The Kerala High Court has dismissed a petition filed by Cochin Minerals & Rutile Ltd (CMRL), Kochi, challenging the Enforcement Directorate's (ED) investigation into alleged financial transactions between the company and Exalogic Solutions, a firm owned by T Veena, daughter of former Chief Minister Pinarayi Vijayan.
Court's Decision
Justice T R Ravi dismissed the 2024 petition on Tuesday, holding that the challenge was premature since it was directed against proceedings at the stage of issuance of summons. The High Court observed that a summons issued by the ED merely requires a person to appear, state the truth, make statements, and produce documents, and that such proceedings do not even require the registration of an FIR. With the dismissal of the petition, the ED is now free to proceed with its investigation into the alleged transactions between CMRL and Exalogic Solutions.
Background of the Case
The matter arose from findings of the Interim Board for Settlement of the Income Tax Department, which concluded that payments amounting to Rs 1.72 crore made to Exalogic Solutions during the assessment years 2017-18 to 2019-20 could not be treated as business expenditure. Following this, the Ministry of Corporate Affairs, in January 2024, ordered an investigation by the Serious Fraud Investigation Office (SFIO). Subsequently, in April 2024, the ED issued a summons to CMRL officials regarding the alleged payments under the Prevention of Money Laundering Act (PMLA), prompting the company to approach the High Court.
Arguments by CMRL
CMRL argued that the ED could initiate proceedings under the PMLA only on the basis of a valid FIR or complaint relating to a predicate offence recognised as a scheduled offence under the Act. The company contended that without such a predicate offence, the ED's summons were invalid.
ED's Submission
Opposing the plea, the ED submitted that proceedings under the PMLA can be initiated even without an FIR. It further argued that the petition was premature because only a summons had been issued and no rights of the petitioners had been curtailed. The ED also pointed out that the SFIO had filed a complaint against the petitioners in April 2025, rendering the argument regarding the absence of a scheduled offence unsustainable.
Court's Observations
The High Court rejected the petitioner's contention that the ED's powers under the PMLA depend upon the SFIO's final report and held that such an argument could not be accepted. It also rejected the petitioners' claim for immunity under Section 245H of the Income Tax Act from prosecution under the Income Tax Act, the Indian Penal Code, or any central legislation in relation to matters covered by the settlement before the Settlement Commission.
With this dismissal, the ED can now proceed with its investigation into the alleged transactions, which have significant political and legal implications in Kerala.
