[Cites 47, Cited by 0]
Madras High Court
S.Nagarajan vs Directorate Of Enforcement on 19 February, 2026
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
Crl.R.C.(MD) No.1025 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Order reserved on 23.01.2026
Order pronounced on 19.02.2026
CORAM
THE HONOURABLE MR JUSTICE SENTHILKUMAR
RAMAMOORTHY
Crl.R.C.(MD) No.1025 of 2024
&
Crl.M.P.(MD) No.11357 of 2024
S.Nagarajan
S/o.V.S.Soodam Mani,
No.68, 4th Floor, CP Ramaswamy Road,
Alwarpet, Chennai-600 018. … Petitioner/
2nd Accused
Vs
Directorate of Enforcement,
Rep by the Assistant Director,
Government of India, Ministry of Finance,
Department of Revenue,
II & III Floor, Murugesa Naicker Office Complex,
No.84, Greams Road, Thousand Lights, Chennai-600 006
(ECIIR/CEZO/11/2013) …Respondent/
Complainant
PRAYER: This Criminal Revision Petition is filed under
Section 397 read with 401 of Cr.P.C. praying to call for the records
pertaining to the order dated 30.05.2024 made in Crl.M.P.No.4274 of
1/24
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Crl.R.C.(MD) No.1025 of 2024
2023 in C.C.No.3 of 2020 in ECIR/CEZO/11/2013 passed by the learned
II Additional District Judge (CBI Cases), Madurai and set aside the same.
For Petitioner(s): M/s S.Elambharathi
D.Venkatachalam
For Respondent(s): Mr.AR.L.Sundaresan
Assistant Solicitor General of India
Assisted by Mr.K.Govindarajan
Deputy Solicitor General of India
ORDER
Factual Background
An entity named ‘Olympus Granites (P) Limited’ (Olympus
Granites’) applied for grant of lease to quarry multi-coloured granite over
an extent of 1.21.5 hectares in SF No.259 / 4B2 of Keelavalavu Village,
Melur, Madurai District, for a period of 30 years under Rule 19A of the
Tamil Nadu Minor Minerals Concessions Rules, 1959. By G.O.(3D) No.
46, Industries (MMB-1) Department dated 14.07.2008, the Government
of Tamil Nadu granted a quarry lease to Olympus Granites for a period of
20 years subject to specific conditions. The said order also directed the
execution of an agreement in the prescribed form. Such agreement was
executed on 13.08.2008. Pursuant thereto, Olympus Granites undertook
quarrying activities in financial years 2009-10, 2010-11, 2011-12 and
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2012-13 and paid seigniorage fees of Rs.45,37,692/-. Granite blocks
extracted from the quarry were transported after obtaining transport
permits.
2. Subsequently, the quarry lease was cancelled on 06.09.2012 for
the alleged violation of the condition pertaining to maintenance of a
safety distance of 10 metres between the leased land and the Government
poromboke land. A complaint in relation to illicit quarrying of granites
was filed on 06.08.2012 by the Village Administrative Officer,
Keelavalavu District, before the Keelavalavu Police Station. The
complaint was inter alia under Sections 447 and 379 of the Indian Penal
Code (the IPC) and Section 3(1) of the Tamil Nadu Public Property
(Prevention of Damage and Loss) Act, 1992 (the TNPPDL Act) read with
Sections 4(1), 4(2), 4(3) and 21(b) and 5 of the Mines and Minerals
(Development and Regulation) Act, 1957. Based on the complaint, Crime
No.161 of 2012 dated 06.08.2012 was registered against Olympus
Granites and two others. The final report was filed on 13.11.2017 before
the Judicial Magistrate, Melur, in respect of offences under Section
120B read with Sections 447, 379, 409, 411, 420, 434, 468, 471, 304(ii),
109, 114, 511 IPC r/w. Sections 109, 116, 119 & 202 thereof; Sections 6
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read with Sections 3(a) & 4(a) of the Explosive Substances Act, 1908 and
Section 4 of the TNPPDL Act. PRC No. 30 of 2018 was assigned and
cognisance was taken on 13.06.2018.
3. On the ground that some of the alleged offences in relation to
the predicate offence of illicit quarrying are scheduled offences under the
Prevention of Money Laundering Act, 2002 (the PMLA), pursuant to
letter dated 11.07.2013 from the Superintendent of Police, Madurai, the
Directorate of Enforcement registered ECIR bearing
No.ECIR/CEZ0/11-2013, dated 18.09.2013, for conducting investigation
under the said statute. The prosecution in respect of the predicate offence
is pending before the Judicial Magistrate, Melur. Meanwhile,
proceedings in relation to prosecution under the PMLA were instituted in
C.C. No.3/2020 before the 2nd Additional District Court (CBI cases),
Madurai. The revision petitioner herein was arrayed as the second
accused therein. He filed Crl.M.P.No.4274 of 2023 seeking discharge.
The discharge petition was dismissed under the impugned order dated
30.05.2024.
4. This revision petition is directed against order dated 30.05.2024
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and was listed before the Division Bench of this Court. Justice
G.R.Swaminathan held that the impugned order did not contain a
discussion of the materials on record and did not demonstrate as to how
a prima facie case is made out against the revision petitioner. On that
ground, it was held that the impugned order is liable to be set aside and
the matter remitted to the file of the trial Judge for fresh consideration of
the discharge petition. Justice R.Poornima dissented and concluded that
the revision petitioner did not make out a case for discharge and that the
rejection of the discharge petition was on the basis of prima facie
examination of the material on record. Pursuant to order dated
15.09.2025 of the Hon’ble Chief Justice, the matter was placed before
me for consideration in the above facts and circumstances.
Counsel and their contentions
5. Oral arguments on behalf of the petitioner were advanced by
Mr.S.Elambharathi. Mr.AR.L.Sundaresan, learned Additional Solicitor
General, assisted by Mr.K. Govindarajan, learned Deputy Solicitor
General, advanced arguments on behalf of the Directorate of
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Enforcement. Both parties also filed written submissions.
6. The first contention on behalf of the revision petitioner was that
no independent investigation was carried out under the PMLA. By
referring to paragraphs 73 and 74 of the impugned order, learned counsel
contended that no reasons are set out therein in support of the conclusion
that there was an independent investigation. The next contention of
learned counsel was that proceedings cannot be initiated under the
PMLA unless there are proceeds of crime relating to the predicate
offence. Learned counsel contended that the impugned order does not
contain any reason in support of the conclusion that there is prima facie
evidence of proceeds of crime.
7. While considering a discharge petition, he contended that the
trial court was required to examine the materials so as to assess whether
there is sufficient ground to frame charges and proceed with the matter.
After submitting that such prima facie consideration and discussion of
the materials is absent in the impugned order, learned counsel relied upon
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the judgment of the Hon’ble Supreme Court in Karnataka Emta Coal
Mines Ltd. v. Central Bureau of Investigation, 2024 SCC OnLine 2250,
particularly paragraphs 20.1 to 20.5 thereof. For the same proposition,
reliance was also placed on the judgment of the Hon’ble Supreme Court
in Karan Talwar v. the State of Tamil Nadu, SLP (Crl.) No. 10736 of
2022, judgment dated 19.12.2024.
8. Relying on the judgment of the Hon’ble Supreme Court in Vijay
Madanlal Chowdary v. Union of India [2022 SCC OnLine SC 929],
learned counsel contended that the expression “proceeds of crime” in
Section 2(1)(u) of the PMLA should be construed strictly and that the
properties of the petitioner would not constitute proceeds of crime unless
there is prima facie evidence that they were derived or obtained as a
result of criminal activity related to a scheduled offence. He also relied
on the judgment of the Hon’ble Supreme Court in Arvind Kejriwal v.
Director of Enforcement, 2024 INSC 512, to contend that the power of
judicial review continues to apply even in the context of the PMLA.
9. In response to these contentions, Mr.Sundaresan opened his
submissions by referring to the wide definition of money laundering and
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proceeds of crime in Section 3 read with 2(1)(u) of the PMLA. By
referring to Section 2(1)(v) of the PMLA, he submitted that ‘property’ is
also defined widely to include movable, immovable and even intangible
property.
10. He submitted that the Sagayam Committee was appointed by
this Court to probe into alleged unlawful granite mining activities in
Madurai District and that a report was submitted on 19.05.2012 to the
Principal Secretary, Industries Department, Government of Tamil Nadu.
He also pointed out that the District Collector constituted a special expert
committee which submitted a report to the effect that Olympus Granites
had illegally mined and transported granite and thereby caused the loss
of Rs.256.44 crore to the Government.
11. He also submitted that crime No.161 of 2012 was registered in
respect thereof and that the charge sheet was filed before the learned
Judicial Magistrate, Melur, after completion of investigation in relation
to the predicate offence. Since the predicate offence included scheduled
offences under Sections 420, 467 and 471 of the IPC read with Section 3
of the Explosive Substances Act, he submitted that a letter was sent by
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the Superintendent of Police informing the Directorate of Enforcement
about the filing of the charge sheet in Crime No.161 of 2012. Thereafter,
he submitted that independent investigation was carried out under the
PMLA and a complaint was lodged before the Special Court, which was
taken cognizance of as C.C.No.3 of 2020.
12. After submitting that the reports of Mr.Sagayam and
Mr.Mohandas are sufficient to justify dismissal of this revision petition,
learned Additional Solicitor General referred to documents filed along
with the complaint. In particular, he relied upon the Government Order
granting the quarry licence (Annexure – 8), the agreement dated
13.08.2008 between Olympus Granites and the Government of Tamil
Nadu (Annexure 9), G.O.(D) No.161 dated 06.09.2022 cancelling the
quarry licence (Annexure 10), the statements issued by the revision
petitioner on 04.09.2014 and 01.07.2015 under Section 50 of the PMLA
before the Assistant Director, Directorate of Enforcement, Chennai
(Annexure 14) and sale deeds relating to properties purchased by the
revision petitioner (Annexure 26).
13. By adverting to the impugned order, learned Additional
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Solicitor General contended that the order should be read in entirety and
that paragraphs 51, 55 and 67 thereof indicate that the trial court applied
its mind to all the materials on record, including the documents referred
to above, which were filed as annexures to the complaint. If read in
entirety in the context of the above documents, he contended that no
case is made out to interfere with the dismissal of the discharge petition.
He relied on Captain Manjeet Singh Virdi (Retd) v. Hussain Mohammed
Shattaf and Ors, 2023 (7) SCC 633 and State of Gujarat v. Dilipsinh
Kishorsinh Rao, 2023 SCC Online SC 1294 to contend that the scope of
discharge is limited and the current case does not fall within that scope.
Discussion, analysis and conclusion
14. The agreed position is that cognisance was taken by the learned
Judicial Magistrate, Melur, under Section 173(2) of the Code of Criminal
Procedure (CrPC) in relation to alleged offences under multiple
provisions of the IPC and the Explosive Substances Act, 1908. Out of the
alleged offences, the offences under Section 120B, 411, 420, 471 and
Sections 3 and 4 of the Explosive Substances Act are Scheduled Offences
under Section 2(1)(y) of the PMLA. The revision petitioner, however,
maintains that the ingredients of these Scheduled Offences are not
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satisfied.
15. The question that falls for consideration is, therefore, whether
the trial court committed an error in dismissing the discharge petition
thereby warranting inference in the exercise of revisional jurisdiction. A
discharge petition would be liable to be allowed if the trial court were to
conclude that there is no sufficient ground for proceeding against the
accused. Given the stage at which such petition is considered by the trial
court, only prima facie assessment is feasible.
16. The offence of “money laundering” is defined in Section 3 of
the PMLA as under:
“3. Offence of money-laundering.---Whosoever directly or
indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process
or activity connected with the proceeds of crime including
its concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall be
guilty of offence of money-laundering.
Explanation. For the removal of doubts, it is hereby
clarified that,-
(i) a person shall be guilty of offence of money-laundering
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if such person is found to have directly or indirectly
attempted to indulge or knowingly assisted or knowingly is
a party or is actually involved in one or more of the
following processes or activities connected with proceeds of
crime, namely:-
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any manner whatsoever;
(ii) the process or activity connected with proceeds of
crime is a continuing activity and continues till such time a
person is directly or indirectly enjoying the proceeds of
crime by its concealment or possession or acquisition or use
or projecting it as untainted property or claiming it as
untainted property in any manner whatsoever.”
17. The text of Section 3 reveals that the offence of money
laundering is committed if a person directly or indirectly attempts to
indulge in or knowingly assists or knowingly is a party to or is involved
in any process or activity connected with the proceeds of crime. Such
process or activity includes the concealment, possession, acquisition, use,
projection or claiming of the proceeds of crime. It follows from the above
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that the critical requirement is direct or indirect involvement with the
proceeds of crime.
18. The expression “proceeds of crime” is defined in Section 2(1)
(u) of the PMLA as under:
“u) "proceeds of crime" means any property derived
or obtained, directly or indirectly, by any person as a result
of criminal activity relating to a scheduled offence or the
value of any such property or where such property is taken
or held outside the country, then the property equivalent in
value held within the country or abroad.
Explanation. For the removal of doubts, it is hereby
clarified that "proceeds of crime" include property not only
derived or obtained from the scheduled offence but also any
property which may directly or indirectly be derived or
obtained as a result of any criminal activity relatable to the
scheduled offence;”
19. Because property is at the heart of the above definition, it is
also necessary to consider the definition of property. Property is defined
in Section 2(1)(v) of the PMLA as under:
“(v) "property" means any property or assets of every description,
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whether corporeal or incorporeal, movable or immovable,
tangible or intangible and includes deeds and instruments
evidencing title to, or interest in, such property or assets, wherever
located.
Explanation. For the removal of doubts, it is hereby clarified
that the term "property" includes property of any kind used in the
commission of an offence under this Act or any of the scheduled
offences;”
20. From the definition of “proceeds of crime”, it is clear that it
pertains to any property, derived or obtained, whether directly or
indirectly, by any person as a result of criminal activity related to a
scheduled offence. The Explanation appears to expand the scope by
including any property which is directly or indirectly derived or obtained
as a result of any criminal activity related to the scheduled offence. The
definition of property covers movable, immovable and even intangible
property. Against this factual background, a brief consideration of the
materials on record is warranted.
21. In the course of investigation under the PMLA, the statement
of the revision petitioner was recorded on 04.09.2014 and 09.09.2014
purportedly in terms of Section 50 thereof. These statements were
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annexed to the complaint as Annexure 14. The statement allegedly made
by him when questioned in relation to the immovable properties
purchased by him is scanned and reproduced below:
22. The details of fixed assets purchased by the revision petitioner
and allegedly provided while making the above statement are scanned
and reproduced below:
23. As is noticeable from the alleged response to the question
regarding the properties belonging to the revision petitioner, except the
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properties at Sl.Nos.15 and 16 of the table reproduced above, he has
admitted that all the other properties stand in his name and belong to
him. The sale deeds pertaining to these properties were annexed to the
complaint as Annexure 26.
24. In the impugned order, the trial court has taken note of the fact
that the revision petitioner was the Managing Director of Olympus
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Granites. The trial court also took note of the fact that the charge sheet
under Section 173(2) of the Cr.P.C. covers scheduled offences as defined
under Section 2(1)(u) of the PMLA. At paragraph 50 of the impugned
order, the trial court noticed the respondent’s averments with regard to
the recording of the voluntary statement of the accused under Section 50
of the PMLA, the independent investigation in relation to the offence of
money laundering, the bank statement and property documents of the
accused. Paragraphs 54 and 55 of the impugned order are set out below:
“54) The petitioner incubated the pecuniary benefits
which resulted in further accruals of proceeds of crime and
same were camouflaged in the organizational system as
business income/earnings. The petitioner has given
voluntary statement on 9.9.2014, that he had furnished 21
immovable properties acquired during the period from
19.05.2003 to 04.07.2011. On perusal of the statement out
of 21 properties/ 16 were acquired after the commencement
of activities of OGPL which was showed as legal sales in
the books of accounts. Hence the properties of petitioner/A2
as being involved in the offence of money-laundering, are
liable to be confiscated to the Central Government in terms
of Sub-section (5) of Section 8 of PMLA, 2002.
55) The respondent has further stated that the illegally
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mine granite in the south side of the area permitted for
quarrying i.e. Survey No. 259/482 which was Paramboke
Land belongs to the Government in Survey No.297/SD Bit
and used the explosive substances to quarry. Further the
petitioner/A2 alleged to have prepared forged document
undertaking dated 25.07.2008 and submitted to the
Government, made the Government to believe the contents,
executed in the license in agreement dated 13.08.2008 with
the District Collector, submitted the same to the Melur SRO
on 18.8.2008 and registered the document as document no.
4176/2008 only to cheat the Government. Therefore, there
are serious allegations that the petitioner has illegal mining
by way of forged documents and caused loss to the
Government and also wrongful gain for themselves.”
25. It is recorded at paragraph 54 that 16 properties were acquired
by the revision petitioner after the commencement of activities of
Olympus Granites. At paragraph 69, the trial court has expressly recorded
that the FIR registered in Crime No.161 of 2012, ECIR dated 18.09.2013,
the statement given by A2/ A. Nagarajan and the evaluation report were
perused. At paragraph 74, it is recorded that the Directorate of
Enforcement has followed the procedure laid down under the PMLA in
Sections 5, 6, 17, 18 and 19 while recording the statement under Section
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50 thereof. As regards the movable and immovable properties involved in
this case, the trial court has recorded that any conclusions regarding the
same, including whether they constitute proceeds of crime, may be
reached only after adducing evidence at trial.
26. Eventually, the following conclusions were recorded at
paragraphs 76 and 77:
“76) Therefore on perusal of the available documents
relied by the respondent/ Complainant, this Court is of the
view that there are prima facie evidence against the
petitioner to proceed under PML Act and also for other
offences. The allegation stated by the petitioner u/s.227
Cr.P.C cannot thrown away the materials by the respondent/
complainant at the initial stage only by analyzing evidence
adduced, this Court will come to the conclusion that the
allegations against the petitioner is proved or not. Therefore
for the above said reasons, this Court is of the view that the
various allegations leveled by the petitioner against the
respondent/ complainant cannot be decided without
adducing elaborate evidence by the
respondent/complainant. Further this Court is not inclined
to allow this petition relying the allegations made by the
petitioner /A2 and that too prima facie case against the
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petitioner/A2. The investigation conducted by the
respondent complainant seems to be prima facie is proper
and legal, if there is any contravention of Mines and
Minerals Act, can be decided at later part of the trial.
77) Considering the way in which the investigation
was conduced by the respondent/ complainant and the
materials available in this case and the reports of Collector
Shri. U.Sagayam IAS, Special officer/ legal commissioner
appointed by Hon'ble Madurai Bench of Madras High
Court and the report submitted by the Revenue Department,
District Collector and the evaluation report submitted by
the Shri.N.C. Mohandas, Deputy Director, Geology and
Mines, this Court feels that there are materials to proceed
against the petitioner for the alleged offences u/s. 120B of
IPC r/w Sec.447, 379, 409, 411, 420, 434, 468, 471, 304 (ii),
109, 114, 511 rive Section 109, 116, 119 & 202 of IPC and
Section 6 r/w Section 3(a) & 4(a) of Explosive Substances
Act, 1908 and Sec. 4 of TNPPDL Act. Therefore this Court
is not inclined to allow this Petition.”
27. If the conclusions in paragraphs 76 and 77 were looked at in
isolation, an inference could be drawn that reasons in support of the
conclusions do not find place therein. However, the said paragraphs
cannot be looked at in isolation and the impugned order should be
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considered as a whole. As noted earlier, at paragraph 69, the trial court
has taken cognizance of the FIR registered in Crime No.161 of 2012,
ECIR dated 18.09.2013, the statement given by A2/ A. Nagarajan and the
evaluation report. At paragraph 74, it has noticed that the ED has
followed the prescribed procedure while recording the statement under
Section 50 of the PMLA. It has also further recorded therein that perusal
of the ECIR reveals that there is a prima facie case for proceeding
against the petitioner. It is pertinent to underscore that while exercising
jurisdiction under Section 227, the trial court is not required to make a
roving inquiry; it is only required to sift through and weigh the evidence
for the limited purpose of finding out whether there is a prima facie case
to proceed against the petitioner.
28. When the earlier paragraphs of the impugned order are viewed
conjunctively with the concluding paragraphs, it appears that the trial
court, after taking stock of the rival contentions, came to the conclusion,
on a prima facie basis, that there is sufficient ground to proceed with the
case. It is not the case of the revision petitioner that requisite sanction
was not obtained or that there is any other ground on which the
prosecution is barred. Consequently, the revision petitioner has failed to
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establish that the rejection of the discharge petition was on account of
non-application of mind or was otherwise perverse warranting
interference in exercise of jurisdiction in a revision petition.
29. Therefore, the revision petition is liable to be and is hereby
dismissed without any order as to costs. For the avoidance of doubt, it is
clarified that no conclusions or findings have been recorded on the merits
of the matter, including as to whether any of the assets referred to in the
complaint qualify as proceeds of crime under the PMLA.
19.02.2026
Neutral Citation : Yes/No
kal
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To
Directorate of Enforcement,
Rep by the Assistant Director,
Government of India, Ministry of Finance,
Department of Revenue,
II & III Floor, Murugesa Naicker Office Complex,
No.84, Greams Road, Thousand Lights, Chennai-600 006
(ECIIR/CEZO/11/2013)
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SENTHILKUMAR RAMAMOORTHY J.
kal
Pre-delivery order made in
&
Crl.M.P.(MD) No.11357 of 2024
19.02.2026
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