The Madras High Court has quashed the Enforcement Directorate’s money-laundering case against former Tamil Nadu minister K Ponmudi, his son Gautham Sigamani and others following their acquittal in the underlying red-earth quarrying case. The bench of Chief Justice S A Dharmadhikari and Justice G Arul Murugan relied on the Supreme Court’s ruling in Vijay Madanlal Choudhary v. Union of India. The court left the ED at liberty to proceed in accordance with law if subsequent developments affect the predicate offence.
Madras High Court Quashes ED’s Money Laundering Case Against K Ponmudi After Acquittal
The Madras High Court dismissed the Enforcement Directorate’s money laundering proceedings against former Tamil Nadu minister K Ponmudi after the criminal case was dismissed but said further proceedings could be taken if the facts warranted it.
The Madras High Court quashed the Ponmudi PMLA case on Tuesday, 13 October 2026, observing that the former Tamil Nadu minister and other accused were acquitted in the criminal case underlying the alleged illegal red earth quarrying.
The Enforcement Directorate (ED) proceedings cannot continue after acquittal in the predicate offence, a bench of Chief Justice SA Dharmadhikari and Justice G Arul Murugan held. The decision was reported by LiveLaw in its coverage of the verdict.
Madras High Court Ponmudi PMLA Case and the Acquittal
The bench referred to the Supreme Court ruling in Vijay Madanlal Choudhary v. Union of India, which speaks about the legal framework for proceedings under the Prevention of Money Laundering Act (PMLA).
The judges noted that on 2 April 2026 the trial court acquitted all accused. Since the underlying offence resulted in an acquittal, the court held that the money laundering proceedings against the petitioners could not proceed in the present circumstances.
The court also said the ED would be at liberty to proceed in accordance with law in the event of subsequent developments in the predicate case. Thus, the ruling does not preclude future proceedings if the legal circumstances change.
Allegations in the Red Earth Quarrying Case
The case is based on a First Information Report registered by the District Crime Branch, Villupuram. The allegations were against K Ponmudi, his son, and others and included offences under Sections 379, 406, 420 and 120-B of the Indian Penal Code.
The case also referred to the provisions of Section 21(1) of the Mines and Minerals (Development and Regulation) Act and Rule 36(A) of the MMDR Rules as reflected in the reported proceedings.
Prosecution allegations say Ponmudi, then Tamil Nadu Minister for Mines and Minerals from 2007 to 2011, had allegedly hatched a criminal conspiracy with his son and others over red earth quarrying licences.
The prosecution alleged that licences were granted to his son, a friend and his brother-in-law, and that the licence holders mined red earth beyond permitted quantities without paying the required seigniorage fees to the government.
The alleged conduct is said to have caused wrongful loss to the State of Rs 28,37,65,600. These were allegations made by the prosecution and not findings recorded against Ponmudi in the trial, which ended in acquittal.
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Why the ED Proceedings Were Quashed
The ED has filed an Enforcement Case Information Report under PMLA invoking provisions of Sections 44(1)(b) and 45 read with Sections 70 and 8(5). The matter was at the stage of framing charges before the Special Court, Chennai.
Ponmudi moved the High Court after he and the other accused were acquitted by the Sessions Court on 2 April 2026. The acquittal, he argued, destroyed the rationale for pursuing the related PMLA prosecution.
It was reportedly stated that the trial court had held that there was no nexus between the grant of quarry lease and the alleged illegal gains/conspiracy. It also found no procedural irregularity or statutory violation in granting the licence and found that the prosecution had failed to establish entrustment, dominion over property or dishonest misappropriation.
Separate Disproportionate Assets Case Remains Pending
It concerns the alleged offence of illegal quarrying during Ponmudi’s tenure as Minister for Mines and Minerals between 2007 and 2011. This is different from another disproportionate assets case registered by the High Court on its own in 2023.
The case pending relates to alleged offences committed during his tenure as Minister for Transport and Highways from 1996 to 2001, when he was with the DMK government. The proceedings are still under consideration in court.
The latest order is a major development in the quarrying-related money laundering case, but its fate may depend on any further move in the underlying criminal proceedings. The ED can proceed according to law if circumstances change; the High Court has expressly kept it intact, Sprouts News notes.
