Attachment of properties under TANPID Act will take precedence over attachment under money laundering charges: Madras High Court

The Madras High Court has come to the rescue of thousands of depositors duped by fraudulent financial institutions by holding that attachment of properties under the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act of 1997 (TANPID Act) would take precedence over the attachment of the same properties under the Prevention of Money Laundering Act (PMLA) of 2002.

A Division Bench of Justices G.R. Swaminathan and V. Lakshminarayanan ruled that the attachments made by the Directorate of Enforcement (ED) by invoking the provisions of the PMLA could not be allowed prevail over the attachments made by a District Revenue Officer under the TANPID Act just because the former legislation was passed by the Parliament and the latter by the State legislature.

The verdict was passed while disposing of a case filed for expeditious sale of five properties belonging to Viswapriya (India) Limited, one of the many companies founded by R. Subramanian of the now-defunct Subhiksha chain of retail provision stores. The judges took note that 34 out of 1,240 depositors of Viswapriya Limited had died since most of them were senior citizens who had invested their retiral benefits.

Though the ED objected to the sale since it had also attached the same properties, the judges said, the Supreme Court had on April 12, 2019 stayed the proceedings initiated against Mr. Subramanian under the PMLA and therefore, as on date, the action initiated by the central agency had been put on hold. Even otherwise, the attachment under TANPID Act would prevail over the attachment under PMLA, they said.

Explaining the reasons, Justice Swaminathan said, Section 14 of TANPID Act categorically states that the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law. Further, the Supreme Court had upheld the validity of the Act in 2011 after taking into account that it had been enacted to ameliorate the conditions of thousands of depositors who had fallen into the clutches of fraudulent financial establishments which had raised hopes of high rate of interest but duped the depositors.

The senior judge in the Bench also recalled that the Supreme Court in 2025 had held that central legislations such as the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act of 2002 and Recovery of Debts and Bankruptcy Act of 1993 could not be permitted to prevail over the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act of 1999. The top court had held that allowing central legislations to prevail over State legislations would offend the very principle of federal structure set out in Article 246 of the Constitution.

Further, Justice Swaminathan highlighted that Section 3 of the TANPID Act, dealing with attachment of properties, begins with a non-obstante clause ‘Notwithstanding anything contained in any other law for the time being in force…’ whereas Section 5 of the PMLA, dealing with attachment of properties, does not have any non-obstante clause though a few other provisions of the central law do begin with such a clause.

“Having incorporated the non-obstante clauses in specific provisions, the omission to do so in the case of attachments appears to be deliberate and significant… An attachment passed under TNPID Act has the shield of non-obstante clause, whereas the attachment provision under PMLA is lacking in such armoury,” the judge wrote.

He ordered liquidation of the properties of Viswapriya (India) Limited attached under the TANPID Act and said: “The endeavor may be to ensure that within the next few months, the poor depositors are able to see the colour of the coin.”