Demonetised currency notes to the tune of Rs. 1.2 crore were seized from a lodge in nearby Karaikudi on Friday with four persons arrested in this connection, police said.
The four, from Chennai, were arrested based on a tip-off, they said.
Preliminary investigations revealed that the gang arrived in Karaikudi on Thursday and had contacted one Ganesh Udayar to change the old currencies, but in vain.
They were instructed by a man from Chennai to hand over the amount to the correspondent of a private engineering college in the district.
Further investigation is on. Police said central government officials had also been informed of the seizure.