Prioritise national scams, not disputes over private property: that was the Madras High Court’s advice to the Enforcement Directorate as it granted bail to an accused in a PMLA case, saying the Act’s stringent powers are not meant for disputes between private individuals.
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Chennai: While granting bail to an accused, the Madras High Court has advised the Enforcement Directorate (ED) to give primacy to cases involving public money, public interest, corruption and scams of national consequence. The Prevention of Money Laundering Act, 2002 (PMLA), the Court indicated, should not be invoked to probe disputes that are in essence between private individuals over private property [Ala Alagappan v. The Additional Director, Directorate of Enforcement].
Justice N. Ramesh allowed CRL OP No. 26721 of 2026 on October 6, 2026. The allegations against the petitioner are untested, the Court has made no final finding on guilt, and the presumption of innocence applies.
Bail, and on what terms
The petitioner was released on a bond of Rs 25,000 with two sureties of the like amount, to the satisfaction of the Special Court (PMLA), Chennai. Until further orders he must report daily at 10:30 a.m. before the respondent police, must not abscond, and must not tamper with evidence or witnesses during investigation or trial. If he breaches the terms, the trial court may pass appropriate orders, and if he absconds a fresh FIR can be registered under Section 269 of the BNS.
What the ED alleged
The ED’s case rests on ECIR No. CEZO-1/14/2025 dated March 31, 2025, the scheduled offence being Crime No. 232 of 2023 registered by the Central Crime Branch-I, Chennai, under Sections 409, 420, 506(1), 120B and 34 of the IPC. According to the ED, the petitioner’s father held powers of attorney from the complainant and misused them to divert funds into family accounts and to enter his wife as co-purchaser of a Neelankarai property.
Against the petitioner himself, the ED pointed to a Rs 4,50,000 credit from a builder on March 23, 2020; a flat at Prakasam Flats, T. Nagar, bought on November 25, 2016 for Rs 32,75,100; 2.36 acres of agricultural land conveyed on February 10, 2021 for a stated Rs 2,24,000; and a Rs 52,00,000 transfer on September 28, 2020. He was arrested and remanded on August 25, 2026, spent two days in ED custody from September 8 to 10, 2026, and stayed in judicial custody after that. The ED argued that bank records trace the complainant’s funds to him and that his release could pose a risk of influence.
Where the material fell short
The Court first dealt with the monetary threshold. The measure, it held, is the sum the person is accused of laundering, “whether alone or jointly with others”. As the ED accused the petitioner jointly with family members of siphoning Rs 4,73,05,750, the proviso did not apply. On the evidence, though, the Court found the ED’s material wanting against this petitioner:
On the present record, therefore, the second foundational fact, that the flat was derived from the scheduled offence, rests on the Directorate’s assertion of a trail rather than on material placed before the Court.
As for the Rs 52,00,000 transfer, nothing suggested that the petitioner kept any part of the sum or acquired an interest in the property, the Court said, since it was used for stamp duty on property in the complainant’s name. The counter-affidavit, it concluded, did not crystallise, as against this petitioner, the material needed to establish prima facie that the properties in his hands were derived from the scheduled offence.
A word on ED priorities
The Court noted that no public money, public body or public servant was involved, and that the complainant had already filed seven FIRs and obtained a civil decree. “The reach of a power is not the measure of the occasions for its use,” it observed, and went on:
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.
What the order shows
The Court wanted the ED to place, even briefly, the material that prima facie links each accused’s properties to the scheduled offence, not just an assertion of a money trail. Its remarks on ED priorities are advisory and sit alongside the bail ruling. The trial is yet to take place, and the ED’s allegations remain to be tested.
Case Title: Ala Alagappan v. The Additional Director, Directorate of Enforcement [CRL OP No. 26721 of 2026]
Bench: Justice N. Ramesh, Madras High Court
Date of Order: October 6, 2026
Appearances: For the petitioner, Senior Advocate T. Mohan with Advocate G. Uma Maheswari; for the ED, Special Public Prosecutor P. Sidharthan