ED Admits Lack of Power to Seal Premises Without ‘Reason to Believe’: Madras HC Orders De-Sealing and Grants Interim Relief [Read Order]
ED Admits Lack of Power to Seal Premises Without ‘Reason to Believe’: Madras HC Orders De-Sealing and Grants Interim Relief
![ED Admits Lack of Power to Seal Premises Without ‘Reason to Believe’: Madras HC Orders De-Sealing and Grants Interim Relief [Read Order]](https://images.taxscan.in/h-upload/2025/06/25/2054312-ed.webp "ED Admits Lack of Power to Seal Premises Without ‘Reason to Believe’: Madras HC Orders De-Sealing and Grants Interim Relief [Read Order]")
In a recent interim ruling, the Madras High Court granted relief to businessman Vikram Ravindran, directing the Enforcement Directorate (ED) to de-seal his residential premises after finding that the agency had acted without proper authority under Section 17 of the Prevention of Money Laundering Act (PMLA). The court held that the ED had failed to show any credible information or “reason to believe” that justified the search and subsequent sealing of the property.
Vikram Ravindran filed a writ petition challenging the ED’s search and sealing of his flat located in Thazambur, Kanchipuram, alleging that the action was illegal and unsupported by any evidence. He argued that he had no connection to the ongoing investigation involving TASMAC (Tamil Nadu State Marketing Corporation) and that no scheduled offence or predicate offence had been registered against him in the 41 FIRs filed by the Directorate of Vigilance and Anti-Corruption (DVAC).
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During the proceedings, the bench comprising Justice M.S. Ramesh and Justice V. Lakshminarayanan questioned whether the ED had any legal basis to seal a property merely because it was locked during a search. In response, Additional Solicitor General S.V. Raju admitted that the ED did not have the power to seal a premise under Section 17 of PMLA. The counsel argued that while the provision allows officers to break open a lock to carry out a search, it does not authorize sealing. The counsel stated that the ED had chosen not to break open the premises in order to avoid escalating the situation.
The court observed that the ED had failed to produce any material that could reasonably establish a link between the petitioner and the alleged offence of money laundering. Although the ED produced a sealed cover and an undated, unsigned explanation note, the court found that the contents had no connection to the original claim of possessing incriminating information. The court remarked that the so-called "reason to believe" lacked any factual basis and that the materials did not justify the search or sealing actions undertaken by the ED.
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Taking note of the ED’s submission that it was willing to withdraw the notice and allow the petitioner access to his premises, the court recorded the statement and held that the authorization dated 15.05.2025 and the subsequent sealing on 16.05.2025 were without jurisdiction. The court granted an interim stay on all further proceedings related to the authorization and scheduled the matter for further hearing on July 16, 2025.
The court also directed that all sealed cover materials submitted during the hearing be kept in safe custody by the Registrar (Judicial) and clarified that it was consciously refraining from commenting in detail on the materials due to their sensitive nature.
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