Madras High Court Quashes ED's Money Laundering Case Against Former Minister Ponmudi, Notes Acquittal In Predicate Offence

The Madras High Court on Tuesday (October 13), quashed a case against former Minister K Ponmudi under the Prevention of Money Laundering Act pending before the Special Court in Chennai. [2026 LiveLaw (Mad) 501]

The bench of Chief Justice SA Dharmadhikari and Justice G Arul Murugan noted that the predicate offence, based on which the Enforcement Directorate had registered the case under the PMLA, had ended in the acquittal of Ponmudi and others. Thus, following the judgment of the Supreme Court in Vijay Madanlal Choudhary, the bench noted that the enforcement proceedings against Ponmudi and others could not continue. 

"Admittedly, the trial court, by judgment dated April 2, 2026, acquitted all accused facing trial in the case. Since the predicate offence against all the accused ended in acquittal as per the decision of the Supreme Court in Vijay Madanlal Choudhary v. Union of India, the proceedings against the petitioners cannot continue," the bench said.

Since the court was informed that the State was considering an appeal against the order of acquittal, the bench gave liberty to the ED to proceed as per law, in case of any development in the predicate offence.

"However, it is open for the respondent to take action as per law, in view of the subsequent action in the predicate case," the court added.

Ponmudi had approached the court stating that the ED had registered the enforcement case based on the FIR registered by the District Crime Branch, Villupuram. The predicate offence was registered against Ponmudi, his son, and others for offences under Sections 379, 406, 420, 120-B IPC, Section 21(1) of Mines & Minerals (Development & Regulation) Act, 36 (A) MMDR Rules.

The prosecution allegation was that while serving as the Minister of Mines and Minerals during 2007-2011, Ponmudi had entered into criminal conspiracy with his son and others and allocated licenses to quarry red earth to his son, his friend, and his brother-in-law, and that the license holders had quarried red earth over and above the permitted quantities without paying seigniorage fees to the government, thus causing wrongful loss of Rs 28,37,65,600 to the State.

Since the act was a scheduled offence, the ED registered an ECIR under Section 44(1)(b) and 45 of PMLA punishable under Section 4 of the PMLA, read with Section 70 and 8(5) of the PMLA. The case was pending at the stage of framing of charge.

Ponmudi argued that on April 2, 2026, the Sessions Court had acquitted him of all charges. The court noted that there was no nexus between the grant of the lease and alleged illegal gain or conspiracy. The court had noted that there was no procedural irregularity or statutory violation while granting the quarry license. The court had also noted that the prosecution had failed to prove entrustment, dominion over property and dishonest misappropriation.

Ponmudi thus submitted that as per settled proposition of law, once an accused was discharged/quashed/acquitted from the predicate offence, then the prosecution under the PMLA would no longer exist and was liable to be quashed. He thus argued that any incidental action by the ED would also become infructuous.

Thus, in light of the acquittal in the predicate offence, Ponmudi had sought to quash the PMLA case, which was registered based on the predicate offence. As an interim measure, Ponmudi has also sought to stay the further proceedings in connection with the PMLA case.

It may be noted that in 2023, the High Court had suo motu registered another disproportionate asset case against Ponmudi and the same is still pending consideration in court. While that case relates to the alleged offence committed by Ponmudi while serving as Minister for Transport and Highways in the DMK regime from 1996 to 2001, the present case deals with alleged offence during his term as Mines and Minerals minister between 2007-2011.