The Kerala High Court has dealt a significant blow to Veena T, the daughter of former Chief Minister Pinarayi Vijayan, by dismissing an appeal filed by Cochin Minerals and Rutile Ltd (CMRL). The appeal challenged the Enforcement Directorate's (ED) investigation into the company's transactions with Exalogic Solutions, a firm owned by Veena.
Division Bench Ruling
A division bench comprising Justices V Raja Vijayaraghavan and K V Jayakumar dismissed the appeal on Friday. The court upheld a single bench order that permitted the ED to proceed with its probe. The bench ruled that the absence of a formal First Information Report (FIR) or complaint regarding a scheduled offense does not prevent the central agency from initiating civil proceedings under the Prevention of Money Laundering Act (PMLA).
Protective Order Denied
Following the verdict, senior counsel representing CMRL requested a two-week protective order to allow the company to approach the Supreme Court. However, the bench declined this request, effectively allowing the ED to continue its investigation without delay.
Background of the Case
The case originates from a report by the Interim Board for Settlement of the Income Tax Department. The report indicated that CMRL had paid Rs 1.72 crore to Exalogic Solutions during the assessment years 2017–18 to 2019–20. These payments were deemed not to qualify as legitimate business expenditure.
Based on this report, the ED registered an Enforcement Case Information Report (ECIR) and issued summons to CMRL officials. The company challenged these actions in a petition filed in 2024, arguing that the ED lacked jurisdiction to investigate without a valid FIR or complaint related to a predicate offense under the PMLA. The company also sought the quashing of the ECIR and summons. However, the single bench dismissed the petition on May 26, leading to the present appeal.
Court's Observations
The division bench clarified that the registration of a scheduled offense is necessary only for penal prosecution under Section 3 of the PMLA. It is not a prerequisite for civil actions such as asset attachment under Section 5 or the exercise of inquiry powers under Section 50.
The court further noted that since the ECIR is not a statutory document, and even the absence of an ECIR does not hinder the initiation of civil proceedings, the request to quash the ECIR could not be granted. Concluding that there were no valid grounds to interfere with the single bench's judgment, the court dismissed the appeal.
