Tasmac ‘scam’ case: Madras HC directs ED not to proceed further

CHENNAI:The Madras High Court on Thursday restrained the Directorate of Enforcement (ED) from proceeding further in the alleged money laundering case against state-run liquor retailer Tamil Nadu State Marketing Corporation (Tasmac).

A division bench of Justice MS Ramesh and Justice N Senthilkumar directed the ED to file a counter with the details of predicate offences to the petitions moved by Tasmac and the State government, challenging the search and inquiry conducted alleging money laundering offence. After conducting searches at Tasmac earlier this month, the ED had recently claimed irregularities to the tune of about Rs 1,000 crore.

The bench posted the matter to March 25 for further submission and made it clear that the ED should not proceed further in the case until then.

Advocate General (AG) PS Raman on behalf of the State submitted that the ED was continuously violating the federalism policy and separation of powers principle. “One and a half years back, the ED conducted search operations at various sand quarrying sites and also issued summons to district collectors without the consent of the State government. Now that is recurring in the Tasmac search. Also, no communication was made to the State regarding the search,” said the AG.

There is CCTV footage to prove that officers of Tasmac from the lowest to the top level including women were detained for three days until midnight for the purpose of search, the AG added.

He also referred to Section 54 of the Prevention of Money Laundering Act (PMLA) and submitted that the State is obliged to assist the ED in the proceedings of any money laundering case, but they acted without our knowledge, he added.

The bench then intervened and wondered, “Since the ED has the power to conduct search, how can the State restrict it?” Further, the bench asked the AG to amend the plea limited to the case of Tasmac, as the State's plea was blanket in nature.

‘ED search violated rights’

On behalf of Tasmac, senior counsel Vikram Chaudhary submitted that it is a case of blatant misuse of the PMLA by the ED, adding that the agency also detained several officers of Tasmac and interrogated them until midnight, which violates private persons’ rights.

He relied upon Section 17 of the PMLA and contended that the ED cannot barge into a public organisation without authorisation and communication in writing. Section 17(1)(f) allows the ED to examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under the PMLA Act. 

However, Additional Solicitor General (ASG) ARL Sundaresan, on behalf of the ED, objected to all the allegations levelled against the enforcement agency. “The ED has issued warrant to officers of Tasmac and obtained acknowledgement before the search operation, further, the ED doesn’t have to give communication in writing regarding the search,” he said.

The ASG also objected to the allegation of the State government that women employees were detained till midnight, adding that no statements were recorded in the night as the State had alleged.

The bench then enquired with the ASG whether forcibly entering a public organisation and maintaining control there for three days was not an alarming issue. It instructed ED to file a counter with the details of the predicate offence and adjourned the matter.