New Delhi, Oct 14 (PTI) The Supreme Court on Tuesday extended its interim order restraining the Enforcement Directorate from taking any coercive action, including search, seizure or further investigation, against the Tamil Nadu State Marketing Corporation (TASMAC) in connection with an alleged liquor retail scam in the state.

The top court questioned whether the ED’s actions could amount to encroaching on the state's investigative powers, even as Additional Solicitor General S V Raju, appearing for the ED, alleged that corruption "is being sought to be concealed behind arguments of federalism”.

“Would it not amount to encroachment upon the right of the state to investigate? In every case, when you find that the state is not investigating, will you take it upon yourself? What happens to Section 66(2)?” a bench comprising Chief Justice B R Gavai and Justice K Vinod Chandran asked.

The counsel for the state and TASNAC also questioned the ED action, citing Section 66(2) of the Prevention of Money Laundering Act (PMLA) that requires the ED to share with the competent authority information received during the course of investigation about the commission of a predicate offence.

On May 22, a bench headed by the CJI had observed that the central agency was crossing "all the limits" and violating the federal concept of governance as it stayed its ongoing probe into money laundering aspects related to the alleged corruption in the grant of wine shop licences.

The DMK-run state government and TASMAC moved the top court against the raids conducted by the ED at the premises of TASMAC. The petition challenged an April 23 order of the Madras High Court that upheld the ED’s actions, alleging grave violations of constitutional rights and the federal structure.

“There shall be stay of further proceedings qua the respondent no.2 (TASMAC)... There shall also be ad-interim relief in terms of prayer Clause (B) of the prayer for interim relief, which reads as under: ‘(B) Issue an ad-interim order directing the Respondent No.1/ED to not take any coercive steps against the Respondent No.2/TASMAC and its officials during the pendency of the present petition’,” the bench had ordered.

On Tuesday, the bench extended the protection to TASMAC and said now its plea against the Madras High Court’s refusal to quash ED searches conducted at its headquarters will be heard after the top court decides review pleas relating to larger issues under the Prevention of Money Laundering Act (PMLA).

A batch of review petitions is pending adjudication against the 2022 judgment in Vijay Madanlal Choudhary, which had upheld several provisions of the PMLA including those relating to arrest, search and non-supply of the Enforcement Case Information Report (ECIR).

The Tamil Nadu government and TASMAC have questioned the ED’s authority to conduct searches without furnishing the ECIR, arguing that the Vijay Madanlal ruling had curtailed procedural safeguards available to the accused.

During the hearing, senior advocates Kapil Sibal and Mukul Rohatgi, appearing for the state government and TASMAC, asked how a government corporation can be raided by the ED.

“How can you raid government corporate offices when the alleged offence is by certain retailers already being investigated by the state? What happens to the federal structure of this country?” Sibal asked.

Sibal argued that the state’s own Directorate of Vigilance and Anti-Corruption (DVAC) had already registered 47 FIRs between 2014 and 2021 against individual liquor outlet operators for alleged corruption.

“The ED suddenly entered the scene in 2025, raided the TASMAC headquarters, and seized phones and devices of officials,” Sibal said.

He pointed out that under Section 66(2) of the PMLA, the ED is required to share information with state agencies investigating the predicate offences. He also alleged ED was effectively investigating “corruption,” which falls within the exclusive jurisdiction of the state and, under the law, could be probed by the CBI only with the consent of the state.

“Corruption is a predicate offence. ED cannot probe corruption directly,” Sibal said.

A “predicate offence” is a crime whose proceeds may become the subject of other illegal activities like money-laundering.

Additional Solicitor General Raju said that since the state vigilance had itself registered the predicate offences, the ED was entitled to investigate the corresponding money laundering aspect.

“The ED has found incriminating evidence during its searches. Large-scale corruption was there. That corruption is being sought to be concealed behind arguments of federalism,” Raju said, adding that the searches were conducted “in a decent and systematic manner.” The law officer alleged that state police are closing the criminal cases one after another.

Responding to a question on whether the ED’s probe would infringe upon the state’s right to investigate, the law officer said that under the PMLA, the ED can conduct searches if there are “reasons to suspect.” “The use of the word ‘suspect’ means the threshold is lower,” he said. The bench also took note of the state’s argument that the DVAC was actively pursuing the predicate offences and had already closed 37 FIRs after investigation.

The ASG countered that the quick closure of cases was itself intended “to cut off the ED by closing predicate FIRs one by one”.

In a lighter vein, the CJI remarked, “In the last six years we have had the opportunity to deal with many cases of ED... I don’t want to say more. Last time I said something, it was reported everywhere.” “When something is said in favour of the ED, it is hardly reported. That is my grievance,” the ED’s counsel said.

“We are bound by the Vijay Madanlal judgment of a three-judge Bench,” the CJI observed. PTI SJK RT

TASMAC probe: Supreme Court extends stay on ED coercive actions pending resolution of PMLA review petitions. The Supreme Court extended an interim order restraining the Enforcement Directorate from taking coercive steps, including searches and seizures, against TASMAC in the alleged liquor licences scam and directed that TASMAC's challenge to ED searches be heard only after pending review petitions concerning broader PMLA issues are decided; the controversy raises federalism questions, the operation of Section 66(2) requiring information sharing about predicate offences, and disputes over ECIR non supply and the ED's authority to probe money laundering linked to alleged corruption.