Madurai Bench Dismisses Batch of Quash and Revision Pleas in Rs 7,237-Crore Illegal Granite Mining Case
The Madras High Court's Madurai Bench refused to quash proceedings against granite quarry operators and their family members accused of large-scale illegal mining and money laundering, directing the Chief Secretary to constitute a special prosecution team.
A Division Bench of the Madras High Court's Madurai Bench, comprising Justice N. Anand Venkatesh and Justice K.K. Ramakrishnan, on 24 June 2026 dismissed a large batch of criminal original petitions, criminal revision cases, and related miscellaneous applications arising out of alleged large-scale illegal granite quarrying in Madurai district. The principal accused, P. Palanisamy, his family members, and associated granite firms had sought either quashing of the criminal proceedings or revision of orders dismissing their discharge petitions. The prosecution alleges illegal extraction and misappropriation of natural resources causing wrongful loss to the State estimated at approximately Rs. 7,237.53 crores, together with a separate prosecution under the Prevention of Money Laundering Act, 2002 (PMLA) in respect of proceeds alleged to have been laundered through acquisition of immovable properties. The bench found no merit in any of the contentions advanced and issued directions for expeditious trial completion.
The Dispute Before the Madurai Bench
P. Palanisamy and members of his family—including his wife P. Selvi, daughter-in-law S. Chandralekha, and others—along with their granite firms M/s PRP Exports, M/s PRP Granites, and M/s PRP Granite Exports, are accused in a series of criminal cases registered by police stations including Keelavalavu, Melur, Othakadai, and Vikkiramangalam in Madurai district. The FIRs, spanning crime numbers from 2012 and 2013, allege that the accused held quarry leases for specific survey numbers but conducted quarrying beyond the leased boundaries into Government poramboke lands, water bodies, water channels, and private lands. The prosecution's case is that they used explosive substances in violation of mining laws, excavated massive pits, destroyed watercourses meant for irrigation, filled up quarry pits to conceal the operations, and removed survey stones.
After investigation, final reports were filed for offences under Sections 447, 434, 379, 420, 430, 465, 467, 468, 471, and 304(ii) of the IPC read with Sections 109, 114, and 511 IPC, Section 3(i)(ii) and 4 of the Tamil Nadu Property (Prevention of Damage and Loss) Act, 1992, and Section 3(a), 4(a), and 6 of the Explosive Substances Act, 1908 read with Section 120-B IPC. Cases were taken on file in various Special Sessions Courts at Madurai. Separately, the Enforcement Directorate filed complaints under the PMLA, registered as C.C. No.10 of 2018 (ECIR/CEZO/15/2013) and C.C. No.5 of 2022 (ECIR/CEZO/4/2014), before the Special Court for CBI Cases and the Principal District and Sessions Judge, Madurai, respectively.
Several accused filed discharge petitions before the trial courts, which were dismissed. They then filed the present batch of criminal revision petitions before the High Court challenging those dismissals. Other accused filed quash petitions directly. Two senior advocates argued the batch: Mr. N. Anandapadmanaban appeared for the accused in the mining cases, and Mr. R. John Sathyan appeared for the accused in the PMLA cases. Mr. A. Thiruvadikumar, Additional Public Prosecutor, appeared for the State, and Mr. K.R. Laxman, Standing Counsel for the Enforcement Directorate, appeared for the ED.
The Arguments Advanced
The petitioners advanced four main grounds. First, they relied heavily on a High-Level Committee report dated 31 March 2021, which, they contended, had been constituted on the directions of the Supreme Court and had returned findings contrary to the Mohandas Committee's earlier valuation, thereby demonstrating that no offence was made out. Second, they argued that the wife, daughter, and daughter-in-law of P. Palanisamy had been unnecessarily arrayed as accused without any incriminating material. Third, they contended that the Section 161 CrPC statements of witnesses were stereotyped “parroted versions” lacking credibility and insufficient to sustain prosecution. Fourth, they argued that inordinate and unexplained delay in registering the FIRs indicated mala fide intent.
The Additional Public Prosecutor countered each ground. He submitted that the Supreme Court had never directed the constitution of any committee; it had merely affirmed the Madras High Court's order and granted liberty to the accused to raise objections before the District Collector in the recovery proceedings. He maintained that the report dated 31 March 2021 was never accepted by the Government, which had instead constituted a fresh committee under a retired High Court judge, Dr. Justice P. Jyothimani, to re-examine the matter. He further submitted that sufficient eyewitness and documentary materials established the involvement of the women accused, that Section 161 statements are not substantive evidence and the question of their credibility is a trial issue, and that the continuing nature of the offences diluted any complaint about delay.
The High-Level Committee Report: No Basis to Quash
The bench dealt at length with the 31 March 2021 report. It traced the factual background: IAS officer Shri U. Sagayam conducted a surprise inspection and reported illegal quarrying involving a loss of approximately Rs. 23,000 crores. The District Collector, Shri Anshul Mishra, then constituted the Mohandas Committee, which inspected more than eighteen villages in Madurai district, found extensive illegal quarrying extending over 4,552,034.3 cubic metres in non-leased areas, and assessed the loss at approximately Rs. 13,178.49 crores. Show-cause notices were issued under the Mines and Minerals (Development and Regulation) Act, 1957. Writ petitions challenging those notices were dismissed by a single judge and, on appeal, by a Division Bench comprising then-Justice Sanjay Kishan Kaul and Justice M.M. Sundresh on 16 March 2015. The accused approached the Supreme Court in SLP No. 16467 of 2015; the Supreme Court granted them liberty to raise all objections before the District Collector and directed completion of proceedings within two months, without directing constitution of any new committee.
The bench found that the 31 March 2021 report had never been accepted by the Government. Instead, the Government constituted a committee under Dr. Justice P. Jyothimani (Retired Judge) to analyse the earlier reports and enable the District Collector to finalise the show-cause notices. That committee's report remained under consideration. The bench held that the Supreme Court's order was misread to justify the 31 March 2021 committee's constitution, and that reliance on a report that (a) was not accepted by the Government, (b) was not part of the final reports filed in the criminal court, and (c) was procured through RTI in 2022, long after charges were filed, could not furnish a ground to quash the proceedings. If the accused wished to rely on the report, they were at liberty to do so during trial, where its admissibility, relevance, and evidentiary value would be for the trial judge to decide.
The bench emphasised that even if the Government ultimately accepts any committee report for the limited purpose of quantifying civil loss, that would have no bearing on the criminal prosecution. And even if recovery proceedings were abandoned or modified, the criminal case would not automatically terminate. The bench also noted that in economic offences, the precise quantum of wrongful gain or loss is not determinative of the offence's existence: it may affect the quantum of damages but does not negate criminal liability or the prima facie case.
Women Accused: Partnership and Participation
The bench rejected the contention that the women accused—the wife, daughter, and daughter-in-law of P. Palanisamy—were falsely implicated. It examined the materials, including eyewitness statements extracted in the order itself, which specifically named P. Selvi, S. Chandralekha, and M. Sivaranjani as having directed quarry workers to remove topsoil and trespassed into Government poramboke land in connection with the quarrying operations.
The records showed that P. Selvi and S. Chandralekha were partners in M/s PRP Exports and M/s PRP Granites from 2003 to 2010. The prosecution alleges illegal mining during that period of partnership. The bench held that their subsequent retirement from the partnership did not efface criminal liability for acts allegedly committed during their active association with the enterprise.
The bench cited a Supreme Court decision in Criminal Appeal No. 496 of 2026, dated 20 January 2026, arising from the very same mining litigation. In that appeal, the Supreme Court set aside a Madras High Court order that had quashed proceedings against a co-accused who had sold the leased property before the FIR was registered. The Supreme Court held that where materials disclose participation in illegal quarrying during the relevant period, subsequent transfer of property or cessation of association cannot by itself ground quashment. The bench applied that principle directly to the women accused.
On the PMLA side, an earlier order in Crl.O.P.(MD) No. 11941 of 2019 had already noted that P. Selvi (A7) and S. Chandralekha (A8) were income-tax assessees, were literate in English, and had thorough knowledge of the movable and immovable properties acquired by the firms. Given the statutory presumption under Section 23 and the reverse burden under Section 24 of the PMLA, the bench could not find at the Section 482 stage that they did not know they were participating in money laundering.
Parroted Versions, Delay, and Mala Fides: All Rejected
The bench rejected the “parroted versions” argument on the ground that Section 161 CrPC statements are not substantive evidence. Whether witnesses have been tutored, whether their versions are unnaturally uniform, or whether similarities affect credibility are questions that arise only after witnesses enter the box and are cross-examined. No such appreciation can be undertaken under Section 482 CrPC.
On delay in FIR registration, the bench held that the offences alleged are of a continuing nature—spanning illegal extraction, storage, transportation, and concealment—which dilutes the rigour of any delay argument. The materials also prima facie suggested that registration was stalled by the alleged intervention of officials who colluded with the accused. Whether that is true is a trial issue. The bench relied on the Supreme Court's observations in Skoda Auto Volkswagen India Pvt Ltd. v. State of Uttar Pradesh, (2021) 5 SCC 795, to hold that delay in lodging an FIR is not by itself a ground to quash proceedings, particularly in serious or continuing offences. The plea of mala fides was also rejected: the investigating agency had collected substantial materials which, taken at face value, constituted the alleged offences, and mere allegations of mala fides in the face of prima facie incriminating material do not justify quashment.
PMLA Proceedings: Independent Offence, Charges Already Framed
The bench dealt separately with the quash petitions targeting the PMLA prosecutions in C.C. No. 10 of 2018 and C.C. No. 5 of 2022. Mr. R. John Sathyan adopted the arguments on the 31 March 2021 report and contended that since no predicate offence survived, the PMLA prosecution must also fall.
The bench refused to accept this. Money laundering under Section 3 of the PMLA is an independent and distinct offence. Once a complaint is filed on the basis of a scheduled offence and the investigating agency has collected prima facie materials indicating proceeds of crime, the burden under the PMLA operates against the accused during trial. The ECIR in the present case was founded on multiple scheduled offences arising from different crime numbers. Not all predicate offences had been quashed. The substratum of the PMLA prosecution therefore survived.
The bench noted that the Special Judge had already framed charges after independently considering the ED's materials. On its own perusal, the bench found sufficient prima facie material indicating laundering of proceeds through acquisition of substantial immovable properties, investments in the names of the accused, and various financial transactions. The bench also pointed out that a previous quash petition (Crl.O.P.(MD) No. 11941 of 2019) targeting the same PMLA proceedings had already been dismissed and that the present petition was, in the ED's submission, an abuse of process aimed at prolonging proceedings. The bench dismissed the PMLA quash petitions and directed that C.C. No. 10 of 2026 continue in accordance with law.
Directions on Expeditious Trial
The bench observed that the criminal cases had remained pending for more than fourteen years, with prosecution witnesses, many around 62 years of age, awaiting conclusion. It further noted that the recovery proceedings under the Mines and Minerals (Development and Regulation) Act, 1957, despite the Division Bench's direction in 2015 to conclude within two months, had not reached their logical conclusion, with successive committees constituted in the intervening period.
The bench directed the Chief Secretary to the Government of Tamil Nadu to constitute a Special Public Prosecution Team by appointing competent Public Prosecutors to conduct the prosecution effectively, with the trial to be concluded preferably within three months from receipt of the order, subject to the cooperation of all stakeholders and the convenience of the trial court.
The bench also observed that it was open to the Government, if so advised, to ensure expeditious completion of the recovery proceedings under the Mines and Minerals (Development and Regulation) Act, 1957, given that the amounts involved, stated to exceed Rs. 13,178.49 crores by way of penalty and other recoverable sums, represent substantial public revenue.
Order
All Criminal Revision Cases challenging the dismissal of discharge petitions and all quash petitions were dismissed. Liberty was granted to the petitioners to raise all available factual and legal defences before the trial court, including reliance on reports and documents subject to their admissibility and proof in accordance with law. The trial judge was directed to independently assess the evidence uninfluenced by any observation in the present proceedings. The Chief Secretary, Government of Tamil Nadu, was directed to constitute a Special Public Prosecution Team to ensure completion of the trial preferably within three months.