The Supreme Court on Thursday rebuked the Enforcement Directorate for "crossing all limits" and violating the concept of federal governance, referring to raids - in March and last week - of state-run liquor shops in Tamil Nadu. An irked court directed the federal agency to stand down for now.
The ED"s raids were over allegations of corruption in the transport of liquor, grant of bar licences, and unaccounted cash generated by siphoning funds in collusion with bottle-making firms and distilleries.
A bench led by Chief Justice BR Gavai told the ED, "You may register cases against individuals... but corporations? Your ED is passing all limits! Issue notice, returnable after vacation."
"Meanwhile, stay granted of further proceedings..." the Chief Justice said.
The court's direction has been welcomed by the ruling DMK; ex-Rajya Sabha MP RS Bharathi told news agency PTI the order was a 'blow to the BJP's efforts to malign the state government'.
The Supreme Court had been approached by the DMK-run state government and a state-run marketing corporation granted a monopoly over wholesale and retail liqour trade in the state. They sought to challenge an April 23 order by the Madras High Court green-lighting ED action in this matter.
However, the ED's knuckles were rapped after senior advocate Kapil Sibal told the court the agency had seized and cloned multiple mobile phones during raids on March 14 and May 16.
Back in March the agency claimed it found "multiple irregularities" in the operations of TASMAC, i.e., the Tamil Nadu State Marketing Corporation Limited.
The ED also said it found "unaccounted" cash worth Rs 1,000 crore.
Specifically, it said it had found "incriminating" data related to corporate postings, and transport and bar licence tenders, as well as indent orders 'favouring' a few distilleries.
There was also "evidence", the ED said of fraudulent pricing, i.e., surcharges of Rs 10 to Rs 30 per bottle sold by TASMAC outlets imposed with the "involvement" of TASMAC officials.
The raids were repeated last week.
READ | Probe Agency Raids In Tamil Nadu Over Alleged Liquor Scam
Ten premises were searched under the Prevention of Money Laundering Act, or PMLA, and the ED claimed to have found 'manipulated data' indicating cheating during award of tenders.
After this Tamil Nadu Excise Minister S Muthusamy launched a counterattack, accusing the ED of harassing state government officials. He accused the agency of a 'political vendetta' and said searches of TASMAC's offices, in Chennai and elsewhere, had 'ulterior political motives'.
He pointed out the ED had found no proof was found to substantiate the alleged irregularities, and said Chief Minister MK Stalin's government firmly supports all state officials at all times.
READ | Tamil Nadu Backs State Officials Amid Raids In Liquor Scam Case
The 'political vendetta' reference was to claims by the opposition the BJP uses federal agencies to target rival political leaders and parties, particularly before a major election.
The alleged TASMAC liqour scam has erupted just as the ruling DMK and the main opposition, the AIADMK (and its on-again, off-again ally, the BJP) prep for next year's Assembly poll.
In the uproar over the allegations, the BJP's K Annamalai, the party's former state unit chief, had fired a fierce attack on Tamil Nadu minister V Senthil Balaji, labelling him the "kingpin".
READ | "Kingpin Of Scams": BJP Jabs Tamil Minister Over Liquor Scam Claims
"I have my sources. I believe (the corruption) is over Rs 1,000 crore. Senthil Balaji is involved in every single scam. He is the kingpin. Supreme Court has questioned (him)..." he declared, referring to the court's comments about the minister in a separate money laundering case.
Mr Balaji has denied all charges against him, accusing the ED of making claims without proof.
"Everything is transparent as far as TASMAC is concerned. As far as purchase is concerned... it would be done by calculating the average of the last three months of purchase brand. By taking the average of the last three years and the last month's purchase, TASMAC will give a purchase order. So, we have not shown any discount to anyone on giving purchase orders," he explained.
With input from agencies
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