Explained: Is ED targeting DMK, acting beyond its jurisdiction in probe into alleged ₹1000-crore TASMAC scam?

In a major setback to the Enforcement Directorate (ED), the Madras High Court on Wednesday questioned the agency’s authority under the Prevention of Money Laundering Act (PMLA) to seal premises that were locked at the time of a search and reserved orders on a batch of petitions filed by Tamil film producer Akash Bhaskaran and businessman Vikram Ravindran.

The ED had conducted a search and seizure operation on May 16 at multiple premises linked to Akash and Vikram, in connection with the alleged Rs 1000-crore scam in the Tamil Nadu State Marketing Corporation (TASMAC). The ED had sealed and locked the premises of Akash and Vikram, as they were not available for investigation during the day of the searches. In the first week of June, a batch of three writ petitions were filed by Akash and Vikram in Madras High Court accusing the ED officials of “sealing” their office premises at Semmencherry and also their residences, when they were not present.

Hearing the petitions on June 16, a division bench of the Madras High Court comprising Justices M.S. Ramesh and V. Lakshminarayanan questioned ED’s authority to seal a residential or business premises if it was found to be locked when the officials go for a search and seizure operation. “Courts often remark that the PMLA (Prevention of Money Laundering Act) is an evolving legislation. But we find that it is actually the Directorate of Enforcement officials who are evolving day by day by expanding their powers.”

During the hearing, Additional Solicitor General S.V. Raju, appearing for the ED, acknowledged that the agency did not have the legal power to seal a locked premise under Section 17 of the PMLA. “The ED does not have power to seal. The lordship is right in that aspect,” Raju said in the court.

It all began on March 6, when the Central agency searched the office premises of TASMAC’s Managing Director (MD) S. Visakan and many others. The searches resumed in May with the ED expanding its investigation, which led to a few private individuals and state government officials. The case is all about corruption to the tune of ₹1000 crore, according to the investigating agency. TASMAC is a state-run liquor corporation that operates about 7,000 liquor outlets in Tamil Nadu. The ED is investigating alleged financial irregularities in its functioning.

The curious case of TASMAC and the allegations 

The Directorate of Vigilance and Anti-Corruption (DVAC), Tamil Nadu’s anti-corruption probe agency, had registered 41 FIRs under the Prevention of Corruption Act, 1988, concerning various allegations of corruption in TASMAC operations, between 2017 and 2022. These FIRs have been taken as the basis for investigation by the ED. 

According to ED’s technical circulars, whose contents the investigating agency had reportedly declined to share with the court, only cases involving proceeds of crime or disproportionate assets above ₹1 crore or ₹10 lakhs in isolated quid-pro-quo cases can be taken as the basis for a money laundering probe or for registering an ECIR. But, in the TASMAC case, all the 41 FIRs clubbed together amount close to only ₹35 lakh. There is not a single FIR where the amount involved exceeds ₹8.3 lakh and in fact, most cases involve amounts less than ₹1 lakh. The notional loss is only around ₹60 lakh across all FIRs. 

As per the list of FIRs submitted by the ED to the court, accessed by THE WEEK, 34 of the 41 FIRs were registered between 2017 and 2021, during the erstwhile AIADMK regime, and seven were registered between May 2021 and December 2022. And, of the 34 FIRs registered between 2017 and 2021, as per ED’s submission in the Madras High Court, 27 were registered based on surprise checks by the DVAC officials, while three cases were registered on TASMAC shop personnel and two each on land owners and bar owners for various offences including collection of bribes and selling at a higher price. Among the seven cases registered between 2021 and 2022, four cases were on district-level and lower rank officers. Further, as of date, 37 of the 41 FIRs have been quashed for lack of evidence.

As per the documents accessed by THE WEEK, the ED went ahead and registered an ECIR in December 2023 based on FIRs registered way back in 2014 onwards. In its very first press statement, three days after the searches between March 6 and 8 in the TASMAC office premises and the residences of its MD Visagan, ED had alleged that the scam ran to ₹1000 crore.

The state government, apparently, contended that the figure arrived by the investigating agency was “built on shaky and dishonest grounds” in its affidavit in the Supreme Court. The apex court stayed the ED probe into TASMAC, criticising the agency for overstepping its authority and violating the federal structure.

Though the Supreme Court had already issued a stay, questioning how a criminal offence could be attributed to a Corporation, particularly a state-owned entity, the investigation is likely to take a turn towards the individuals who, according to the agency, are allegedly involved in money laundering. The ED had conducted searches at the premises connected to Ratheesh, who is reportedly linked to the power centres of the ruling Dravida Munnetra Kazhagam, film producer Akash Bhaskaran and his friend Vikram Ravindran, who is serving as the director at Akash’s Creative Studios Private Limited.

Akash’s production company is producing some of the upcoming big-budget films in Tamil. Their next film, ‘Parasakthi’, slated for release in January 2026 with Sivakarthikeyan in the lead, is rumoured to be a political drama talking about Dravidian ideology and the anti-Hindi agitation days. 

Coerced testimonies during searches and the three affidavits 

While the petitions filed by Akash and Ravindran are still pending in the court, three other individuals – K. Devakumar, S. Durairaj and P.R. Rajesh Kumar – in separate affidavits, a copy of which is available with THE WEEK, have claimed that the agency had subjected them to investigation even when they do have any links to the alleged ₹1000-crore liquor scam. Devakumar and Rajesh Kumar, claim themselves to be individual businessmen while Durairaj is the driver of film producer Akash. The three allege that they were subjected to intimidation, procedural violations and coercive interrogation.

Devakumar in his affidavit says that the agency, during the search operations at his residences on May 16, “was trying to extract a sworn statement” from him and the officers hurled “abuses” at him. He also said that he couldn't handle the undue pressure. “Therefore, I had no choice but to agree to whatever they wrote in my statement and I meekly surrendered to their arm-twisting tactics and signed the statement.”

Devakumar has also stated that he was lodged inside the jail room at ED’s zonal office for investigation during which “the officers informed me that unless I agree to their expected answers and sign the statement, I cannot go home and further threatened me that in PMLA cases, even ministers like Senthil Balaji and Aravind Kejriwal cannot get bail.”

Durairaj, the car driver of Akash, in his affidavit, stated that he was coerced to sign the statement written by the ED officials, even when he said that he didn’t know English. Durairaj also said that he was subjected to physical harassment. “One of the officers slapped me on my face and asked me where Akash was?” Durairaj says in his affidavit submitted in the court. 

In a separate petition, Rajesh Kumar, who claims to be the director at Global Thermal Control Systems Pvt Ltd, says that he was “threatened with arrest and imprisonment.” According to his affidavit, the officers from ED entered his residential premises at Adyar and asked for Venkatsamy or Mukesh Kanniyappan. Stating that the PMLA proceedings against him are unjustified and illegal, Rajesh Kumar submits that the officers forced him “to sign on some paper typed that had been prepared solely at their discretion. The document stated that I had conducted a hawala transaction of ₹15 lakh. I vehemently objected to the same and clarified that those were pertaining to mere loan transactions between me and my friend Mr Muthukumar of Trichy.” He has also said in the affidavit that there is no predicate offence for initiating PMLA proceedings against him. “I reiterate that there is no FIR registered against me under any penal law, and in the absence of a predicate offence, the initiation of PMLA proceedings against me is wholly unjustified and illegal.”

These three affidavits raise serious questions whether the agency had tried to implicate certain individuals with an intention to build-up on the case and link it politically. On the other, sources close to TASMAC MD Visakan say that the ED officials questioned him only on the high-profile political links. Visakan took charge as the MD of TASMAC only in 2023, many months after the registration of the DVAC FIRs, which has been taken as the basis for the investigation by the probe agency. Officials at TASMAC say that ED’s questioning in the name of investigation is an “unjust persecution of the government officials.”

Links to breweries and bottling units

On the other hand, the probe agency, soon after the searches on May 19, issued a statement saying that the searches revealed a large-scale financial fraud involving distillery companies — SNJ, Kals, Accord, SAIFL, and Shiva Distillery, apart from bottling entities such as Devi Bottles, Crystal Bottles, and GLR Holding, which exposed “a well-orchestrated scheme of unaccounted- for cash generation and illicit payments”.

The statement further said that the distilleries inflated expenses and fabricated bogus purchases, particularly through bottle-making companies, to siphon off over ₹1000 crore in unaccounted cash. “These funds were then used for kickbacks to secure increased supply orders from TASMAC,” the statement claimed. 

However, sources say that the ED came into the picture only after SNJ distilleries and KALS were brought under the Income Tax scanner, way back in 2019. SNJ Distilleries, a company owned by S.N. Jayamurugan, who was a close aide of DMK patriarch M. Karunanidhi, was raided by tax sleuths in August 2019. Four months later, it donated ₹1.05 crore to the Bharatiya Janata Party. In the next financial year, in March 2021, it contributed ₹6 crore to the BJP. It was searched by tax sleuths in April 2021 again, just before the Tamil Nadu Assembly elections. In 2022-23, SNJ gave ₹5 crore to the Prudent Electoral Trust. The Prudent Trust donates majority of its money to the BJP, as per the exclusive documents accessed by THE WEEK. 

KALS Distilleries owner S. Rajasekaran who joined the BJP, contested in the general election from Puducherry’s Karaikal constituency in 2021. “Income Tax Department had found ₹700 crore unaccounted income in these two Tamil Nadu distilleries and after that, they had paid party fund. In such a case, can we say that the proceeds of the crime were given to the BJP?” asks a senior DMK leader. However, the unaccounted income flagged by the Income Tax department has been contested by a few of the breweries and distilleries in the court, while some companies accepted it and paid up.

However, sources in the DMK-led state government and TASMAC say that they have been following the policies and the rules laid during the erstwhile AIADMK regime for procurement and sales. “The bulk of the cases fall under the previous government. But the officials are being hounded. No politician of the previous dispensation has been questioned or investigated. The breweries and private individuals are raided now for FIRs registered from 2014 to 2022. The political parties cry foul saying there is a scam and the bureaucracy is put to hardship,” said a senior officer on conditions of anonymity.