The Kerala High Court on Monday reserved its order for Friday regarding an appeal filed by Cochin Minerals and Rutile Ltd (CMRL). The appeal challenges a Single Bench order that allowed the Enforcement Directorate (ED) to continue its investigation into alleged transactions between CMRL and Exalogic Solutions, a firm owned by Veena T, daughter of former Chief Minister Pinarayi Vijayan.
Court Directs Status Quo
The Bench comprising Justice V Raja Vijayaraghavan and Justice K V Jayakumar also directed the ED to maintain the status quo in its proceedings against the appellants, which include CMRL and its officials, until Friday. This interim order provides temporary relief to the company while the court examines the legal issues involved.
Background of the Case
The ED's investigation originates from allegations in a report by the Interim Board for Settlement of the Income Tax Department. According to the report, CMRL paid Rs 1.72 crore to Veena's company during the assessment years 2017–18 to 2019–20. The report stated that these payments did not qualify as business expenditure. Based on this, the ED registered an Enforcement Case Information Report (ECIR) and issued summons to CMRL officials.
Company's Challenge
The company challenged the summons in a petition filed in 2024, arguing that the ED lacked jurisdiction to investigate the matter. CMRL contended that there was no complaint or FIR relating to a scheduled offence that could serve as the predicate offence for proceedings under the Prevention of Money Laundering Act (PMLA). However, the Single Bench dismissed the petition, holding that the challenge was premature as it was directed against proceedings at the stage of issuance of summons. The Court noted that the summons merely required a person to appear, state the truth, make statements, and produce documents, and that such proceedings did not require the registration of an FIR.
Appeal Arguments
Aggrieved by this finding, CMRL filed the present appeal. The company contended that the ED had commenced its investigation as early as April 2024, before the registration of any scheduled offence and without identifying any proceeds of crime under the Act. Opposing the appeal, Additional Solicitor General A R L Sundaresan submitted that the issuance of summons was only for the purpose of collecting material for initiating proceedings under other relevant provisions of the PMLA and, therefore, could not be quashed.
