The Supreme Court on Thursday stayed the Enforcement Directorate’s money laundering investigation against the Tamil Nadu State Marketing Corporation, or Tasmac, stating that the central probe agency was “crossing all limits” and violating the federal structure of the country, reported Live Law.

Tasmac is a government-owned company that has a monopoly over the wholesale and retail sales of alcoholic beverages in Tamil Nadu.

The ED has alleged that Tasmac is at the centre of a Rs 1,000-crore corruption network involving state officials, liquor distilleries and bottling companies. It based its investigation on first information reports filed under the Prevention of Money Laundering Act.

The agency on March 6 searched several locations across Tamil Nadu, including the Tasmac headquarters, in connection with the case.

On Thursday, a bench of Chief Justice BR Gavai and Justice AG Masih was hearing a petition filed by the Dravida Munnetra Kazhagam-led Tamil Nadu government and Tasmac, challenging the Madras High Court’s order in April.

The High Court had dismissed their plea against the Enforcement Directorate’s searches at the liquor corporation’s headquarters.

The Supreme Court questioned how the central agency could initiate a case against a corporation. “You may register cases against individuals…but corporations?” asked the bench. “Your ED is passing all limits!”

Advocate Kapil Sibal, representing the state government, told the court that 41 first information reports were already against liquor outlet operators for alleged corruption between 2014 and 2021. Despite this, the Enforcement Directorate got involved only in 2025 and conducted raids, said Sibal.

Tasmac has alleged that during the searches, Enforcement Directorate officials violated the rights of its employees by seizing their mobile phones, and claimed that some employees were detained for inquiry for 60 hours, Bar and Bench reported. The state-owned company claimed that ED officials did so without producing summons and without explaining the reasons for the searches to the employees.

The Enforcement Directorate has denied the claim that employees were stopped from going back home.

The case will be taken up for further hearing after June 1.

The ED’s allegations

The agency has claimed that during the investigation, it had found manipulation in the tender process, with transport contracts worth Rs 100 crore allegedly awarded to bidders who failed to meet the eligibility criteria.

The ED alleged that leading liquor manufacturers – SNJ, Kals, Accord, SAIFL and Shiva Distillery – along with bottling entities such as Devi Bottles, Crystal Bottles and GLR holding, engaged in a “well-orchestrated scheme of unaccounted cash generation and illicit payments”.

It alleged that distilleries inflated expenses and fabricated purchase orders through bottle-making companies to siphon off more than Rs 1,000 crore in unaccounted cash. The funds were allegedly then used for kickbacks to secure increased supply orders from Tasmac.

The ED also alleged that Tasmac shops routinely overcharged customers by Rs 10 to Rs 30 per bottle.

The ruling Dravida Munnetra Kazhagam party has accused the Centre of misusing investigative agencies for political vendetta. Tamil Nadu Home Secretary Dheeraj Kumar alleged that the ED’s sole intention was to “malign and tarnish the reputation of Tasmac and the state government in the eyes of the public by making baseless allegations and misrepresenting facts, The Indian Express reported.

The Bharatiya Janata Party has demanded a thorough probe into the corruption allegations.