Madras High Court Questions ED's Authority in Money Laundering Case

In a recent hearing, the Madras High Court scrutinized the Enforcement Directorate's (ED) authority under the Prevention of Money Laundering Act. The court raised concerns about the ED's actions in sealing premises linked to a money laundering investigation involving film producer Akash Baskaran. The judges questioned the legal basis for restricting access to properties without clear justification. As the hearing progresses, the court seeks to determine whether the ED has overstepped its statutory limits, emphasizing the need for clarity in its operations. This case highlights ongoing tensions regarding the powers of investigative agencies in India.

By Narendra Chaudhary Jun 17, 2025, 15:59 IST

Court Challenges ED's Powers

Chennai: The Madras High Court raised significant concerns on Tuesday regarding the Enforcement Directorate's (ED) authority under the Prevention of Money Laundering Act (PMLA), 2002. The court remarked that while the legislation is developing, it appears that the ED officials are continuously expanding their powers.

Justice M.S. Ramesh, leading a division bench alongside Justice V. Lakshminarayanan, made these comments during the hearing of multiple writ petitions filed by film producer Akash Baskaran and his associate Vikram Ravindran. They are contesting the ED's actions related to a money laundering probe tied to alleged irregularities within the Tamil Nadu State Marketing Corporation (TASMAC).

The judges expressed particular concern over the ED's decision to 'seal' two locations—one being a commercial office in Semmenchery and the other a rented flat in Poes Garden—without clear legal justification.

Ravindran stated that both locations were locked when ED officials attempted a search on May 16, and in his absence, they affixed notices on the doors, effectively barring access until further instructions from the agency.

Representing the ED, Special Public Prosecutor (SPP) N. Ramesh refuted claims that the premises were sealed, asserting that the officers had only posted notices seeking the petitioners' cooperation.

However, the court pointed out that the wording of the notices effectively restricted entry without the ED's consent.

Justice Lakshminarayanan questioned the legal validity of such notices, stating, 'Even if the language does not imply sealing, what authority do you have to prevent someone from entering their own home or office?' He emphasized that no reasonable person would disregard such a notice for fear of punitive consequences.

The ED's counsel contended that Section 17 of the PMLA grants the agency the power to conduct searches and seizures, including breaking locks if necessary. 'However, we opted not to take the extreme measure of breaking locks, hence the notices were posted,' the SPP added, noting that these notices could be rescinded if the court permitted.

The bench remarked that the ED's actions lacked clear legal justification and highlighted the psychological effects such notices could impose on individuals who have not been formally accused.

It was also revealed that neither petitioner had been named as accused in the TASMAC-related money laundering case thus far. The ED had only received credible information indicating that potentially incriminating evidence might be in their possession.

Ramesh reiterated the necessity for the petitioners to cooperate with the investigation, asserting that the agency was acting based on intelligence inputs.

In response, the bench allowed the ED until Wednesday to present relevant documents supporting its actions.

The hearing is set to continue on Wednesday as the court deliberates whether the agency has exceeded its statutory authority under the PMLA.