Introduction:

In the case titled Tamil Nadu State Marketing Corporation Ltd (TASMAC) v. Directorate of Enforcement, the Madras High Court, comprising Justices SM Subramaniam and K Rajasekar, reserved its judgment on the petitions filed by the Tamil Nadu government and TASMAC challenging the Enforcement Directorate’s (ED) search operations at TASMAC’s headquarters. The court allowed Senior Advocate Vikas Singh, representing TASMAC, to submit a rejoinder on the following Monday before finalising the order.

Arguments:

Petitioners’ Arguments:

TASMAC and the Tamil Nadu government contended that the ED’s search operations conducted between March 6 and 8, 2025, were illegal and politically motivated. They alleged that the ED officers harassed senior TASMAC officials, including the Managing Director and a senior female officer, during the raids. The petitioners argued that the searches violated the principles of federalism and were an overreach of the ED’s authority under the Prevention of Money Laundering Act (PMLA). They also claimed that the ED failed to follow due process, including not recording reasons to believe as mandated under Section 17(1) of the PMLA.

Respondent’s Arguments:

Representing the ED, Additional Solicitor General SV Raju refuted the allegations of harassment, stating that the claims were an afterthought designed to create grounds for the present litigation. He emphasised that the panchnama (official record of the search) was signed by high-ranking TASMAC officials without any objections or endorsements of coercion. Raju argued that if any harassment had occurred, the officials would have raised concerns at the time of the search. He also pointed out that the petitioners bypassed the statutory framework by approaching the court directly instead of the adjudicating authority, as prescribed under Section 17(2) of the PMLA. Raju maintained that the ED had reasonable grounds to search and that the delay in forwarding information to the adjudicating authority was justified with a cogent explanation.

Court’s Observation:

After hearing the submissions, the bench reserved its judgment but allowed TASMAC’s counsel to submit a rejoinder on the following Monday. The court acknowledged the need to prevent prolonging the proceedings and emphasized the importance of adhering to the legal framework governing such investigations.

Conclusion:

The Madras High Court’s decision to reserve judgment in the TASMAC case underscores the complexities involved in balancing the enforcement of anti-money laundering laws with the rights of state entities. The court’s forthcoming judgment will likely address the legality of the ED’s actions and the procedural aspects of the search operations.