Tasmac 'scam': ED tells HC it lacks power to seal locked premises during search

The Enforcement Directorate (ED) has conceded before the Madras High Court that it does not have the authority to seal premises found locked during search and seizure operations under the Prevention of Money Laundering Act (PMLA), 2002.

Also read: Tasmac 'scam' probe: Madras High Court orders ED to respond

The admission came during a hearing of writ petitions filed by film producer Akash Baskaran and associate Vikram Ravindran, challenging the ED’s actions in a money laundering probe linked to Tamil Nadu State Marketing Corporation Limited (TASMAC), prompting the court to question the legal basis for sealing properties and restricting access.

Court raises concerns

A Division Bench comprising Justices MS Ramesh and V Lakshminarayanan raised concerns about the ED’s practice of sealing properties, questioning the legal basis for such actions. The court’s observation came after the ED allegedly sealed Baskaran’s office at Semmenchery and a rented residential flat in Poes Garden, Chennai, on May 16, when they found the premises locked during an attempted search. The petitioners argued that the ED’s actions were illegal and sought a court order to declare the sealing invalid and to de-seal the properties.

Also read: Who dumped WhatsApp chat printouts near Tasmac MD’s house?

During the proceedings, Additional Solicitor General (ASG) SV Raju, representing the ED, conceded that the agency lacked the power to seal premises under the PMLA if they were locked during a search. He clarified that notices stuck on the doors of the premises, instructing that they not be opened without ED permission, would be withdrawn. The notices had been placed to ensure cooperation with the ongoing investigation, but the court questioned the authority behind preventing individuals from accessing their own properties.

Justice Ramesh remarked that the PMLA is an “evolving legislation” that often raises new legal questions, but emphasised that it is the ED officials who appear to be “expanding their powers” beyond what the law permits. Justice Lakshminarayanan questioned the ED’s Special Public Prosecutor, N Ramesh, on the legal provision allowing the agency to bar individuals from entering their homes or offices.

The case stems from an ED investigation into an alleged TASMAC money laundering scam. The petitioners, Baskaran and Ravindran, are not currently named as accused in the case but were targeted for searches based on “credible information” suggesting they possessed materials relevant to the probe. On May 16, the ED conducted searches at Baskaran’s Alwarpet residence, seizing three iPhones, a laptop, two external hard disks, a hard drive, and lease agreements for properties in Alwarpet and Poes Garden. Baskaran has urged the court to declare the search illegal and return the seized items, asserting no connection to the TASMAC case.

ED told to return seized materials

The court granted the ED until Wednesday (June 18) to produce documents justifying the link between the petitioners and the TASMAC investigation and to clarify the agency’s authority to seal premises. The ruling reinforces the judiciary’s scrutiny of the ED’s powers under PMLA, emphasising that actions like sealing properties must strictly adhere to legal provisions.

The court criticised the ED for discrepancies in its submissions, noting a “divorce” between the agency’s claim that 41 FIRs formed the basis for its “reason to believe” under Section 17 of the PMLA and the documents provided, which failed to justify the link to the petitioners.

Additional Solicitor General Raju informed the Bench that the ED had been instructed to withdraw the notices placed on the sealed premises and to return all seized materials, including three iPhones, a laptop, two external hard disks, a hard drive, and lease agreements taken from Baskaran’s Alwarpet residence. The Bench noted the submission and reserved orders on the interim application.