KOCHI: The Kerala High Court on Friday cleared the way for the Enforcement Directorate (ED) to continue its investigation into alleged illegal payments made by Cochin Minerals and Rutile Limited (CMRL) to Exalogic Solutions, the IT firm owned by T Veena, daughter of former Chief Minister Pinarayi Vijayan.
Dismissing appeals filed by CMRL and its officials challenging the ED probe, a division bench comprising Justices Raja Vijayaraghavan V and KV Jayakumar upheld an earlier single-judge ruling that permitted the investigation to proceed.
The court held that the absence of an FIR or a complaint related to a scheduled offence does not prevent the ED from initiating civil proceedings under the Prevention of Money Laundering Act (PMLA). It clarified that registration of a scheduled offence is mandatory only for criminal prosecution under Section 3 of the Act, and not for civil actions such as attachment of properties under Section 5 or inquiries conducted under Section 50.
Rejecting the plea to quash the Enforcement Case Information Report (ECIR), the bench observed that the ECIR is not a statutory document and that even its non-registration would not hinder the commencement of civil proceedings under the PMLA. Consequently, the court found no grounds to interfere with the earlier judgment dismissing CMRL’s petition.
Following the verdict, counsel for CMRL sought two weeks of protection from coercive action to enable the company to approach the Supreme Court. The bench declined the request, stating that such relief could not be granted.
The ED had earlier issued summons to CMRL officials under provisions of the PMLA. In their appeal, the company and its officers argued that the agency lacked jurisdiction because no FIR or complaint relating to a scheduled offence existed when the ECIR was registered. They also contended that the single-judge bench had improperly relied on subsequent developments, including a complaint filed by the Serious Fraud Investigation Office (SFIO) alleging offences under the Companies Act, to justify the investigation.
Appearing for the ED, Additional Solicitor General ARL Sundaresan argued that the agency is empowered to begin inquiries upon receiving credible information and registering an ECIR, even in the absence of an FIR involving a scheduled offence. He submitted that the present proceedings remain at the inquiry stage and have not culminated in the filing of a complaint under Section 44 of the PMLA.
The ED further relied on findings of the Income Tax Department, which allegedly indicated inflation of expenses, generation of cash for unlawful payments, and a purportedly fictitious payment of Rs 1.72 crore to Veena Vijayan and Exalogic Solutions without any services being rendered in return. The agency cited these findings as part of the basis for its ongoing investigation.
