According to police, Varadarajan's son could not identify the body as it was in a highly decomposed, but the politician's wife and other relatives identified the body.
64-year-old Varadarajan was a trade union leader and a former legislator. He was stripped of central committee membership of the CPI-M and all party posts earlier this month.
An official said that police are investigating the cause of death and will hand over the body after conducting DNA tests.
Varadarajan, a qualified chartered accountant, quit his Reserve Bank of India (RBI) job, attracted by the communist ideology.
He was elected to the Tamil Nadu assembly in 1989 from Villivakkam constituency.