The Tamil Nadu government has escalated its fight against the Enforcement Directorate (ED) by approaching the Supreme Court of India on May 20, 2025, challenging the Madras High Court’s April 23, 2025, ruling that upheld the ED’s raids on the state-run Tamil Nadu State Marketing Corporation (TASMAC). The raids, conducted between March 6 and 8, 2025, targeted TASMAC’s headquarters in Chennai and various distilleries and bottling units across the state, uncovering alleged financial irregularities exceeding ₹1,000 crore. The state government and TASMAC argue that the ED’s actions were excessive, lacked proper authorization, and violated federal principles by encroaching on state autonomy. This high-stakes legal battle, steeped in allegations of political vendetta, corruption, and procedural overreach, has sparked intense debate, with the opposition Bharatiya Janata Party (BJP) demanding accountability and the ruling Dravida Munnetra Kazhagam (DMK) condemning the raids as a central government ploy to tarnish its image ahead of the 2026 elections.
The Raids: Uncovering a ₹1,000 Crore Scandal
The controversy began when the ED launched extensive searches from March 6 to 8, 2025, at TASMAC’s Chennai headquarters and multiple associated facilities, including distilleries in Chennai and Coimbatore and the residences of key officials like TASMAC Managing Director S. Visakan. The agency’s investigation, prompted by 41 First Information Reports (FIRs) filed by the Tamil Nadu Directorate of Vigilance and Anti-Corruption (DVAC), focused on allegations of systemic corruption within TASMAC, the state’s monopoly liquor retailer. The ED alleged that TASMAC outlets were overcharging customers by ₹10–30 per bottle above the mandated Maximum Retail Price (MRP), generating unaccounted cash. Further, the agency claimed to have uncovered evidence of tender manipulations, fictitious purchases, and collusion between distilleries and TASMAC officials, leading to the misappropriation of state revenue.
The ED’s findings pointed to a sophisticated scheme where distilleries inflated expenses and recorded fake purchases to siphon off funds, with illicit payments allegedly used to secure supply orders. The raids also targeted the residence of Shankar Anand, a close aide of Tamil Nadu Excise and Electricity Minister Senthil Balaji, in Karur, raising suspicions of political targeting. Balaji, out on bail since 2023 in a separate money laundering case involving a cash-for-jobs scam, has been a focal point of the BJP’s criticism, with the opposition alleging that the DMK government is shielding corrupt practices. The ED’s report on March 13, 2025, claimed that the irregularities amounted to over ₹1,000 crore, a figure that AIADMK leader Edappadi K. Palaniswami suggested could be as high as ₹40,000 crore, though this claim remains unsubstantiated.
Tamil Nadu’s Legal Counteroffensive
The Tamil Nadu government and TASMAC swiftly challenged the ED’s actions in the Madras High Court, filing writ petitions on March 20, 2025. The state argued that the ED’s raids were conducted without prior state consent, violating federal principles since law and order is a state subject under India’s Constitution. The petitions also alleged that ED officials harassed TASMAC employees, detaining them for over 60 hours, seizing mobile phones and electronic devices without judicial warrants, and restricting their movement, including preventing women employees from leaving until past midnight. The state demanded that the ED provide copies of the Enforcement Case Information Report (ECIR) and refrain from further coercive actions.
On March 20, a Madras High Court bench comprising Justices MS Ramesh and N. Senthilkumar expressed concern over the ED’s conduct, orally directing the agency to halt further actions pending the next hearing. The court also requested the ED to submit the ECIR and related materials. However, on March 25, the same bench recused itself from the case for undisclosed reasons, complicating the proceedings. On April 8, 2025, the court criticized the Tamil Nadu government for filing a transfer petition in the Supreme Court without informing the High Court, accusing the state of lacking transparency. The state’s transfer plea, filed under Article 139A of the Constitution, sought to move the case to another High Court or the Supreme Court, citing concerns over judicial neutrality and the need to align with similar cases pending before the apex court.
The Madras High Court’s final ruling on April 23 dismissed Tamil Nadu’s and TASMAC’s petitions, upholding the ED’s authority to conduct searches under the Prevention of Money Laundering Act (PMLA), 2002. The court deemed the state’s arguments about employee harassment “inadequate and highly disproportional” compared to the broader public interest in combating money laundering, which it described as a “crime against the people of the nation.” The court further stated that requiring state consent for ED raids was “illogical and bereft of conscience,” emphasizing that searches must be discreet to catch offenders off guard. It also rejected claims of fundamental rights violations, noting that detaining employees during raids is standard procedure to prevent evidence tampering.
The Supreme Court Appeal
Unconvinced by the Madras High Court’s ruling, the Tamil Nadu government escalated the matter to the Supreme Court on May 20, 2025, challenging the April 23 order. The state reiterated its concerns about federalism, arguing that the ED’s actions infringed on Tamil Nadu’s autonomy by bypassing state authorities. It also contested the legality of the ED’s search and seizure operations, particularly the confiscation of electronic devices without consent or warrants and the prolonged detention of employees. The state’s plea, represented by Senior Advocate Vikram Chaudhari, emphasized that similar issues regarding the ED’s powers were already under consideration in other Supreme Court cases, warranting a transfer to ensure judicial consistency.
Earlier, on April 4, 2025, the Tamil Nadu government had approached the Supreme Court to transfer the case from the Madras High Court to another High Court or the apex court, citing potential bias and federalism concerns. A bench led by Chief Justice of India Sanjiv Khanna, alongside Justices Sanjay Kumar and KV Viswanathan, agreed to list the plea but ultimately, on April 8, the state withdrew it after the Supreme Court expressed confidence in the Madras High Court’s ability to handle the matter. The Solicitor General, Tushar Mehta, representing the ED, dismissed the transfer plea as “forum shopping,” arguing that the state was attempting to evade scrutiny. The Supreme Court’s refusal to entertain the transfer plea, coupled with its directive to let the Madras High Court decide, led to the state’s withdrawal, but the May 20 appeal signals Tamil Nadu’s determination to challenge the ED’s authority.
Political Firestorm and Allegations of Vendetta
The TASMAC raids have ignited a political firestorm in Tamil Nadu, with the DMK and BJP trading accusations. Tamil Nadu Excise Minister S. Muthusamy condemned the ED’s actions as a “political vendetta” orchestrated by the central government to discredit the DMK ahead of the 2026 state elections. On May 17, 2025, Muthusamy alleged that the ED violated Supreme Court guidelines during fresh raids on May 16, targeting Visakan’s residence and that of film producer Akash Baskaran, without uncovering incriminating evidence. He accused the ED of coercing officials and claimed that the raids were based on DVAC cases from the previous AIADMK regime, not the current DMK administration, to falsely portray irregularities under DMK rule. Muthusamy vowed that the state would take all legal measures to support its officials.
The BJP, led by state chief K. Annamalai and former Telangana Governor Tamilisai Soundararajan, has capitalized on the scandal, organizing protests on March 17, 2025, to demand transparency and action against corruption. The protests were disrupted when Tamil Nadu police detained BJP leaders, including Annamalai and Soundararajan, preventing them from reaching the protest site. Annamalai accused the DMK of suppressing dissent out of fear, while Soundararajan claimed that 300 party workers were confined to a marriage hall. The BJP’s Vanathi Srinivasan wrote to the Tamil Nadu Assembly Speaker, urging action against the alleged ₹1,000 crore scam, citing manipulated tenders and unaccounted cash transactions.
The DMK has countered by framing the ED’s actions as a central government strategy to target opposition-ruled states. Chief Minister M.K. Stalin, commenting on a separate Supreme Court ruling against Governor R.N. Ravi on May 16, 2025, hinted at broader coordination with other state leaders to counter central overreach. The involvement of Senthil Balaji, a key DMK figure, has further fueled speculation that the raids are politically motivated, especially given his prior legal troubles with the ED.
Broader Implications: Federalism and Governance
The TASMAC case raises critical questions about the balance of power between central agencies and state governments in India’s federal structure. Tamil Nadu’s argument that the ED’s raids infringe on state autonomy reflects a broader tension seen in other opposition-ruled states, where central investigative agencies like the ED and CBI are often accused of being politicized. The state’s emphasis on federalism underscores the constitutional division of powers, where law and order falls under state jurisdiction, while money laundering investigations under the PMLA are a central prerogative.
The case also highlights systemic issues in Tamil Nadu’s liquor trade. TASMAC, which operates 4,829 retail outlets and generates significant revenue for the state, has long been criticized for inefficiencies and corruption. A June 2024 Comptroller and Auditor General (CAG) report revealed that TASMAC outlets failed to pay ₹30.5 crore in differential excise duty due to revised liquor rates, despite charging higher MRPs. The ED’s allegations of overpricing and tender rigging point to deeper structural flaws, which the BJP argues require urgent reform.
Looking Ahead: A Legal and Political Standoff
As the Supreme Court prepares to hear Tamil Nadu’s plea, the outcome will have far-reaching implications for the ED’s authority and the state’s ability to challenge central interventions. The state’s decision to pursue the case in the apex court, despite withdrawing its earlier transfer plea, reflects its resolve to contest what it sees as an overreach by the ED. The ongoing investigation, which includes fresh raids and scrutiny of TASMAC’s financial records, suggests that the ED is building a broader case against alleged corruption in the liquor trade.
For Tamil Nadu’s residents, the controversy underscores the need for transparency and accountability in state-run enterprises like TASMAC. The political slugfest, meanwhile, risks overshadowing these governance issues, with both the DMK and BJP leveraging the scandal for electoral gain. As the legal battle unfolds, the Supreme Court’s ruling will likely set a precedent for how central agencies operate in opposition-ruled states, shaping the delicate balance of India’s federal framework.
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