In a significant blow to the Enforcement Directorate (ED), the Supreme Court on Thursday stayed all ongoing investigations into alleged money laundering involving Tamil Nadu’s state-run liquor distribution agency, the Tamil Nadu State Marketing Corporation (TASMAC).

A bench comprising Chief Justice of India DY Chandrachud and Justice AG Masih made sharp observations against the central agency's conduct, saying the ED had been “crossing all limits” in its recent probes.

The court was hearing a Special Leave Petition (SLP) filed by TASMAC challenging a Madras High Court order dated April 23, which had dismissed three writ petitions against the ED’s search and seizure operation carried out at TASMAC's Chennai headquarters between March 6 and 8, 2025.

SC Questions Legality of ED Action

In a direct rebuke to the central agency, the Supreme Court questioned the basis of the ED’s case. “How can you register a case against a corporation? You may register against individuals, but how against a corporation?” the bench asked Additional Solicitor General (ASG) SV Raju, appearing for the ED.

Further grilling the agency, the bench asked, “Where is the predicate offence?”—a necessary foundation under the Prevention of Money Laundering Act (PMLA) for ED to proceed. The agency had filed FIRs against several high-ranking TASMAC officials but had not clarified the underlying offence that triggered the probe.

When ASG Raju defended the ED’s actions, claiming a multi-crore laundering case was involved, the court pushed back strongly: “We are saying this again. Your ED has been crossing all limits, Mr Raju,” the bench asserted.

Allegations of Privacy Breach

Appearing for TASMAC and its employees, senior advocates Kapil Sibal and Mukul Rohatgi accused the ED of violating constitutional rights by cloning mobile phones and seizing personal devices without following due legal process.

“There is something called privacy,” Rohatgi reminded the bench, while Sibal urged the court to prevent the use of any data extracted from seized devices.

Background of the Case

The ED had raided the TASMAC headquarters as part of a probe into alleged money laundering, seizing documents and devices over a three-day operation. However, the Tamil Nadu government accused the agency of targeting the state’s officials unfairly, a claim that has been at the heart of the legal battle.

Earlier, the Supreme Court had declined to transfer the case from the Madras High Court, after the High Court reprimanded the state for “insulting” the judiciary and “forum shopping.”