The Madras High Court has issued a temporary directive restraining the Enforcement Directorate (ED) from proceeding with its investigation into the Tamil Nadu State Marketing Corporation (TASMAC) until the next hearing. This decision follows petitions filed by the Tamil Nadu government and TASMAC challenging the ED's recent raids on the state-run liquor retailer's premises.
The ED conducted searches at TASMAC's headquarters in Chennai and other locations, alleging financial irregularities amounting to approximately ₹1,000 crore. These purported irregularities included manipulation in tender processes, unaccounted cash transactions, and overpricing of liquor at retail outlets. The agency claimed to have uncovered evidence of collusion between distilleries and TASMAC officials, leading to the diversion of unaccounted funds and alleged kickbacks.
In response, TASMAC and the Tamil Nadu government filed petitions asserting that the ED's actions violated principles of federalism and the rights of state employees. They contended that the ED conducted searches without the state's consent, infringing upon the state's autonomy. Furthermore, they alleged that the ED's operations were excessive and beyond its jurisdiction, citing instances where employees, including women, were detained for extended periods and subjected to invasive searches without proper legal procedures.
During the court proceedings, Advocate General P.S. Raman, representing the state government, argued that the ED's searches were conducted without adhering to the requisite legal framework. He emphasized that the agency failed to provide copies of the Enforcement Case Information Report (ECIR) and did not disclose the predicate offences justifying the raids. Senior counsel Vikram Choudhry, appearing for TASMAC, highlighted that the ED's actions amounted to an invasion of privacy and were conducted without proper authorization, violating Section 17(1) of the Prevention of Money Laundering Act (PMLA), which mandates that searches be based on recorded reasons to believe an offence has been committed.
The court, acknowledging the concerns raised, directed the ED to refrain from taking any coercive action against TASMAC officials and to produce relevant documents, including the FIR and ECIR, along with any other materials relied upon, by the stipulated date. The bench also noted that the relief sought by the petitioners was broad and advised the state to amend its plea accordingly.
This interim order by the Madras High Court underscores the delicate balance between the enforcement of central laws and the autonomy of state institutions. It also brings to the forefront the importance of adhering to due process and respecting individual rights during investigations. As the case progresses, the court's forthcoming decisions will likely have significant implications for the jurisdictional boundaries between central agencies and state authorities, as well as for the procedural safeguards afforded to public sector employees.
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