The Madras High Court recently remarked that the Enforcement Directorate should use its powers and resources for cases involving public money, public interest, corruption and scams of national consequences, instead of disputes between private individuals. [2026 LiveLaw (Mad) 489]
Justice N Ramesh commented that the stringent provisions of the Prevention of Money Laundering Act are not meant to be used in property dispute between private individuals, for which the ordinary criminal and civil law already provides relief.
“The resources of the Directorate are not unlimited…It is for the Directorate to decide where its investigations should go, and nothing in this order is a direction to close or abandon this one. I would only commend to the Directorate that, in choosing the matters in which it brings its powers of arrest to bear, it gives primacy to cases involving public money, public interest, corruption and scams of national consequence. The stringent provisions of the Act are not meant to be invoked where the dispute is, in its essence, between private individuals over private property, for which the ordinary criminal and civil law already provides,” the court observed.
The court was hearing a bail petition filed by an accused charged under the PMLA. The petitioner, Alagappan, was the third accused in the ECIR registered by the ED and was accused of offences of money laundering under Section 3 of the Act.
The predicate offence was registered on September 29, 2023, for offences under Sections 409, 420, 506(1), 120B and 34 IPC. The prosecution case was that the first accused, the petitioner’s father, had misused the power of attorney from the de facto complainant and dealt with her property, diverting her funds into his account and that of his family.
Against the petitioner, it was claimed that there was a credit of Rs 4,50,000 in his account from one AN Builders to whom the complainant had sent Rs 50 Lakh at the request of the petitioner’s father. The second allegation was that he purchased a flat in his name and the payment for it came from the account to which the complainant had deposited money. The third allegation was that agricultural land was conveyed to him by the complainant for which no payment was made, though the petitioner claimed that he had paid in cash. The last allegation was that there was payment made from the account of the first accused to another concern which was managed by the petitioner.
The petitioner claimed that the sum he is accused of laundering was less than Rs 1 crore and thus the proviso of Section 45 of the PMLA would be attracted. The court rejected this contention and noted that while calculating the money, the total amount involved would be considered rather than the amount alleged against each accused.
“The first proviso to Section 45(1) permits the release on bail of a person who “is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees”. The measure is the sum which the person is accused of laundering, whether alone or jointly with others. It is not the sum that happens to be found in his own account, and it is not necessarily the total of every allegation in the case. Where the accusation against a person is that he laundered a larger sum in concert with his co accused, the proviso looks at that joint sum,” the court said.
On looking into the transactions, however, the court noted that each was capable of proof at trial and there was nothing in the counter of the ED to crystallise and say that the properties at the hands of the petitioner were derived from scheduled offence and that he was knowingly involved in any process or activity connected with them.
Thus, noting that there are reasonable grounds to believe that the petitioner was not guilty of money laundering, the court was inclined to grant him bail.
While granting bail, the court also highlighted that the Act dealt with laundering of proceeds of serious crime, which threatens the financial system and, through it, the interest of the nation. While the court agreed that cheating and criminal breach of trust were scheduled offences under the Act, the court noted that even as per the Directorate’s own admission, the case arose from transactions between one individual and the family of the man she appointed her power agent. The court noted that no public money was involved in the case.
The court thus made the remarks, suggesting that the powers of ED be used in cases which involve public money and not on private disputes.
Counsel for Petitioner: Mr. T. Mohan Sr. Counsel for M/s. G. Uma Maheswari
Counsel for Respondent: MR. P. Sidharthan, Spl. PP FOR ED