Hearing petitions by TASMAC and the Tamil Nadu government, a Bench led by CJI B. R. Gavai extended the stay on the Enforcement Directorate’s probe into alleged liquor retail irregularities at the State-run TASMAC on 14 October 2025. The court asked whether the ED’s steps amount to an “encroachment” on State powers and what this means for India’s federal structure. The case will be listed after the Court rules on review petitions challenging its 2022 PMLA judgment in Vijay Madanlal.
The Story
The ED says it is probing only the money-laundering component linked to alleged TASMAC irregularities, relying on predicate FIRs registered by State agencies. The State counters that its Vigilance Department has already filed dozens of FIRs and that the ED failed to share information as required under Section 66(2) of the PMLA. The Bench asked why the local police could not conduct the investigation and what would “happen to the federal structure” if a Central agency steps in despite active State probes.
The court’s caution is not new. In May 2025, it stayed the ED’s TASMAC probe and remarked that the agency appeared to be “crossing all limits,” before today’s extension “until further orders.”
A key fault line is transparency around the ECIR. In Vijay Madanlal (2022), the Supreme Court held that ED inquiries are distinct from police investigations and that ECIRs are internal documents that need not be routinely shared with the accused. Those very holdings are under review.
Why the Case Matters
The Tamil Nadu State Marketing Corporation (TASMAC) runs all liquor retail shops in the State.
The ED alleged large-scale irregularities and kickbacks in procurement and licensing.
The State Vigilance Department, however, had already filed 47 FIRs on similar issues between 2014 and 2021.
TASMAC and the State government argue that:
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The ED’s entry violates State police powers under the State List (List II) of the Constitution.
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Section 66(2) of the PMLA obliges the ED to share information with State agencies — which was ignored.
The ED contends that:
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It probes only the money-laundering component, not the original corruption offences.
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Its jurisdiction arises from the very FIRs registered by the State itself (called “predicate offences”).
Explainer: Constitutional vs Statutory vs Executive (Non-Constitutional) Bodies
Constitutional Bodies
Constitutional bodies are institutions explicitly created by the Constitution of India. Their powers, structure, and functions are directly drawn from constitutional provisions, which makes them independent of ordinary legislative changes.
They are designed to ensure checks and balances within the democratic framework, safeguard fundamental rights, and uphold constitutional values.
Examples include:
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Election Commission of India (Articles 324–329): Conducts free and fair elections to Parliament, State Legislatures, and the offices of the President and Vice-President.
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Union Public Service Commission (Article 315): Conducts examinations for recruitment to the civil services and advises the government on personnel matters.
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Comptroller and Auditor General of India (Article 148): Audits all receipts and expenditures of the Union and the States, ensuring accountability of public funds.
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Finance Commission (Article 280): Recommends the distribution of financial resources between the Centre and the States.
Because these bodies derive their authority from the Constitution itself, they cannot be abolished or altered without a constitutional amendment.
Statutory Bodies
Statutory bodies are created by an Act of Parliament or a State Legislature. Their powers, duties, and structure are clearly defined by the statute that establishes them. These institutions are typically formed to regulate specific sectors, enforce laws, or protect rights and interests in areas requiring continuous oversight.
Examples include:
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Securities and Exchange Board of India (SEBI): Established under the SEBI Act, 1992 to regulate and protect investors in the securities market.
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National Human Rights Commission (NHRC): Created under the Protection of Human Rights Act, 1993 to investigate human rights violations.
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Competition Commission of India (CCI): Formed under the Competition Act, 2002 to ensure fair trade and prevent monopolistic practices.
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Central Pollution Control Board (CPCB): Constituted under the Water (Prevention and Control of Pollution) Act, 1974 to oversee pollution control efforts.
These bodies enjoy operational autonomy but remain accountable to the Parliament or respective State Legislatures through periodic reports.
Executive or Non-Constitutional, Non-Statutory Bodies
Executive bodies are established by an executive order or resolution of the Government rather than a law or the Constitution. They are often created for administrative convenience, to implement schemes, or to advise on specific policy matters.
While they may later receive statutory backing, their creation initially stems from executive power under Article 73 (for the Union) or Article 162 (for the States).
Examples include:
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NITI Aayog: Formed by executive resolution in 2015, replacing the Planning Commission.
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National Development Council (NDC): Created by a Cabinet decision in 1952 (now defunct).
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National Disaster Management Authority (NDMA): Initially set up by executive order before being given statutory status under the Disaster Management Act, 2005.
| Type | How Created | Examples | Core Feature |
|---|---|---|---|
| Constitutional Bodies | Directly by the Constitution | Election Commission, UPSC, CAG, Finance Commission | Independent; can be changed only via constitutional amendment |
| Statutory Bodies | Through Acts of Parliament/State Legislature | SEBI, NHRC, CCI, CPCB | Powers and duties defined by statute |
| Executive / Non-Constitutional Bodies | By Government resolution or executive order | NITI Aayog, NDMA (initially), NDC (defunct) | Created for administrative convenience; may later get legal backing |
Where Does the Enforcement Directorate (ED) Fit In?
The Enforcement Directorate (ED) is an executive agency functioning under the Department of Revenue, Ministry of Finance. It is not a constitutional body and was not created by a separate statute of its own.
Instead, it draws its powers from multiple legislations that it enforces, primarily:
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Prevention of Money Laundering Act, 2002 (PMLA)
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Foreign Exchange Management Act, 1999 (FEMA)
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Fugitive Economic Offenders Act, 2018 (FEOA)
ED’s Powers and Functions under the PMLA
Provision Power Purpose Section 3 Defines money-laundering offence Concealment or projection of “proceeds of crime” as legitimate Section 5 Provisional attachment of property Prevent disposal of assets linked to crime Sections 17–18 Search and seizure powers Collect evidence, documents, valuables Section 19 Arrest powers Authorised officers can arrest with recorded reasons
The ED’s main functions are:
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Investigating offences of money laundering and foreign exchange violations.
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Tracing, attaching, and confiscating assets derived from criminal proceeds.
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Prosecuting offenders under PMLA before Special Courts.
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Assisting foreign authorities in international financial crime investigations.
Thus, while it acts under statutory powers, its institutional existence and administrative control remain executive in nature, making it an executive enforcement agency rather than a statutory commission or constitutional body.
ED: Powers and Duties at a Glance
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Investigative Remit: The ED investigates offences involving “proceeds of crime” under Section 3 of the PMLA. It can attach properties suspected to be linked with money laundering under Section 5 and conduct search and seizure operations under Sections 17 and 18.
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Summons and Statements: Under Section 50 of the PMLA, the ED has powers similar to a civil court — to summon individuals, require production of documents, and record statements under oath.
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Prosecution: Once investigations are complete, the ED files a Prosecution Complaint before the designated PMLA Special Court, seeking conviction and confiscation of attached assets.
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Information-Sharing: Section 66(2) allows the ED to share relevant information with other enforcement or regulatory authorities such as CBI, SEBI, Income Tax Department, and State Police when overlapping investigations exist.
Recent ED Controversies and Debates
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Political Targeting Allegations: Opposition parties have accused the ED of being used to target rival political leaders. A large number of ongoing cases involve opposition-ruled States, leading to recurring debates on misuse of central agencies.
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Conviction-Rate Debate: The government highlights a high conviction rate in cases decided under PMLA. Critics, however, point out that only a small fraction of total registered cases reach trial, and prolonged investigations themselves can have political or reputational consequences.
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Centre–State Flashpoints: Tamil Nadu (TASMAC case), Kerala (Life Mission probe), and West Bengal (teacher recruitment and coal cases) are among States that have challenged the ED’s jurisdiction, calling it an infringement on federal autonomy.
Implications
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Federalism Test: The Supreme Court’s ruling in the TASMAC matter may redefine how far a central agency like the ED can intervene in matters where State police or vigilance wings are already investigating.
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Due-Process Guardrails: Post-Vijay Madanlal and Pankaj Bansal, the judiciary has sought clearer safeguards — including providing written grounds of arrest and ensuring judicial oversight of property attachment — to uphold fairness in PMLA actions.
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Operational Coordination: Strengthening coordination under Section 66(2) could create a more balanced framework for cooperation between the ED and State police, preventing parallel or conflicting investigations.
The Editorial Take
The TASMAC hearing goes beyond one liquor scam.
It revives India’s enduring question — can the Centre’s pursuit of financial integrity coexist with the States’ constitutional right to maintain law and order?
In that answer lies the real test of cooperative federalism.
