ED Search under PMLA Not Harassment: Madras HC Allows PMLA Proceedings Against TASMAC to Continue [Read Order]

The High Court of Madras, held that the Enforcement Directorate’s search under the Prevention of Money Laundering Act (PMLA) was lawful and did not amount to harassment, allowing proceedings against TASMAC to continue.

Tamil Nadu State Marketing Corporation Limited, (TASMAC),petitioner-assessee,is a government-owned company incorporated in May 1983. It was granted exclusive rights to wholesale supply of Indian Made Foreign Liquor (IMFL) across Tamil Nadu and also operated around 5,000 retail outlets. Distribution was handled through 43 depots across the State.

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The writ petitions were filed after the ED conducted searches at TASMAC’s head office and related locations from March 6 to March 8, 2025. The searches were carried out under Section 17 of the PMLA.

The ED, in its counter, stated that several FIRs had been registered by the Tamil Nadu Vigilance and Anti-Corruption Department. These FIRs alleged that TASMAC shops were overcharging customers above the MRP, accepting payments in cash and by card. Unaccounted cash was also reportedly found during joint inspections.

Senior officials, including District and Regional Managers, were accused of collecting bribes to permit overcharging, avoid inspections, and influence staff transfers. Some FIRs also alleged that brewery representatives paid bribes to TASMAC officials to favour their products. The FIRs were registered under Sections 7, 12, and 13 of the Prevention of Corruption Act, which are scheduled offences under the PMLA.

Justice S.M Subramaniam and Justice K.Rajasekar held that TASMAC officials, as public servants, were duty-bound to cooperate with the ED during the search. It noted that valid authorisation was produced as per Rule 3(4) of the PMLA Rules, and the Panchnama showed the search was peaceful, without coercion or damage, and witnessed by independent parties.

It found no merit in claims of forced detention or harassment, as no official filed complaints, and affidavits submitted later were vague and lacked supporting evidence. The search was conducted under Section 17 of PMLA, and officials were provided food, rest, and allowed movement. Some staff remained voluntarily for coordination.

The Court rejected allegations of fundamental rights violations and said that only affected individuals, not the State, should have approached the Court. It criticised the petition as an attempt to obstruct the investigation.

Claims about women being detained were found baseless and contradicted by records. The Court observed that women employees were not forcibly held and were allowed to leave safely. It cautioned against using gender to resist lawful action and affirmed the duty of both the State and ED to ensure women's safety.

Seizure of mobile phones was held valid and necessary for evidence collection. The Court found no breach of privacy or free speech, and confirmed proper documentation, including forensic procedures and hash values. It accepted ED’s justification citing risk of tampering, and noted that retention approval would follow due process.

The Court clarified that TASMAC, as a government-owned company, fell within PMLA’s scope, and those in charge could be held liable under Section 70. It rejected the claim that only State-notified officers could be involved and confirmed ED’s powers under Sections 50 and 54.

It also ruled that an FIR was not required before a search under the 2019 PMLA amendment and referred to the Vijay Madanlal case. FIRs had already been filed and forwarded to the Magistrate.

The Court concluded that the petitions lacked merit and were based on exaggerated claims. It upheld the legality of the ED's actions, stating that such searches were crucial to criminal investigations under the PMLA and did not amount to harassment or rights violations.

The writ petitions were dismissed.

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