Supreme Court raises concerns about Enforcement Directorate’s investigation approach in Tamil Nadu’s liquor corruption case.
The Supreme Court has raised questions regarding the Enforcement Directorate’s (ED) approach in its investigation of a money laundering case linked to the Tamil Nadu State Marketing Corporation, commonly referred to as Tasmac. This inquiry marks the second instance within six months where the court has scrutinized the actions of the ED in relation to this matter.
Tasmac is a government-owned entity that holds a monopoly over the wholesale and retail distribution of alcoholic beverages in Tamil Nadu. The ED has alleged that Tasmac is at the center of a corruption network valued at Rs 1,000 crore, involving various state officials, liquor distilleries, and bottling companies. The agency’s investigation is based on over 40 cases filed by the state government and Tasmac against certain officials of the corporation since 2017, and it has been initiated under the Prevention of Money Laundering Act.
Earlier this year, in March, the ED conducted searches at multiple locations in Tamil Nadu, including Tasmac’s headquarters, as part of its investigation. However, in May, the Supreme Court had temporarily halted the ED’s money laundering investigation, asserting that the agency was overstepping its jurisdiction and infringing upon the federal structure of the country. This ruling came during the court’s consideration of a petition filed by the Dravida Munnetra Kazhagam-led Tamil Nadu government and Tasmac, which challenged a Madras High Court order that had dismissed their plea against the ED’s searches.
During a recent hearing, Chief Justice BR Gavai and Justice Vinod Chandran resumed discussions on the case. Gavai questioned the necessity of the ED’s involvement, asking if the state police could adequately address the situation. He emphasized concerns regarding the implications for the federal structure, inquiring, “Who controls law and order?”
Advocate Kapil Sibal, representing the state government, expressed skepticism about the ED’s actions, highlighting the contradiction of raiding a government-owned company that had initiated its own legal actions against certain officials. He pointed out that the agency had seized computers and other materials during its searches, questioning the legality of such actions.
In defense, Additional Solicitor General SV Raju argued that the ED had uncovered significant irregularities within Tasmac and noted that 47 first information reports had been filed concerning the matter. Sibal countered that the ED was obligated to share information with the state police, as stipulated by the Prevention of Money Laundering Act, and mentioned that many of the FIRs related to the case had already been closed.
The court also addressed concerns regarding the seizure of private mobile phones during the ED’s searches. Advocate Mukul Rohatgi pointed out that such actions might violate individuals’ rights under Article 21 of the Constitution, which guarantees the right to life and personal liberty. Raju responded that the individuals whose privacy was supposedly compromised were not present before the bench, claiming that the ED acted in accordance with established norms.
As the hearing progressed, Gavai reflected on the ED’s track record over the years, hinting at broader issues without elaborating. Raju asserted that the media tends to portray the ED unfavorably, suggesting that the agency’s actions were justified. The ED’s investigation has alleged that there were manipulations in the tender process, resulting in substantial unaccounted cash generation and illicit payments involving leading liquor manufacturers and bottling companies.
Overall, the Tamil Nadu government has accused the central authorities of misusing investigative agencies for political purposes, with the state’s Home Secretary alleging that the ED aims to undermine Tasmac’s reputation through unfounded allegations. The Bharatiya Janata Party, on the other hand, has called for a comprehensive investigation into the corruption claims.
