Tamil Nadu Court Slams ED for Encroaching on State’s Investigation Rights in Liquor Firm Case

The Supreme Court on Tuesday raised strong concerns over the Enforcement Directorate’s (ED) probe into Tamil Nadu’s state-run liquor monopoly, TASMAC, questioning.

Whether the central agency was overstepping its jurisdiction and infringing on state powers. The Bench, led by Chief Justice of India (CJI), emphasized that federal principles must be respected and warned against undermining the state’s exclusive right to maintain law and order.

Court Questions ED’s Jurisdiction

The CJI asked pointedly, “What happens to the federal structure? The law and order is within whose domain? Are you not encroaching the state’s right to investigate?”, signaling judicial unease over the central agency’s expanding role in state matters.

The case revolves around ED raids at TASMAC headquarters, challenged by both the Tamil Nadu government and the corporation. Senior Advocate Kapil Sibal, representing TASMAC, argued that the agency had no jurisdiction over a government company. He questioned the seizure of employee phones, noting that they had no connection to the alleged offence.

Concerns Over Privacy and Political Timing

Senior Advocate Mukul Rohatgi highlighted privacy issues, questioning the legality of forcibly extracting data from personal phones. Meanwhile, Sibal also raised the issue of potential political misuse, noting that the raids coincided with the upcoming Tamil Nadu 2026 elections. The ED denied politicization, claiming it was tracing proceeds of crime in a suspected corruption case.

Supreme Court Intervenes

The Bench expressed skepticism over ED’s justification and noted that state police were already investigating. “Is the police there not probing? Whenever you have a doubt the state isn’t investigating properly, will you interfere?” the CJI asked.

The court confirmed its interim stay on the ED’s investigation, stating that the matter will proceed only after the Supreme Court delivers its review judgment in the Vijay Madanlal Choudhary case, which addresses the scope of ED powers under the Prevention of Money Laundering Act (PMLA).

Implications for Federalism

The Supreme Court has consistently cautioned against central agencies encroaching on domains reserved for states. The final verdict in the TASMAC case, alongside the broader PMLA review, could have significant implications for federal balance and investigative overreach, setting a precedent on the limits of ED powers in state matters.

This case underscores the ongoing tension between central investigative agencies and state authority, highlighting the judiciary’s role in maintaining constitutional boundaries while ensuring accountability and transparency in probes.