New Delhi: The Supreme Court on Tuesday (October 14) has extended a stay on the Enforcement Directorate's (ED) investigation into money laundering cases against the Tamil Nadu State Marketing Corporation (TASMAC) in connection with an alleged liquor retail scam. The court's decision comes after it orally questioned whether the ED's probe encroached upon the state's authority to investigate offenses.

A bench led by Chief Justice B.R. Gavai expressed concerns about federal structure and the ED's powers, asking if the agency's investigation would amount to an encroachment on the state's right to investigate.

“What happens to the federal structure? Would this not amount to encroachment upon the State’s right to investigate? Can’t the local police look into the matter?” Chief Justice Gavai asked Additional Solicitor-General (ASG) S.V. Raju, as per a report published in The Hindu.

The apex bench comprising of Chief Justice Gavai and Justice K. Vinod Chandran has listed the case for further hearing after it pronounces its judgment on review petitions challenging its 2022 ruling in the Vijay Madanlal Choudhary case.

Previously, the Supreme Court had ruled in 2022 that the Enforcement Case Information Report (ECIR) doesn't necessarily need to be shared with the accused. TASMAC, the State’s public sector liquor retailer, claims it was denied access to the ECIR, while the ED argues it's an internal document with no legal right to access.

Notably, this is the second time in six months the Supreme Court has questioned the ED's actions in this case, with the Chief Justice previously remarking that the agency was "crossing all limits," The Hindu reported.

The ED's probe into TASMAC was initiated based on alleged irregularities in the liquor retail business, including kickbacks and manipulation in procurement. However, the Tamil Nadu government has denied these allegations, accusing the BJP-led Centre of misusing central agencies to target political rivals. The dispute pertains to the ED’s raids and seizures conducted at TASMAC's headquarters.

During the hearing, senior advocate Kapil Sibal, representing TASMAC, argued that the ED's actions were an affront to federalism and that the agency had failed to share information with state authorities conducting parallel investigations. “How can you raid government offices? What happens to the federal structure of this country?” Sibal was quoted as saying by The Hindu.

Raju countered saying that it was investigating only the money-laundering component and had uncovered incriminating material during its probe. Responding to the ASG, Chief Justice Gavai noted, “Law and order must operate within its own domain... what happens to the federal structure otherwise?”

“In the last six years, I have seen many cases of the ED. But I do not want to say something, else it will again be reported (in the media),” the CJI said, while refraining from making any adverse comments on the ED.

Raju, however, suggested that the media rarely reports on the agency's favour. “Anything in our favour is hardly reported, and that is my grievance.”

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