The Enforcement Directorate (ED) does not necessarily require a predicate offence — an FIR registered for any scheduled offence by any enforcement agency — to initiate a probe under the Prevention of Money Laundering Act (PMLA). This was reaffirmed by the Kerala High Court while vacating a stay on the ED investigation against Cochin Minerals and Rutile Limited (CMRL), a publicly listed company of the Kerala State Industrial Development Corporation.
Court Dismisses CMRL Petition
On Tuesday, the Kerala High Court dismissed a petition from CMRL, ruling that the ED's money laundering investigation is independent of the existence of a scheduled offence. Justice TR Ravi presided over the case and stated that the summons issued by the ED were solely for investigative purposes and did not require the registration of an FIR.
ED Searches Following Judgment
A day after the court's decision, on Wednesday, the ED conducted searches across nine premises in Thiruvananthapuram. These included the residence of former Kerala Chief Minister Pinarayi Vijayan, where he resided with his daughter Veena. Veena is one of the accused who allegedly received Rs 2.8 crore from CMRL without providing any IT services as claimed.
Legal Precedent Cited
Justice Ravi referenced the Supreme Court's judgment in Vijay Madanlal Choudhary (Supra), holding that the absence of an FIR regarding a scheduled offence does not impede the commencement of an inquiry or investigation for initiating civil action, such as the provisional attachment of property that constitutes proceeds of crime. The court noted that the term 'investigation' under Section 2(n)(a) of the PMLA includes all proceedings conducted by the Director or authorized authorities for evidence collection.
The judge remarked, “At this stage it is not possible to state what the outcome of the investigation would be. As the law has already been laid down by the Supreme Court, that the existence of an FIR is not a pre-condition for issuing summons under Section 50 of the PML Act, it only needs to be followed by this court.”
Petition Deemed Premature
The writ petition was considered premature and not maintainable against summons issued under Section 50 of the PMLA. The court further clarified that immunity under the Income Tax settlement mechanism does not bar PMLA proceedings, and the ED's powers are independent of the Serious Fraud Investigation Office's (SFIO) final report or prosecution. Dismissing the petition, the court observed that the subsequent filing of an SFIO prosecution complaint had “cured the petitioners’ principal objection regarding absence of a scheduled offence.”
