"Alarming": Madras High Court after TASMAC, TN allege ED barged in, violated privacy during raid

The Madras High Court on Thursday expressed disapproval over the manner in which Enforcement Directorate (ED) officials allegedly conducted themselves during the raids at the premises of Tamil Nadu State Marketing Corporation (TASMAC)..A Bench of Justices MS Ramesh and N Senthilkumar particularly objected to the ED officials allegedly restraining TASMAC employees and not conveying the reasons for the search and raids to the TASMAC officials. "Is it not alarming situation? We can understand if you have specific input. But can you keep entire office under your control for hours together. If you have reason to believe, should you not convey it them? That is their grievance, that they do not know (why ED searched and raided the TASMAC premises)," the Bench said.This was after the State-run liquor distribution corporation moved the Court contending that the ED’s actions were excessive and beyond its jurisdiction. The State too has moved a plea in the matter. They have contended that the ED barged into the TASMAC premises and violated the rights of TASMAC employees, including their privacy by seizing their mobile phones."Some of the people have been made to sit for 60 hours! Some of them, from morning to 1 in midnight; (they were) allowed to go home for 6 hours - that too women - and then asked to come back. This process allowed to go on for three days," the TASMAC's counsel alleged."Female employees were allowed to leave at 1 am, provided they come back at 8 or 9 in the morning," Advocate General PS Raman, representing the State government, added."You can't barge into my place under Section 17! You have to show your authorised, because you are not director. You have to show that it is directly connected to four contingencies (under the Prevention of Money Laundering Act). You are taking everything, mobile phones! Is it not (violative) of right to privacy?" the TASMAC's counsel asked.However, Additional Solicitor General (ASG) AR L Sundaresan, representing the ED, strongly refuted these claims."No one was kept captive, everyone was allowed to go and come back," the ED counsel responded."If few officials filed this writ petition, we can understand. But the organisation has filed this. Their primary contention is that you have not permitted the A to Z - right from watchman," the Bench said."It is strongly disputed that they were not allowed to go back. Everybody was allowed to go back," the ASG maintained.The Court eventually asked the ED to file its response to the petitions moved by the State and TASMAC.The Court also orally asked ED not to take any coercive action against TASMAC officials for the time being."ASG takes notice and seeks time to file counter.. The ASG is also called upon to produce FIR relating to the predicate offence as well as ECIR before this court along with any other materials they may rely on," the order said."Till Monday (till the next date of hearing, which was later fixed on Tuesday), don't do anything. Don't make us pass an order," the Court remarked.The matter will be heard again on March 25, Tuesday.The Court also mooted an examination of the CCTV footage at the TASMAC premises to verify the conflicting claims."We will also have the CCTV footages with timestamp," the Bench orally remarked during the hearing. .Is it not alarming situation? Can you keep entire office under your control for hours together?Madras High Court.On March 6, 2025, the ED carried out raid at TASMAC headquarters in Chennai, as well as multiple distilleries and bottling units across Tamil Nadu. The agency alleged financial irregularities amounting to over ₹1,000 crore, citing issues such as tender manipulations, unaccounted cash transactions and overpricing at retail outlets.According to ED, TASMAC retail outlets were allegedly charging customers ₹10-30 more per liquor bottle than the mandated maximum retail price (MRP), suggesting a systematic overpricing strategy.Following the raids, the ED claimed to have uncovered substantial evidence of collusion between distilleries and TASMAC officials, allegedly leading to the misappropriation of State revenue. These revelations triggered political tensions, with the opposition Bharatiya Janata Party (BJP) staging protests, demanding transparency and action against corruption.According to the ED, distilleries reportedly collaborated with bottling companies to artificially inflate expenses and record fictitious purchases. This scheme allegedly facilitated the diversion of substantial unaccounted funds, which were then used to bribe TASMAC officials to secure favorable supply orders.The ED also claimed that there were irregularities in the allocation of transport and bar license tenders.The ruling Dravida Munnetra Kazhagam (DMK) party has criticised the ED’s involvement, alleging that the Central government was using its investigative agencies to further political vendetta. Meanwhile, the BJP has dismissed these claims, asserting that the corruption allegations must be thoroughly investigated to ensure accountability..TASMAC then moved the Court seeking directions to the ED not to harass its employees under the guise of investigation.The agency also sought a declaration from the Court that ED's action of investigating the offence within the territorial limits of the State is violative of federalism.According to TASMAC, ED can carry out such an investigation only on the request of State agencies..During the hearing today, Advocate General (AG) PS Raman, appearing for the State, slammed the ED for its actions.He said that the case is not limited to TASMAC bit involves a larger issue of territorial jurisdiction of ED, a central government agency, and separation of powers between the Central government and States."My case is not (just) about TASMAC. We have sought declaration that power of ED within territorial limits of State without consent of State is violative of separation of powers etc ... Can they come and take over TASMAC premises?" the AG argued. The counsel for the TASMAC too echoed similar concerns. He asked the Court whether the ED could simply walk into any premises without authorisation."We happen to be a Public Sector Undertaking. Prevention of Money Laundering Act has stipulated where there is an inquiry, some standards are to be adopted. You can't enter the premises unless the officer is the director or authorised by director. He has to show that authorisation," it was contended.Such acts by ED amounts to total violation of privacy of individuals, the counsel argued."They (ED) are entering into any premises, picking up (various articles), even picking up any call (on mobile phones). Total invasion of right of privacy of people who may not even have remotest connection to the offence being investigated," he said.The TASMAC's also counsel referred to Section 17 (1) of the PMLA, which deals with search and seizure by ED."Search and seizure is to be conducted only when there is reason to believe there is money laundering offence committed. Law requires reasons to be recorded in writing, this should be communicated. These reasons are obviously meant to be conveyed, otherwise there is no point in recording them," he said.It was further argued that the ED cannot seize each and everything under the sun during raids. Rather, there should be some connection between what is seized with the alleged offence of money laundering."You can seize records falling under four contingencies. If I have a book of Mahatma Gandhi (you can't just pick that up). (It's) not everything and under the sun (that you can seize). It has to have direct relation, how is it proceeds of crime of money laundering?" the counsel demanded.He also strongly objected to the manner in which ED questioned certain officials for long hours. The senior counsel further referred to a recent decision of the Bombay High Court in which the ED was slammed for violating the rights of people called in for questioning."Bombay High Court has recently dealt with this (where people were detained for hours together). High Court came heavily down on this. It said, right to blink, right to sleep are part of fundamental rights. ED itself issued circulars and warned not to do this," the senior counsel highlighted..Some of the people have been made to sit for 60 hours! Some of them, from morning to 1 am in midnight.TASMAC's counsel.He emphasised that this case will have a major role in the application and evolution of PMLA law."There are specific standards in PMLA. What is happening in entire country, what is coming before your lordships... This case is going to be precedent for evolution of this law. PMLA has been an evolution, it is work in progress," it was submitted.While there can be no bar on a legitimate probe, there cannot be a violation of privacy and other rights in the guise of investigation, the TASMAC's counsel said. He added that there should be a Lakshman Rekha on the ED's actions.ASG Sundaresan however opposed the allegations made against the ED."No one was kept captive, everyone was allowed to go and come back. On 6th, 7th, 8th .. no statements recorded at night as alleged. We dispute that,"the ASG said."If one single person said, you can dispute. But when the organisation files the writ petition?" the Court replied. It added that no one was disputing the ED's powers, but only questioning the manner in which it was allegedly exercised. .[Read Live Coverage]