Madras High Court
R. Varadarajan vs Directorate Of Enforcement Rep. By on 10 July, 2026
CRL OP No. 14929 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 25-06-2026
PRONOUNCED ON : 10-07-2026
CORAM
THE HON'BLE MR.SUSHRUT ARVIND DHARMADHIKARI,
CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE G.ARUL MURUGAN
CRL OP No. 14929 of 2026
and
CRL MP Nos. 9547 & 9654 of 2026
R.Varadarajan
No.136, Flat 3D, Block 4,
Ceebros Shyamala Gardens,
Saligramam,
Chennai – 600 093.
..Petitioner(s)
Vs
Directorate of Enforcement,
Represented by the Deputy Director,
Government of India,
Ministry of Finance,
Department of Revenue,
2nd and 3rd Floor, Murugesa Naicker Complex,
No.84, Greams Road, Thousand Lights,
Chennai – 600 006.
..Respondent(s)
PRAYER: Criminal Original petition filed under Section 528 of the
Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, to call for the records
of Spl.CC.No.1 of 2020 on the file of the learned XIV Additional Sessions
Judge for CBI Cases at Chennai and quash the same.
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For Petitioner(s): Mr.N.R.Elango
Senior Counsel
For Mr.A.S.Aswin Prasanna
For Respondent(s): Mr.P.Siddarthan
Special Public Prosecutor
[For Enforcement Directorate]
ORDER
G.ARUL MURUGAN, J.
This quash petition has been filed under Section 528 of the
Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. The petitioner/fifth
accused seeks to quash the complaint in Spl.C.C.No.1 of 2020 pending on
the file of the XIV Additional Sessions Judge for CBI Cases, Chennai.
2. The facts in a nutshell are that the first accused/Mr.T.D.Naidu,
availed huge financial assistance from Andhra Bank to the tune of Rs.41
Crores in the name of the M/s.Deen Dayal Medical and Educational Trust.
The loan was allegedly availed by entering into a criminal conspiracy with
the sixth accused, Branch Manager of Andhra Bank, whereby a sum of
Rs.41 Crores was availed from the bank in connivance with
Mr.R.Varadarajan/fifth accused/petitioner herein, by furnishing fake
documents and cooked-up financial statements to secure the funds. The
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CRL OP No. 14929 of 2026
loan proceeds were subsequently diverted in collusion with the Branch
Manager, thereby causing a total loss to the tune of Rs.57.64 Crores.
3. Based on the complaint lodged by Andhra Bank, the Central
Bureau of Investigation (CBI) registered a case in FIR No.RC-3(E)/2012.
After completion of investigation, the CBI filed a charge sheet, which was
taken on file as C.C.No.48 of 2013 on the file of the XI Additional Special
Judge for CBI Cases, Chennai, for the offences punishable under Sections
120B read with Sections 420, 468 and 471 of the Indian Penal Code
(IPC), 1860.
4. Following the registration of the predicate case for a scheduled
offence, the Enforcement Directorate (ED) registered Enforcement Case
Information Report (ECIR) No.13 of 2013 under Prevention of Money
Laundering Act, 2002 [hereinafter referred to as ‘PMLA’]. After completion
of investigation, the Enforcement Directorate filed the complaint under
Section 45(1) read with Sections 3 and 4 of the PMLA, which was taken
on file as Spl.C.C.No.1 of 2020 on the file of the Principal Sessions Judge,
Special Court Constituted under Section 43(1) of the Prevention of Money
Laundering Act, Chennai, arraying six accused persons, including the
petitioner. Consequently, the petitioner/fifth accused has preferred this
petition to quash the complaint.
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5. Mr.N.R.Elango, learned Senior Counsel appearing on behalf of the
petitioner contended that absolutely there are no materials to implicate
the petitioner in the complaint, and even if the entire complaint is taken
at its face value to be true, no offence under Section 3 of the PMLA is
made out against the petitioner/fifth accused. Therefore, since the
complaint implicating the petitioner constitutes a clear abuse of process of
Court, it is liable to be quashed.
6. He further submitted that the petitioner is merely a builder and
civil contractor. The alleged payments were transferred to him by the
trust and the first accused for the purpose of constructing buildings. But
for some reasons, the petitioner has not proceeded with the construction
and had simply returned the money.
7. The learned Senior Counsel further contended that simply
because money was transferred to the petitioner’s account, which was
duly returned, that alone cannot constitute an offence. Mere existence of
a predicate offence is not, by itself, sufficient for registration of the
complaint or for invoking the provisions of the PMLA, but something more
is required, particularly, in respect of the proceeds of crime generated
from the predicate offence, in which the role of the petitioner is to be
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explicitly stated, only then the petitioner could be implicated in the
complaint. In the present case, there is not an iota of material or any
averments in the complaint giving the details of the proceeds of crime
based on which the petitioner has been roped in. In absence of such
essential elements, the complaint against the petitioner cannot be
sustained and the complaint is liable to be quashed.
8. Further, learned Senior Counsel relying on the order dated
27.01.2022, passed by the Co-ordinate Bench of this Court in
Crl.OP.No.29533 of 2015, submitted that the complaint as against the
sixth accused/Branch Manager has already been quashed. Since the
petitioner stands exactly on the same footing as the sixth accused, the
complaint against the petitioner is equally liable to be quashed in the line
of the said order.
9. Per contra, the learned Special Public Prosecutor appearing on
behalf of the Enforcement Directorate, contended that the petitioner is
not a bona fide contractor, and had, in fact, conspired with the first
accused and actively indulged in diverting the proceeds of crime by
receiving the money from the trust account of the first accused and
subsequently transferring them back to the various personal accounts of
A1, A2 and several other accounts for the purpose of diverting and using
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the proceeds of crime.
10. He further submitted that the petitioner conspired with the first
and second accused and had indulged in submitting manipulated jacked-
up Income Tax certificates to the bank for availing substantial loans.
Learned Special Public Prosecutor further contended that ample materials
are available on record against the petitioner to attract the offences under
Section 3 of the PMLA, as a co-accused and as such the present quash
petition is not sustainable and liable to be dismissed.
11. We have given our anxious consideration to the submissions
made on either side and have perused the materials available on record.
12. The Central Bureau of Investigation (CBI) registered the
predicate case against the first accused/Mr.T.D.Naidu, the second
accused/Mr.R.Varadarajan, and the sixth accused/Mr.Raveendranadha
Reddy, which is pending in C.C.No.48 of 2013 on the file of the XI
Additional Special Judge, for CBI Cases, Chennai, for the offences
punishable under Sections 120B, 420, 468 and 471 of IPC and Section
13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988.
13. The first accused is the Chairman and Managing Trustee of
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M/s.Deen Dayal Medical and Educational Trust, Chennai. The second
accused, who is the wife of the first accused, is also a lifetime trustee of
the said trust. The trust applied for and secured financial assistance from
Andhra Bank to the tune of Rs.41 Crores. The trust had availed the loan
for the purpose of constructing a medical college. The loan amount
availed with the assistance of the fifth accused was transferred to
personal accounts and money has been diverted. The utilisation was for
the purchase of movable and immovable properties. In view of the
registration of the predicate case for scheduled offences, the Enforcement
Directorate registered an ECIR. After completion of investigation, the
Enforcement Directorate filed a complaint for the offences punishable
under Sections 3 and 4 of the PMLA.
14. The alleged role attributed to the petitioner/fifth accused is
explicitly detailed in the complaint in the following paragraphs:
“4.7…………….
All the three accused as mentioned above were charge sheeted
under Sections 120-B r/w 420, 468 & 471 of IPC, 1860 and
Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act,
1988 and substantive offences thereof. Further, the offences
under Section 420 & Section 471 of Indian Penal Code, 1860 and
Section 13(2) г/w 13(1)(d) of the Prevention of Corruption Act,
1988 are also Scheduled Offences under section 2(1)(y) of
PMLA, 2002.
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CRL OP No. 14929 of 20264.7.1. Based on the written complaint dated 17.03.2012 of Shri
C.Bala Subrahmanyam, General Manager, Andhra Bank, Zonal
Office, Chennai alleging that Shri T. D. Naidu (A-1) had
dishonestly and fraudulently got sanctioned term loan of Rs.
41.00 Crores from Andhra Bank, Anna Nagar Branch, Chennai by
furnishing fake documents of his qualifications, cooked-up
financial statements, etc., & diverted the term loan proceeds
in collusion with Shri R. Varadarajan (A-2) for various
other purposes and thereby caused wrongful loss to the
bank to the tune of Rs. 57.64 Crores and Shri
N.Raveendranadha Reddy (A-3), the then branch Manager of
Anna Nagar Branch, had facilitated the fraud by his acts of
recommending sanction of limit without proper due diligence of
the background of Shri T. D. Naidu and also by disbursing the
loan without following the sanctioned terms and without
ensuring proper end use of the funds in gross violation of the
sanction stipulations, a Criminal Case No.RC 3(E)/2012 was
registered on 20.03.2012 by CBI, BS & FC, Bangalore.
4.7.2……………..
4.7.3……………..
4.7.4……………..
4.7.5……………..
4.7.6. The term loan of Rs. 41 crores was sanctioned and the
terms & conditions were accepted by Shri T. D. Naidu, Smt. T.
D. Prabhavathy, Shri T. D. Tataji & Ms. T. D. Sonia, who have
signed all pages of the said sanction letter.
4.7.7. An amount of Rs. 19,69,00,000/- was disbursed to M/s
DDE&MT on 16.08.2008, out of which an amount of Rs. 302 lacs
was used to close the SOD limits allowed to Shri T.D.Naidu &
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CRL OP No. 14929 of 2026Smt.T.D. Prabhavathy. An amount of Rs. 14.40 crores was
paid to Shri R. Varadarajan (A2) for purchase of steel &
cement vide pay order No. 977315 dated 16.08.2008,
which was deposited by him in his account in Indian
Bank, Valasaravakkam Branch, Chennai & an amount of
Rs. 14.20 crores out of the said amount was transferred
by Shri R. Varadarajan in favour of Shri T. D.Naidu.
Further, out of the payment of Rs. 6.50 crores and Rs. 9
crores made to Shri R. Varadarajan through pay orders on
07.10.2008 & 14.10.2008 respectively towards payment
of building materials, an amount of Rs. 6:45 crores & Rs.
9 crores were transferred to the account of Shri T. D.
Naidu.
4.7.8……………..
4.7.9. Investigation conducted by CBI, BS & FC, Bangalore, has
also revealed that M/s LIPT had neither supplied the material nor
had given any pro-forma invoices. Further the receipts of pay
orders from M/s DDM&ET had not been issued by M/s LIPT.
4.7.10. Investigation conducted by CBI has also disclosed that
the certificates submitted by Shri T. D. Naidu in support of
his educational/professional qualification & of Shri R.
Varadarajan (A2) along with project report are
fake/forged.”
15. The above details demonstrate the role played by the
petitioner/fifth accused in assisting the first accused in using the proceeds
of crime. The proceeds of crime used for acquiring those properties are
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also set out in detail.
16. At this juncture, it is relevant to refer to Section 3 of the PMLA,
which reads as follows:
“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 and projecting it as
untainted property shall be guilty of offence of money
laundering.”
17. As per Section 3 of PMLA, whoever directly or indirectly
attempts to indulge, knowingly assists, knowingly is a party or is actually
involved in any process or activity connected with the proceeds of crime,
which include its concealment, possession, acquisition, or use and
projects or claims it as untainted property, shall be guilty of the offence of
money laundering.
18. From the averments in the complaint and the documents
available on record, it is evident that after the first accused received
Rs.41 Crore in the trust account through manipulation and fabrication, a
portion of the amount was routed through the petitioner. Specifically a
sum of Rs.14.40 Crores was paid to Mr.R.Varadarajan/petitioner in his
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personal account for purchase of steel material and construction work,
which was deposited by the petitioner in the Indian Bank account,
Chennai. Immediately, thereafter, out of the funds received, the
petitioner transferred Rs.14.20 Crores back to the personal account of
Mr.T.D.Naidu/first accused.
19. Further, again a sum of Rs.6.50 Crores was paid to the
petitioner on 07.10.2008 and a sum of Rs.9 Crores was paid to the
petitioner on 14.10.2008 for procuring building materials. However, the
petitioner, in turn, transferred Rs.6.45 Crores and Rs.9 Crores to the
personal account of the first accused/Mr.T.D.Naidu. Therefore, out of the
total amount of Rs.29.90 Crores received by the petitioner towards the
construction purposes from the Trust, he has immediately re-transferred
a sum of Rs.29.65 Crores to the personal account of Mr.T.D.Naidu and
other personal accounts as instructed, which prima facie discloses that the
petitioner Mr.R.Varadarajan actively and knowingly involved himself in the
process of transferring, concealing and disbursing the proceeds of crime,
which had been availed from the bank by manipulating the documents.
20. Since prima facie materials are available on record indicating
that the petitioner assisted and actively participated in handling the
proceeds of crime by transferring the funds from the trust to the first and
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second accused’s personal accounts, which were ultimately utilised to
acquire several immovable and movable properties, the averments and
materials available are sufficient to implicate the petitioner in the
complaint.
21. Insofar as the decision of this Court relied upon by the learned
Senior Counsel in respect of the sixth accused is concerned, it stands on a
completely different footing. The Co-ordinate Bench of this Court had
quashed the complaint against the sixth accused after considering that he
was only the Branch Manager of the bank who sanctioned the loan. The
Bench found that there were no specific averments or materials in the
complaint to show that the Branch Manager had, in any manner, directly
or indirectly assisted the first accused in laundering, projecting, or
concealing the proceeds of crime.
22. However, a perusal of the very same order dated 27.01.2022
reveals that the Coordinate Bench had, in fact, dismissed the quash
petitions filed by the second and fourth accused in this case. The Bench
did so by taking into account the specific overt acts detailed in the
complaint against accused persons, including the petitioner
Mr.R.Varadarajan, as there are materials available against them to show
as to how they have assisted the first accused in handling the tainted
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money generated from the predicate offence. Therefore, the order passed
in respect of the sixth accused is of no avail to the petitioner/fifth
accused.
23. In view of the above deliberations, we find that there are
sufficient materials available in the complaint implicating the petitioner for
offences under Section 3 of the PMLA, and we see no merit in this
petition.
24. Accordingly, the Criminal Original Petition stands dismissed.
Consequently, the connected Miscellaneous Petitions are closed.
(SUSHRUT ARVIND DHARMADHIKARI, C.J.) (G.ARUL MURUGAN J.)
10-07-2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
Jeni
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To
1.The XIV Additional Sessions Judge for CBI Cases,
Chennai.
2.The Directorate of Enforcement,
Represented by the Deputy Director,
Government of India, Ministry of Finance,
Department of Revenue, 2nd and 3rd Floor,
Murugesa Naicker Complex,
No.84, Greams Road, Thousand Lights,
Chennai – 600 006.
3.The Special Public Prosecutor,
High Court of Madras, Chennai.
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THE HON’BLE CHIEF JUSTICE.
AND
G.ARUL MURUGAN, J.
Jeni
CRL OP No. 14929 of 2026
10-07-2026
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