Kerala high court dismisses CMRL’s plea against ED probe

Kochi: In a major setback to Veena T, daughter of former chief minister Pinarayi Vijayan, a division bench of Kerala high court on Friday dismissed an appeal filed by Cochin Minerals and Rutile Ltd (CMRL) challenging the Enforcement Directorate’s (ED) probe into its alleged transactions with Exalogic Solutions, a company owned by Veena.

The bench, comprising Justices V Raja Vijayaraghavan and K V Jayakumar, while dismissing the appeal against the single bench order permitting ED to proceed with the probe, held that the non-registration of an FIR or non-filing of a complaint in respect of a scheduled offence would not bar the central agency from initiating civil action under the Prevention of Money Laundering Act (PMLA).

Following the judgment, senior counsel appearing for CMRL sought a protective order for two weeks to enable the company to approach Supreme Court. However, the bench declined the request.

With the dismissal of the appeal, ED can proceed with its probe. The case stems from a report by the Interim Board for Settlement of the Income Tax Department, which stated that CMRL had paid Rs 1.72 crore to Exalogic Solutions during the assessment years 2017–18 to 2019–20 and that these payments did not qualify as business expenditure.

Based on the report, ED registered an Enforcement Case Information Report (ECIR) and issued summons to CMRL officials. The company challenged the proceedings in a petition filed in 2024, contending that ED lacked jurisdiction to investigate the matter in the absence of a valid FIR or complaint relating to a predicate offence recognised as a scheduled offence under the Act. It further sought the quashing of the ECIR and summons. However, the single bench dismissed the petition on May 26, prompting the company to file the present appeal.

The division bench held that the registration of a scheduled offence is a prerequisite only for penal prosecution under Section 3 of the PMLA and not for civil action such as attachment under Section 5 or the exercise of inquiry powers under Section 50.

The court further held that, since the ECIR is not a statutory document and even the non-registration of an ECIR does not impede the commencement of civil action, the prayer to quash the ECIR cannot be granted. Observing that there were no grounds to interfere with the judgment of the single bench, the court accordingly dismissed the appeal.