likely to set a precedent on whether government-run corporations can be directly prosecuted under PMLA without specific individual charges.
As the political battle heats up ahead of the 2026 Assembly elections in Tamil Nadu, this case could have far-reaching implications for Centre-State relations, institutional autonomy, and the role of investigative agencies.
