Madras High Court dismisses TASMAC plea against search-and-seizure operations by ED
The Madras High Court on Wednesday dismissed the three writ petitions filed by the state government and the Tamil Nadu State Marketing Corporation (TASMAC) to declare the searches and seizures by the Enforcement Directorate (ED) in its offices from March 6 to 8, 2025.
The Court also permitted the Directorate of Enforcement to proceed with all further actions under the PMLA (Prevention of Money Laundering Act).
A division bench comprising Justice S.M. Subramaniam and K. Rajasekar concluded that the search and seizure conducted by the ED was legal and within its jurisdiction under Section 17 of the Prevention of Money Laundering Act (PMLA). The court said that there was no evidence of harassment or violation of fundamental rights during the search operations, as alleged by the petitioners.
The court said that prior consent from the state government is not required before conducting searches under PMLA, as the Act extends to the whole of India. Arguments invoking federalism were also rejected by the court. “Federalism cannot be applied to obstruct the investigation of crimes affecting national economic growth,” the court said.
The division bench held that there were sufficient reasons for conducting the searches at the TASMAC headquarters, on the basis of several First Information Reports (FIRs) for the predicate offence of corruption registered by the Directorate of Vigilance and Anti-Corruption (DVAC).
The concept of requiring an FIR before conducting searches was also rejected by the court, saying that “this requirement was removed by a 2019 amendment to PMLA”, which was upheld in the Vijay Madanlal case.
The Division bench also said that the courts cannot go into the allegations of political motives behind the act of ED as the agency was allowed to probe the money laundering charges. “Economic offences are against the interests of citizens and the citizens are the best judge to decide whether there was any political motive behind these actions,” the court said.
The TASMAC had filed two writ petitions before the Madras High Court on March 19, soon after the ED conducted searches in the TASMAC headquarters and several places linked to minister V. Senthil Balaji. The petition sought a direction to the ED not to harass the TASMAC employees in the name of investigation. The Tamil Nadu government and TASMAC had jointly filed one more writ petition, which sought a declaration that the conduct of such searches by the ED, without the consent of the state government, “was in violation of the principle of federalism.”
The three writ petitions first came up for hearing before a division bench comprising Justices M.S. Ramesh and N. Senthilkumar on March 20. The bench asked “how an omnibus direction can be issued.” While the state government agreed to amend its prayer and urged the court to order notices in TASMAC’s writ petition, both the justices recused themselves from hearing the case. The petitions were heard by the alternative bench comprising Subramaniam and Rajasekar.
With the ED getting a favourable order from the court to proceed with the investigation in the case against TASMAC, sources say that the investigation agency could go across the board to conduct enquiries. Already it had questioned the TASMAC managing director and other employees. The agency had also said that the scam by way of the sale of liquor runs to the tune of ₹1,000 crore.
India