SC asks ED to 'stay hand in all manner' in liquor scam linked case in Chhattisgarh

New Delhi: The Supreme Court on Tuesday asked the Enforcement Directorate (ED) to "stay their hand in all manner" in a money laundering case linked to the alleged Rs 2,000 crore liquor scam in Chhattisgarh.

A bench of justices S K Kaul and Sudhanshu Dhulia passed the order while hearing the pleas, including the one filed by two Chhattisgarh-based persons, challenging the proceedings initiated against them by the anti-money laundering agency.

"Apart from the order already passed of no coercive action, the concerned respondent authorities (ED) must stay their hand in all manner," the bench said.

While hearing the matter on May 16, the top court had told the ED not to create an "atmosphere of fear", after the Chhattisgarh government had alleged that the probe agency was "running amok" and was trying to implicate Chief Minister Bhupesh Baghel in a money laundering case linked to liquor scam in the state.

During the hearing on Tuesday, senior advocate Kapil Sibal, who appeared for the Chhattisgarh government, alleged that the officers of the state were harassed by the probe agency and they were being told to give details of their properties, which were being attached.

The bench observed that in one of the petitions, it had earlier directed that no coercive steps be taken against the petitioners till the next date of hearing - July 18.

Senior advocate Abhishek Singhvi, appearing for some of the petitioners, said the court should stay the ongoing investigation by the ED.

"How can they investigate without a predicate offence," he said.

"Hold your hands in the meantime…. We are not taking a final view," the bench orally told Additional Solicitor General S V Raju, who was appearing for ED.

The Chhattisgarh government had earlier alleged in the apex court that several state excise department officials have complained that the ED was threatening them and their family members with arrest.

The state has filed an application seeking impleadment in one of the petitions, claiming that 52 officers of the excise department have complained in writing alleging "mental and physical torture" by ED officers during the course of the investigation.

The ED had earlier told a court about an alleged massive scam in liquor trade in Chhattisgarh perpetrated by a syndicate comprising high-level state government officials, private persons and political executives that generated tainted money more than Rs 2,000 crore in 2019-22.

In its application, the state has claimed, "Several officers have made serious allegations that not only were they threatened but the members of the family of the officers were also physically abused and threatened to sign blank pages or pre-typed documents.

"The officers in the state are being threatened by the officers of the Directorate of Enforcement with the threat of their arrest or arrest of their family members and being implicated in cases if they do not make and sign the statement as desired by the officers and to implicate the Chief Minister and other senior officers of the state administration," the application said.

The state alleged the investigation being carried out by the ED is wholly without jurisdiction and illegal in as much as there is no underlying predicate offence.

Earlier, Chhattisgarh had become the first state to move the top court challenging the constitutional validity of certain provisions of the Prevention of Money Laundering Act (PMLA) alleging that central investigating agencies are being misused to "intimidate, harass and disturb" the normal functioning of the non-BJP state government.

The Bhupesh Baghel-led Congress government has filed an original suit through advocate Sumeer Sodhi challenging the law under Article 131 of the Constitution which empowers a state to move the Supreme Court directly in matters of dispute with the Centre or any other state.

The money laundering case stems from a 2022 income tax department charge sheet filed in a court in Delhi.

The federal agency had alleged that bribes were collected from distillers in the state on a per liquor case basis procured from the CSMCL (state body for purchase and sale of liquor) and country liquor was being sold off-the-books.

According to the ED, bribes were taken from distillers to allow them to form a cartel and have a fixed market share.