The Supreme Court on Thursday stayed a money laundering probe against state-run liquor retailer, Tamil Nadu State Marketing Corporation (TASMAC), in an alleged Rs 1,000 crore scam.

Commenting on the raids, the apex court also cracked the whip of the Enforcement Directorate, saying, “ED is violating the Constitution. ED is really crossing all the limits,” adding that ED’s probe against TASMAC will not proceed in the meantime.

A bench led by CJI BR Gavai said, "You may register cases against individuals... but corporations? When there are FIRs against officers why is ED coming here? Where is the predicate offence?"

The law officer opposed the order, saying the issue involved corruption over Rs 1,000 crore and the ED is not crossing the limits “at least in this case.”

The bench took note of the submissions of senior advocates -- Kapil Sibal and Amit Nand Tiwari -- that the state itself has lodged over 40 FIRs in cases related to allotment of liquor shop licences from 2014.

Speaking to reporters soon after the court order, the DMK organisation secretary alleged that after Prime Minister Narendra Modi came to power in 2014, the ED has been used against non-BJP ruled states.

"In Tamil Nadu, the MK Stalin-led DMK government that assumed office in 2021 has been gaining popularity ever since and the chief minister's stature has been rising. Unable to digest this and the DMK alliance's electoral triumph after 2021, the ED was used to malign the DMK and the BJP leaders used to make all kinds of charges," he said.

"The SC staying the ED probe against TASMAC is a big blow to such things and is in deference to the sentiments of the people of Tamil Nadu...we welcome the (SC) order. The union government should stop misusing ED at least after this," he said.

The story so far...

The DMK-run state government approached the Supreme Court challenging ED's raids on TASMAC premises. The state contested the April 23 ruling by the Madras High Court, which dismissed petitions filed by both the government and TASMAC and allowed the ED to continue its investigation under the Prevention of Money Laundering Act (PMLA).

The arguments of TASMAC and the state government over the harassment of its officers, who were detained for hours during the searches, were observed to be "inadequate and highly disproportional" by the high court "when compared to the rights of millions of people of the country".

Back in March, the central agency claimed it found "multiple irregularities" in the operations of TASMAC, which has a monopoly over liqour trade in the state. The ED also said it found "unaccounted" cash worth Rs 1,000 crore.

The agency said it had found "incriminating" data related to corporate postings, and transport and bar licence tenders, as well as indent orders 'favouring' a few distilleries.

There was also "evidence", the ED said of fraudulent pricing, that is, surcharges of Rs 10 to Rs 30 per bottle sold by TASMAC outlets imposed with the "involvement" of TASMAC officials.

The raids were repeated last week where as many as ten premises were searched under the Prevention of Money Laundering Act.