A timely reprimand from Supreme Court

The Supreme Court criticized the ED for overreach in Tasmac's investigation, warning against misuse of power and emphasizing procedural safeguards.

The Supreme Court’s sharp remarks directed at the Enforcement Directorate (ED) while suspending its investigation into alleged financial irregularities at the Tamil Nadu State Marketing Corporation (Tasmac), the Tamil Nadu government’s liquor distribution body, should serve as a wake-up call for the federal agency. On Thursday, an apex court bench comprising Chief Justice of India BR Gavai and Justice Augustine George Masih expressed serious concern over what it described as ED’s overreach and questioned the legality of the agency’s actions. The bench pulled up the agency for initiating coercive search and seizure operations at Tasmac’s headquarters in Chennai between March 6 and 8, in the absence of a predicate offence under the Prevention of Money Laundering Act (PMLA), especially when several first information reports pertaining to alleged corruption, tender manipulation, and overpricing of liquor bottles were registered by the state government itself. The bench asked how the agency entered a space that the state was already investigating, and said “ED is crossing all limits”.  

The CJI-led bench pulled up the central agency for initiating coercive search and seizure operations at Tasmac’s headquarters in Chennai between March 6 and 8 (ANI)

Such rebuke — coming from the CJI-led bench, no less — underlines how the agency’s actions crossed multiple red lines and potentially violated federal guardrails. Unfortunately, this is not the first time. Earlier this month, the top court observed that it has “become a pattern” for the central agency to level allegations without proof, while hearing the bail petition of an accused in a money laundering case linked to allegations of corruption in liquor sale in Chhattisgarh under the earlier Congress government. In February, the apex court pulled up ED for using PMLA to keep an accused in jail and questioned if the provision was “being misused”. In January, the apex court called out ED’s “high-handedness” and “inhuman conduct” for interrogating a former lawmaker for nearly 15 hours. Last year, while granting bail to former Tamil Nadu minister V Senthil Balaji, the court also sounded a clear warning about the abuse of PMLA provisions by ED, disapproving of how the law was being used to keep individuals jailed without trial for an unreasonably long time. 

The court has also underlined the importance of procedural safeguards, holding in 2023 that it is the constitutional right of a person to be informed of the grounds of arrest and that this right can be effectively realised only when the grounds are supplied in a written form. The verdict further held that ED cannot arrest anyone under PMLA for failing to respond to the agency’s questions, adding it is not legitimate for the agency to expect an admission of guilt from a person called for interrogation. 

Clearly, this is part of a pattern — that after the 2022 Vijay Madanlal Choudhury vs Union of India verdict that upheld contentious PMLA provisions, the top court has progressively placed guardrails around the stringent law and ED’s considerable powers. This has played out against the backdrop of a political fight between opposition parties, which blames the BJP for using investigative agencies for political vendetta, and the Union government, which accuses its political rivals of corruption.  

Since the early years of independence, corruption has been an endemic menace that has hobbled national progress. As the country’s premier financial crimes agency, ED has a responsibility to be tough and uncompromising, and investigate grubby deals without fear or favour. It is also expected that in high-stakes cases, there will be some setbacks in court. But today, the perception of political bias threatens to stain its efforts. If ED probes are seen as partisan, it is good neither for the country nor the agency. The agency would do well to remember that it works for the citizens of India and imbibe greater transparency to dispel the fog of bias. It is both a legal and reputational issue.