'FIR For Scheduled Offence Not Necessary For Civil Action Under PMLA': Kerala High Court Upholds ED Probe Against CMRL

The Kerala High Court on Friday (June 5) dismissed an appeal by Cochin Minerals and Rutile Limited (CMRL) and its officials challenging an order of the Single Bench that dismissed their plea to quash the proceedings initiated by the Enforcement Directorate in an alleged case of misappropriation of public funds.The Division Bench of Justice Raja Vijayaraghavan V. and Justice K.V. Jayakumar has upheld the single judge's order. The Court held:"The core issues that this Court was called upon to answer wasa) the legal nature and status of the ECIR vis-à-vis an FIR under Code of Criminal Procedure, 1973 and whether it can be quashedb) whether the power of enquiry under S. 50 PMLA can be exercised without a prior FIR or complaint involving a scheduled offencec) whether the initiation of civil action under S.5/50 PMLA requires the prior registration of a scheduled offenceWe hold that the non-registration of an FIR or non-filing of a complaint in respect of a scheduled offence will not bar the ed from initiating civil action under the PMLA. The registration of a schedule offence is only a pre-requisite only for penal prosecution under S. 3 and not for civil action of attachment under S. 5 or the exercise of inquiry power under S. 15 PMLA".It further held that since ECIR is not a statutory document, and even the non-registration of the ECIR does not impede the commencement of civil action, the prayer for quashing ECIR cannot be granted.Earlier this week, the Court had heard detailed arguments advanced by Senior Advocate Siddharth Luthra appearing for the appellants, ASGI AR L Sundaresan and Zoheb Hossain (Special Counsel) appearing for the ED. It had then reserved its verdict and asked the ED not to precipitate the issue until the verdict is pronounced.The Division Bench relied on the decision of the Apex Court decision in Vijay Madanlal Choudhary v. Union of India and observed:"In plain and simple words, the ECIR is not a statutory document, and there is no provision in the PMLA, requiring the authority mentioned in Section 48 to record ECIR or to furnish copy thereof to the accused, as in the case of Section 154 of the Cr.P.C. As far as furnishing the copy of the ECIR is concerned, it was observed that the ECIR may contain sensitive operational details about the material in the ED's possession, disclosure of which could jeopardize the investigation and frustrate the attachment of proceeds of crime. Taking note of the above, the Apex Court has held that supply of a copy of the ECIR would defeat the purpose sought to be achieved by the PMLA."BackgroundIn 2023, a complaint was filed by Shone George before the Ministry of Corporate Affairs seeking an investigation into the affairs of CMRL under Sections 210 [Investigation into Affairs of Company] and 212 [Investigation into Affairs of Company by Serious Fraud Investigation Office] of the Companies Act.It has been alleged that CMRL handed bribes to Veena Thaikandiyil (Veena Vijayan), daughter of former Chief Minister Pinarayi Vijayan, her company Exalogic Solutions Pvt. Ltd., and other public servants, and carried out illegal financial transactions.Following this, orders were passed by the Ministry, appointing three Inspectors to carry out the investigation and assigning SFIO to look into the affairs of CMRL. Later, CMRL came to know from a media report that a case have been registered under the PMLA (Prevention of Money-Laundering Act, 2002) in relation to Exalogic based on a SFIO complaint.The ED issued summons to the office bearers to personally appear before it but CMRL gave a reply that the PMLA proceedings were initiated without jurisdiction. However, ED replied that the reply cannot be accept and mandated their personal appearance, leading them to approach the High Court by filing a writ petition. They sought to quash the proceedings initiated by the ED arising out of Enforcement Case Information Report (ECIR) and to stay the summons issued against the officials.The Single Judge had dismissed the plea after finding that the same, made at the stage of issuance of summons, was premature. The Single Judge was also of the view that the contention of the petitioners that SFIO complainant was not there at the time of summons can no longer exist in view of the fact that SFIO filed a complaint against the petitioners, alleging scheduled offences under the PMLA, after the case was heard and taken for orders. It was further opined that FIR on scheduled offences not a pre-condition for issuing summons under the PMLA.Case Title: M/s Cochin Minerals and Rutile Limited and Ors. v. Directorate of EnforcementCase No: WA 1140/ 2026Citation: 2026 LiveLaw (Ker) 311Counsel for the appellants: Sidharth Luthra (Sr.), Arshdeep Singh Khurana, Gopikrishnan Nambiar M., K. John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C. Abraham, Raja KannanCounsel for the respondent: ARL Sundaresan - ASGI, Zoheb Hossain - Spl. Counsel, Jaishankar V. NairClick to Read/Download Judgment

'FIR For Scheduled Offence Not Necessary For Civil Action Under PMLA': Kerala High Court Upholds ED Probe Against CMRL

K. Salma Jennath

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K. Salma Jennath

'FIR For Scheduled Offence Not Necessary For Civil Action Under PMLA': Kerala High Court Upholds ED Probe Against CMRL

K. Salma Jennath

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K. Salma Jennath

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