The Tamil Nadu State Marketing Corporation (TASMAC) and the state government have jointly petitioned the Madras High Court against Directorate of Enforcement’s (ED) 6th-8th March searches at TASMAC’s Chennai headquarters. The pleas have been scheduled for hearing before the bench of Justices MS Ramesh and N Senthilkumar on 20th March with the intention of staying the action under the Prevention of Money Laundering Act (PMLA) and the order to refrain from harassing any TASMAC officers and workers.
The Registry received three writ petitions. TASMAC and the state government together filed the first writ petition, while the latter filed the other two. These petitions contended that the agency’s authority to look into money laundering offenses within a state’s borders without first obtaining its government approval goes against the core ideas of federalism and the separation of powers. Additionally, the state has requested an interim order directing the ED to provide a copy of the ECIR (Enforcement Case Information Report) related to the investigation.
The state claimed that the ED was carrying out a roving enquiry (overly broad, without specific focus and conducted without a clear purpose or basis) devoid of any supporting documentation in its plea submitted through the Additional Chief Secretary. It was argued that there was no evidence linking TASMAC to the commission of PMLA offenses since, despite several hours of searching, the ED was unable to find any “proceeds of crime” under the act.
It was submitted that the search did not follow due process since the authorities were compelled to admit that they had read and comprehended the contents of the warrant/memorandum but were not provided a copy of the search warrant. It was contended that the inquiry took place with flagrant contempt for the TASMAC staff’s fundamental rights to life, liberty and dignity. The state further alleged that the ED operated in a completely capricious and arbitrary manner, subjecting a number of TASMAC personnel, including female employees, to unlawful confinement for about 60 hours.
It was added that the their cell phones were also confiscated, which prevented them from contacting their families, who were deeply concerned about their well-being. It was charged that a large number of female employees were permitted to depart late at night without any means of transportation, resulting in anxiety, insecurity and severe discomfort.
It was submitted that ED’s actions violated Articles 14 and 21 of the Constitution and were arbitrary and without legitimacy. The state contended that the agency had been abusing its authority and taking a selective approach that went against federalism’s tenets. The state argued that ED’s action violated the constitutionally mandated boundaries on state power and amounted to usurping that authority.
Home Secretary Dheeraj Kumar stated in an affidavit submitted in support of the state government’s writ case that TASMAC is a government-owned company that has the sole authority to sell alcohol throughout the state both wholesale (from May 1983) and retail (since 29th November 2003). The Home Secretary stated that TASMAC Managing Director S. Visakan, an IAS officer, General Manager (Administration and Wholesale) Sangeetha and Deputy General Manager (Purchase and Sale) M. Jothi Shankar had all provided oral testimonies to the ED officials during the search. The three officials were also required to complete a questionnaire that included over 100 questions about the tender procedure, liquor and bar license price fixing.
“All these statements are not valid under the eyes of law for having been recorded, under illegal detention, threat and coercion,” he added. He accused that TASMAC’s head office had been forcibly searched for documents related to its bar tenders, transport tenders and the names of successful tenderers over the previous four years.
According to senior ED sources, the investigation has not received cooperation from the Tamil Nadu government. They reported that despite repeated requests, the state police are not disclosing First Information Reports (FIRs) pertaining to cases that are under the ED’s jurisdiction. It further disclosed that the Tamil Nadu Police are preventing them from accessing vital information by failing to post pertinent official complaints online.
According to reports, the ED created its ECIR in the TASMAC case by combining data from 40–50 smaller FIRs submitted by the State Anti-Corruption Bureau. These FIRs deal with charges of bribery, anomalies in the way distilleries were given tenders and inconsistencies in the way TASMAC regional offices issued bar licenses. The ED emphasized that their conclusions are supported by current data and point to dubious financial activity.
The agency asserted that the Financial Action Task Force (FATF) principles are violated and that the lack of cooperation and compliance with ED probes is a severe problem. They highlighted that in other states, the police readily share FIRs with the ED for money laundering investigations. This case, according to the ED, is a component of a broader probe into financial irregularities at TASMAC, which has generated legal and political turmoil in the state.
