Chennai: In a sharp rebuke to the Enforcement Directorate (ED), the Supreme Court on Wednesday stayed the agency’s money laundering investigation against Tamil Nadu State Marketing Corporation (TASMAC) in connection with a row over liquor shop licences.

The apex court issued notices to the ED on pleas filed by the Tamil Nadu government and TASMAC, which challenged the legality of the raids and the initiation of the probe. The court observed that the ED appeared to be “crossing all limits” and questioned how the agency could justify raiding a state-run body like TASMAC.

“This is a matter of federal concern. How can ED raid a state corporation like TASMAC?” the bench remarked, stressing that the central agency's actions could amount to a breach of federalism.

The Tamil Nadu government has maintained that liquor licensing and regulation fall squarely within the state's jurisdiction and accused the ED of politically motivated interference.

The matter will be heard further after the ED files its response. The court's interim stay marks a significant setback for the agency's ongoing operations in the state.