Tamil Nadu: Madras High Court restrains ED from conducting searches in TASMAC case

The ED had earlier said it has found 'multiple irregularities' in the operations of TASMAC

The Madras High Court on Thursday directed the Enforcement Directorate (ED) not to proceed further pursuant to its searches at state-run liquor retailer TASMAC's headquarters in the city recently.

While giving an oral direction to ED in this connection, the HC also directed the central agency to produce copies of FIR and Enforcement Case Information Report (ECIR) along with any other materials which it relied upon against the Tamil Nadu State Marketing Corporation.

After conducting searches at TASMAC earlier this month, ED had recently claimed irregularities to the tune of about Rs 1000 crore.

A division bench comprising Justices M S Ramesh and N Senthilkumar posted to March 25, further hearing of the petitions filed by TASMAC and the Tamil Nadu government against the searches conducted by ED.

In its petition, TASMAC sought a direction to the ED not to harass its employees under the guise of investigation. It also sought a declaration that the ED's action of investigating the offence within the territorial limits of the state was violative of federalism. When the case came up for hearing, Advocate General P S Raman, appearing for the state government submitted the ED can conduct searches with the consent of the State. They cannot do it without getting consent from the state government.

When the bench orally expressed its dissatisfaction over the prayer, the AG sought time to file an application to amend the prayer. Senior counsel Vikram Choudhry, appearing for TASMAC submitted the raids by the central agency ought to be transparent. They cannot enter into any premises, conduct search and seize digital devices. This was a total invasion of privacy, he added.

Referring to section 17 (1) of Prevention of Money Laundering Act (PMLA), he said search and seizure was to be conducted only when there was reason to believe money laundering offence was committed. Law requires reason to be recorded in writing and it should be communicated to the officers, he added. He said during the raids nobody was allowed to go out including women. They were made to wait for hours.

Additional solicitor general A R L Sunderesan denied the allegations. Raman said he will produce the CCTV footage with timings to show that the employees were not allowed to go out.

ASG Sunderesan said a money laundering offence was committed and therefore search was conducted at TASMAC office. In its brief order, the bench said ASG sought time to file a counter affidavit. ASG was called upon to produce copies of FIR and ECIR along with any other material, which they rely upon by March 24.

The ED had earlier said it has found "multiple irregularities" in the operations of TASMAC, including "manipulation" in the tender processes and "unaccounted" cash transactions worth Rs 1,000 crore through distillery companies.

The federal agency had claimed it got 'evidence' suggesting these corrupt practices after it raided the employees, corporate offices of distilleries and plants of TASMAC on March 6. There were 'kickbacks' involved, it had claimed.