On Thursday, the Supreme Court intervened by suspending the Enforcement Directorate's (ED) investigation into the Tamil Nadu State Marketing Corporation, commonly known as Tasmac. The court criticized the central agency for allegedly exceeding its authority and infringing upon the federal structure of the nation.

Tasmac, a state-owned entity, holds a monopoly over the wholesale and retail distribution of alcoholic beverages in Tamil Nadu.

The ED has accused Tasmac of being at the heart of a corruption scheme worth Rs 1,000 crore, involving state officials, liquor distilleries, and bottling firms. This investigation was initiated based on first information reports filed under the Prevention of Money Laundering Act.

On March 6, the agency conducted searches at various locations throughout Tamil Nadu, including Tasmac's headquarters, as part of its inquiry.

A bench comprising Chief Justice BR Gavai and Justice AG Masih heard a petition from the Tamil Nadu government, led by the Dravida Munnetra Kazhagam party, and Tasmac, contesting a prior ruling by the Madras High Court.

The High Court had previously dismissed their request to challenge the ED's searches at Tasmac's headquarters.

The Supreme Court raised concerns about the ED's authority to initiate a case against a corporation, questioning, “You may register cases against individuals…but corporations?” The bench remarked, “Your ED is passing all limits!”

Kapil Sibal, representing the state government, informed the court that 41 first information reports had already been filed against liquor outlet operators for alleged corruption from 2014 to 2021. He noted that the ED only became involved in 2025 and conducted raids thereafter.

Mukul Rohatgi, representing Tasmac, argued that the rights of Tasmac employees had been infringed upon, stating that all phones had been wiped clean, raising concerns about privacy.

Tasmac claimed that during the ED's searches, officials violated employee rights by seizing their mobile devices and detaining some for up to 60 hours without proper summons or explanations.

The ED has refuted claims that employees were prevented from returning home.

The case is scheduled for further hearings after June 1.

The ED has asserted that its investigation uncovered irregularities in the tender process, alleging that transport contracts valued at Rs 100 crore were awarded to bidders who did not meet the necessary criteria.

According to the ED, prominent liquor manufacturers, including SNJ, Kals, Accord, SAIFL, and Shiva Distillery, along with bottling companies like Devi Bottles, Crystal Bottles, and GLR Holding, participated in a coordinated scheme to generate unaccounted cash and make illicit payments.

The agency claims that distilleries inflated costs and created false purchase orders through bottle-making firms to misappropriate over Rs 1,000 crore in unaccounted funds, which were allegedly used for kickbacks to secure increased supply orders from Tasmac.

Furthermore, the ED alleged that Tasmac outlets routinely overcharged customers by Rs 10 to Rs 30 per bottle.

The ruling Dravida Munnetra Kazhagam party has accused the central government of misusing investigative agencies for political purposes. Tamil Nadu Home Secretary Dheeraj Kumar stated that the ED's primary goal was to damage Tasmac's and the state government's reputation through unfounded allegations and misrepresentation of facts.

The Bharatiya Janata Party has called for a comprehensive investigation into the corruption claims.