Days after TASMAC raids, High Court pauses ED action, asks: ‘Is it not alarming to not allow staff to leave?’

The case stems from a large-scale investigation by the ED into alleged corruption and financial irregularities within TASMAC. Between March 6 and March 8, ED officials raided 20 locations, including the corporation’s headquarters in Chennai.

The agency later issued a report claiming that its probe was triggered by cases registered under the Prevention of Corruption (PC) Act and suggested that more than Rs 1,000 crore in unaccounted money may have circulated through TASMAC due to irregularities.

The court questioned the ED about the alleged incident and instructed the state advocate general to submit CCTV footage from TASMAC offices to substantiate the claims.

“We do not dispute the powers of the agency, but the manner in which such powers are exercised,” the judges said. Citing a recent Bombay High Court ruling, they said that searches should be conducted during the daytime rather than at midnight. “Is it not alarming to go into a premises and not allow the entire staff to leave?” the bench asked.

The TASMAC petition also said that the ED had not issued summons or search warrants prior to the raids, making the operation unlawful. The petition seeking a stay on ED probe also demanded the court to restrain ED from using data and information gathered during the searches as the searches were “illegal”. The court has now directed the ED to file a response to these allegations by Monday.

According to the ED’s report, TASMAC was overcharging for liquor, distilleries were bribing officials, and procurement volumes were underreported. The document also alleged that bribes were paid for employee transfers and bar licenses and that senior TASMAC officials had direct ties to liquor companies. Additionally, it claimed that the corporation paid Rs 100 crore annually to transport corporations in an irregular financial arrangement.

TASMAC, backed by the Tamil Nadu government, has fiercely opposed the ED’s investigation. The corporation has filed multiple petitions seeking legal intervention, arguing that the ED’s actions violated federal principles by encroaching upon a state-run entity without prior approval from the Tamil Nadu government. One of the petitions sought an order prohibiting the ED from using any documents or data obtained in the searches, while another called for a formal declaration that the raids and seizures were illegal.

In an affidavit submitted to the court, Tamil Nadu Home Secretary Dheeraj Kumar accused the ED of conducting the operation in an arbitrary and high-handed manner. He argued that the ED officials failed to provide a copy of their search authorisation, forcing TASMAC officials to sign statements under duress. The affidavit also alleged that multiple employees were detained unlawfully and deprived of basic necessities for nearly three days, creating a coercive environment.

The ED’s sole intention “is to malign and tarnish the reputation of TASMAC and the state government in the eyes of the public by making baseless allegations and misrepresenting facts,” the home secretary said.

During the hearing, the HC made pointed inquiries about the ED’s actions and sought clarity on whether officials had indeed confined TASMAC employees and whether the searches were conducted in compliance with procedural norms. When Additional Solicitor General A R L Sundaresan, representing the ED, denied allegations of unlawful detention, the court requested supporting evidence.

The controversy has also taken a political turn, with Tamil Nadu’s ruling party accusing the ED of overreach. Electricity, Prohibition, and Excise Minister V Senthilbalaji, whose portfolio includes TASMAC, has earlier said that the ED’s actions were politically motivated. “This is an attempt to create a narrative of corruption where none exists,” he said. “The agency’s complaint is based on ulterior motives rather than evidence.”

Senthilbalaji also refuted the ED’s claims regarding TASMAC’s financial dealings and added that employee transfers and tender processes were conducted transparently in TASMAC. He denied allegations that Rs 1,000 crore in unaccounted money was circulating through the liquor trade, calling the ED’s assertions “baseless”.