The Madras High Court has quashed the money laundering case against former Minister K Ponmudy after the trial court acquitted all accused in the predicate case, while leaving the Enforcement Directorate free to act under law if that case revives.
Chennai: The Madras High Court has quashed the proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) pending before the Special Court in Chennai against former Minister K Ponmudy, holding that they could not continue once the predicate case ended in acquittal. The Court gave the Enforcement Directorate (ED) liberty to take action as per law in view of any subsequent action in the predicate case [K Ponmudy v. Assistant Director (Enforcement Directorate)].
A Bench of Chief Justice Sushrut Arvind Dharmadhikari and Justice G Arul Murugan allowed Crl OP 27067 of 2026, filed by Ponmudy, who served as Minister for Mines and Minerals between 2007 and 2011. The case was at the stage of framing of charge when the petition was filed.
The predicate case
The ED case rested on an FIR registered by the District Crime Branch, Villupuram, under Sections 379, 406, 420 and 120-B of the Indian Penal Code, Section 21(1) of the Mines and Minerals (Development and Regulation) Act and Rule 36(A) of the MMDR Rules. The allegation was that Ponmudy conspired with his son and others in the allotment of red earth quarrying licences, causing a wrongful loss of Rs 28,37,65,600 to the State through unpaid seigniorage fees. These were allegations, and the trial court acquitted all accused facing trial by its judgment of April 2, 2026.
What the Court held
Relying on the Supreme Court’s ruling in Vijay Madanlal Choudhary v. Union of India, the Bench held that a PMLA prosecution cannot survive once the accused is acquitted in the scheduled offence. It noted:
“Admittedly, the trial court, by judgment dated April 2, 2026, acquitted all accused facing trial in the case.”
Liberty to the ED
The Court did not close the door on the agency. It added:
“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 was informed that the State would be appealing against the order of acquittal. That appeal, if filed, is yet to be heard, and the High Court has expressed no view on it.
The petitioner’s case
Ponmudy argued that once an accused is discharged, acquitted or the predicate case is quashed, the PMLA prosecution no longer survives and any incidental action by the ED becomes infructuous. He had also sought a stay of further PMLA proceedings as an interim measure. A separate disproportionate assets case against him, registered suo motu by the High Court in 2023 in relation to an earlier tenure as Minister, is not affected by this order and remains pending.
Why the order matters
Money laundering is defined by its link to a scheduled offence. If the underlying offence ends in acquittal, there is no proceeds of crime to launder, and the order applies that settled position to a case that had reached the charge stage.
At the same time, the liberty granted to the ED, and the State’s stated plan to appeal, mean the question is not closed for good. If the acquittal is disturbed in appeal, the agency may move afresh under law.
Case Title: K Ponmudy v. Assistant Director (Enforcement Directorate) [Crl OP 27067 of 2026]
Bench: Chief Justice Sushrut Arvind Dharmadhikari and Justice G Arul Murugan, Madras High Court