Supreme Court stays arrest of Senthil Balaji in TASMAC corruption case

The Supreme Court on Friday stayed the arrest of former Tamil Nadu Minister and Dravida Munnetra Kazhagam (DMK) MLA V Senthil Balaji in a corruption case concerning alleged irregularities in the functioning of the Tamil Nadu State Marketing Corporation (TASMAC).

A Bench of Chief Justice of India (CJI) Surya Kant and Justice Joymalya Bagchi passed the interim order while hearing Balaji's appeal against the Madras High Court's refusal to grant him anticipatory bail in the case.

The top court also directed Balaji to cooperate with the ongoing investigation, deposit his passport, and ensure that no witnesses are influenced till further orders.

The Directorate of Vigilance and Anti-Corruption (DVAC) registered against Balaji and six others concerns alleged irregularities in liquor procurement, transport contracts, bar licences and other administrative decisions within TASMAC between 2021 and 2025.

Balaji had served as Tamil Nadu’s Minister for Prohibition and Excise during part of this period.

Following the registration of the First Information Report (FIR), DVAC officials conducted searches at more than 40 locations across Tamil Nadu, including Balaji’s residence in Karur and premises linked to his former aides and other accused persons.

Apart from Balaji, the case names former TASMAC Managing Director S Visakan, former senior regional managers T Ramadurai Murugan and R Panneerselvam, Balaji’s former personal assistant Bhaskar, alleged middleman Rathesh Raj Shanmugavel and S Karthik.

According to the DVAC, bar licence tenders were allegedly manipulated through cartelisation, proxy ownership and the use of consecutively numbered demand drafts.

The agency has alleged that Rathesh Raj exercised undue influence over TASMAC’s operations, including approval of liquor brands, transfers of officials and allotment of bar licences. Visakan allegedly acted on Rathesh Raj’s directions, which were said to have originated from Balaji.

The agency has further alleged that certain distilleries generated unaccounted cash by inflating invoices relating to used liquor bottles. The money was allegedly paid as kickbacks to TASMAC officials in return for favourable supply orders.

The FIR also contains allegations that TASMAC outlets collected amounts above the maximum retail price. According to the agency, customers were charged between ₹10 and ₹100 above the prescribed price for several liquor brands and as much as ₹500 extra for foreign liquor.

Justice GK Ilanthiraiyan of the Madras High Court rejected Balaji's anticipatory bail in the matter on July 30 prompting him to approach the top court.

When the matter was heard this morning, Justice V Mohana recused from hearing the case. Following this, it was heard by CJI Kant and Justice Bagchi this afternoon.

Senior Advocate Kapil Sibal represented Balaji. He argued that the State's Additional Secretary has now changed his statement in the case following a regime change in Tamil Nadu. Following the State Assembly elections held earlier this year, the Tamilaga Vettri Kazhagam (TVK) formed the government in Tamil Nadu.

Senior Advocate Guru Krishnakumar represented the Tamil Nadu government and opposed any grant of relief to Balaji.

"There is a risk of the evidence going up. It is not just about the records. In a serious case of corruption of this nature, why anticipatory bail at all? See how strange it is. The State (when it was led by DMK) files an application saying the ED should not take any action. They now want to take advantage of their own wrong by saying the State should not take any action," he contended.

Guru Krishnakumar added that Balaji has a criminal history and he is facing six serious criminal cases. The present case involves a huge scam running into hundreds of crores, he said.

"Hold an investigation. Hold an independent investigation. If he is guilty, he will face the music," remarked CJI Kant.

"If, during the investigation, it becomes imperative for us to take him into custody?" asked Krishnakumar.

"Then come to us. Of course, he will not abscond. As you are saying, he was a Minister earlier. He will not jump the gun. We will ensure that he participates in the investigation. We will ensure that he does not interfere with the investigation. If there is any breach or any perception of breach, please come to us," Justice Bagchi replied.

The Court then issued notice to the State and proceeded to stay Balaji's arrest pending its consideration of his anticipatory bail plea.

Advocate Vrinda Bhandari also appeared for the Tamil Nadu government.