The Tamil Nadu government further alleged that ED officials acted oppressively, detaining officials, including women, until 1 am, and seizing personal phones to extract data using advanced tools.
Published Oct 14, 2025 | 8:35 PM ⚊ Updated Oct 14, 2025 | 8:35 PM
The Supreme Court of India. (iStock)
Synopsis: The court’s pointed questions underscored the ongoing tension between central agencies and state governments over federal jurisdiction, with the case highlighting broader concerns about the ED’s investigative powers.
The Supreme Court on Tuesday, 14 October, criticised the Enforcement Directorate (ED) for violating federal principles during its investigation into the alleged irregularities to the tune of ₹1,000 crore at Tamil Nadu State Marketing Corporation (TASMAC).
The Bench of Chief Justice BR Gavai made the remark during a hearing on an appeal filed by the Tamil Nadu government seeking to restrain the ED’s probe.
Senior Advocate Kapil Sibal, representing the Tamil Nadu government, argued that the ED conducted raids in March 2025 at TASMAC’s offices in Chennai, Villupuram, and over 10 other locations without following due process.
The agency seized computers, laptops, and critical data, which the state described as a “shocking” overreach.
Sibal contended that if any official had committed wrongdoing, the ED should have investigated them individually rather than raiding a state-run corporation’s headquarters. He argued that such actions violated federal principles, stating, “If the ED can raid any government institution just by registering a case, it exceeds its authority. Even the CBI shares information with the state before conducting searches, but the ED acts high-handedly.”
The ED, in response, defended its actions. It said the raids were part of an investigation into large-scale financial irregularities at TASMAC, triggered by credible complaints of corruption. The agency claimed that its searches were lawful and uncovered critical evidence. The ED further alleged that Tamil Nadu had failed to properly investigate 36 related cases and that financial fraud worth thousands of crores had occurred, justifying their intervention.
Chief Justice Gavai, however, intervened, questioning the ED’s approach: “Do you think you can enter any government institution, conduct searches, and seize documents just because you have suspicions? Don’t you realise this goes against the federal principles enshrined in the Constitution?”
The Bench also raised pointed questions: “Is this investigation not against federalism? If you suspect the state isn’t investigating properly, does the ED have the right to intervene immediately? Who controls law and order? You’re being questioned on federal principles—do you have an answer?”
The Tamil Nadu government further alleged that ED officials acted oppressively, detaining officials, including women, until 1 am, and seizing personal phones to extract data using advanced tools.
“Who gave the ED such authority?” Sibal questioned.
The ED denied the allegations and asserted that only the devices of officials suspected of wrongdoing were examined and that female officers were sent home with proper security measures after the searches.
It also highlighted specific irregularities at TASMAC, including officials allegedly taking bribes for appointments, employees charging customers above the maximum retail price (MRP), and the sale of unauthorised foreign liquor. The agency claimed these practices were systemic, with illicit funds being funnelled to higher authorities daily.
The Tamil Nadu government countered that it was already investigating the irregularities and questioned the ED’s sudden intervention.
At this juncture, Chief Justice Gavai remarked: “We’ve been observing the ED’s investigations for six years,” indicating scepticism about the agency’s methods.
The court’s pointed questions underscored the ongoing tension between central agencies and state governments over federal jurisdiction, with the case highlighting broader concerns about the ED’s investigative powers. The hearing will continue.
Senior Advocate Kapil Sibal spoke about excessive action, seizure of critical data and violation of federalism.
Excessive action: The ED conducted raids at the main TASMAC office in Chennai and over 10 other locations in March based on allegations of a ₹1,000 crore scam, but failed to follow due procedure.
Seizure of critical data: ED officials searched the main government office and seized computers, laptops, and crucial data.
Violation of federalism: Sibal argued that if an individual official within the government company is suspected of wrongdoing, the ED should investigate that person and their associated premises individually. Targeting the main office of a state government enterprise is an overreach that violates the principle of federalism. He stated that even the CBI shares information with the concerned state government before a raid, but the ED acted arbitrarily.
In response to the ED’s submission that it initiated the money laundering probe due to a “strong suspicion” of massive corruption, CJI Gavai expressed strong disapproval:
“If you have a suspicion, will you enter any government institution, conduct a search, and seize documents? What do you think you are doing? Don’t you feel that what you are doing is contrary to the federal structure enshrined in the Constitution?”
The Chief Justice asked a series of pointed questions to the ED:
“Is this investigation not against the spirit of federalism?”
“If there is a suspicion that the state government is not investigating properly, will the ED immediately intervene?”
“Who controls law and order?”
“The state is raising questions about federalism. Do you have an answer for that?”
The ED argued that they intervened because the state government had closed 36 related cases without proper investigation, leading to a suspicion of thousands of crores in money laundering.
The CJI, in a veiled reference to the pace of ED probes, commented with a chuckle: “We have also been watching the investigation of cases the ED has been involved in for the past six years.”
Tamil Nadu further alleged:
The ED acted high-handedly, forcing female employees to stay until 1 am.
The agency illegally seized personal mobile phones of individuals and cloned all the data using sophisticated equipment.
The ED’s lawyer, in turn, denied the harassment charges, stating that female officers were released at the appropriate time following safety protocols. The counsel maintained that the agency only targeted the phones and computers of officials confirmed to be involved in the scam.
When the ED stated that no one was arrested during the TASMAC searches, the CJI immediately asked, “Was Senthil Balaji arrested in this case?” The ED clarified that the former minister was arrested in a separate cash-for-jobs scam.
The Tamil Nadu government’s side also introduced a political element to the argument:
“The ED began investigating this case just before the last election. Now, they are showing urgency to resume the probe as the 2026 Tamil Nadu elections approach. After the election is over, the ED will lose all interest in this case.”
After the detailed hearing, the Chief Justice noted that a review petition on the necessity of an Enforcement Case Information Report (ECIR) for the ED to initiate an investigation is currently pending before the Supreme Court.
CJI Gavai therefore deferred the hearing of the TASMAC matter. Due to this adjournment, the existing stay order on the ED’s investigation and other proceedings in the TASMAC case remains in effect.
(Edited by Majnu Babu).
