The Kerala High Court on Monday (October 26) has stayed the FIR registered against former Chief Minister Pinarayi Vijayan, daughter Veena T. and son-in-law/ex-Minister Muhammed Riyas in CMRL-Exalogic pay off case, on a Single judge's direction to the Vigilance.

The Division Bench of Justice K. Natarajan and Justice Johnson John also stayed the further investigation in the case as well as the judgment of the Single Bench.

The Court today heard detailed arguments by Senior Advocates N. Hariharan, Sidharth Luthra, Gopalakrishna Kurup and T.A. Shaji for the appellants as well as Advocate General K. Jaju Babu for the State, Additional Solicitor General of India P. Sreekumar for the Enforcement Directorate and Advocate V. Sethunath for the writ petitioner.

The Court then admitted the appeals and posted them after 3 weeks for final hearing.

Arguments by the appellants

Senior Advocate Hariharan argued that the writ petitioner (Adv. K.M. Shajahan) had short circuited the statutory procedure as per Section 175 BNSS by approaching the writ court at the first instance. He pointed out that the result of the same was that the affected party, including the appellants, were not heard before action against them was ordered. He added that the Single Judge also decided the case without hearing them even though the Rules of the High Court permits the judges to issue notice to any party, who ought to be heard.

The senior counsel further argued that the State's decision to conduct a preliminary enquiry by a Special Investigation Team (SIT) was interfered with by a politically-motivated interloper, who is not even an affected party. He further added that the Single Judge exceeded jurisdiction by entering into the shoes of the investigating officer and by giving a direction to register FIR, which role is upon the executive to carry out. Moreover, since the matter was in the nature of a public interest litigation, the Single Judge ought not have heard the same. Plus, the procedural requirements for PILs was also not followed.

It was also pointed out that the very reason for the petitioner to approach the Single Judge was because the Serious Fraud Investigation Office (SFIO) enquiry into the very same transactions were stayed by the Delhi and Kerala High Courts. Moreover, as per Section 212 of the Companies Act, once the SFIO is conducting a probe, no other agency can conduct an investigation, he added. It was further argued that there is a mischief being conducted by way of the preferring of the writ petition.

One of the crucial arguments that was raised was that there is no cognizable offence made out, let alone an offence under the Prevention of Corruption Act. The transactions in question was done by the company headed by Veena and by virtue of that fact alone, former CM and the former Minister cannot be roped in for being her relatives when there is clear indication of any money being received by the two. He added that the materials do not even clearly say which of the two was the beneficiary of the bribes allegedly received:

"There has to be the offence which fall within the provisions of the PC Act. That is lacking. Then, the entire thing crumbles. The information shared must show that there is commission of offence under PC Act. If CMRL had engaged Veena for services and monies were given to her, for what she has not done, then that money has to reach the hands of Vijayan or Riyas. You [ED] are not sure. You say that this is quid pro quo. Where is that benefit? What was shared does not make out an offence under the PC Act. There is no case of any income or asset showing disproportionate assets. The entire act was a mischievous act."

He also added that procedure as per Section 17A PC Act was also not followed, with respect to prior sanction, preliminary enquiry, etc.

Senior Advocate Luthra pointed out that the SFIO or the appellants were not made a party on purpose so as not to hear them. He added that had the petitioner followed the route provided by the BNSS, the Magistrate or the investigating officer would have come to the conclusion that there is no cognizable offence.

He pointed out that there are apparent errors in the judgment of the Single Bench, which was also set aside in part by the Apex Court. Moreover, the main issue framed by the Single Judge regarding the responsibility of the State to register FIR without preliminary enquiry after receipt of information as per Section 66 of the Prevention of Money Laundering Act (PMLA) was also answered in favour of the appellants, he submitted.

Senior Advocates Kurup and Shaji pressed for a stay of the Single Bench decision.

Contentions raised by the State

The Advocate General submitted that though the State is not in full agreement with the Single Bench decision to set aside the formation of the SIT, it decided to respect the decision and register Vigilance FIR since the Single Bench was privy to the materials with the ED regarding commission of offences.

"I would submit that what we did was legally and factually correct. An information is received from the ED on which we decided to conduct a preliminary enquiry as to whether all the buttons are in the right hole. We constituted the SIT and two days after, it was challenged by the petitioner...Somebody diverted the investigation that we started. The stand of the government, with abundant caution, we decided to conduct preliminary enquiry...We had respected the Single Judge's decision to that extent since the Single Judge had verified the documents and was satisfied regarding commission of the offence. We didn't challenge the decision for this reason," he said.

He prayed that a stay may not be granted at the present stage since an FIR has already been registered.

ED's arguments

The ASGI appeared on behalf of the Directorate of Enforcement and argued that when materials disclosing cognizable offence is passed on, the State has to register an FIR, as rightly held by the Single Judge. He added that Section 212 of the Companies Act regarding SFIO alone having jurisdiction is not applicable to PMLA cases.

He also prayed that the stay on the investigation ought not be extended.

Writ petitioner's arguments

The Court also heard the counsel, who is appearing for the writ petitioner. He pointed out that this is not a case where the remedy is to approach the Magistrate. Since information was given to the State Police Chief, there is no other remedy available to him, he added.

It was also pointed out the State had constituted an SIT illegally, without following the law. It was further contended that the writ petitioner had locus standi to prefer the case.

Background

The Apex Court had, on October 21, set aside the order refusing to permit Pinarayi and his family from appealing against Single Bench order directing FIR against them and had held that are entitled to move appeals before the Division Bench.

A Single Bench had directed the Vigilance and Anti-Corruption Bureau (VACB) to register an FIR incorporating offences under the Prevention of Corruption Act against Pinarayi, Veena and Riyas based on the information passed by the Directorate of Enforcement.

The Single Bench had found that the government's decision to conduct preliminary enquiry without registration of FIR is illegal considering the facts of the case. It had also set aside the State's order forming Special Investigation Team (SIT) to conduct preliminary enquiry.

Aggrieved by the direction, the three moved separate appeals before the Division Bench. It is contended that they were not heard by the Single Bench before passing an order that directly affects them, violating principles of natural justice. The Division Bench did not grant them leave to prefer the appeal.

Subsequently, the three moved the Supreme Court challenging the decision and the appeals were remanded back to the Division Bench for consideration. The Supreme Court had also granted a 10-day stay on the investigation in the FIR registered against them.

Counsel for the appellants: N. Hariharan (Sr.), Sidharth Luthra (Sr.), S. Sreekumar (Sr.), T.A. Shaji (Sr.), K. Gopalakrishna Kurup (Sr.), Raman B. Pillai (Sr.), Ameen Hassan K., Lisna Sherin T.T., Ummul Fadla T., Abdul Fathah, Rajesh A., Muneer Ahmed, Gilbert George Corrreya, K.K. Ravindranath, P. Narayanan, Manu V., Thanushree Damodaran, Abhijith M.A., Clarina Christopher P., Mayank Jain, Madhur Jain, Arpit Goel

Counsel for the respondents: K. Jaju Babu - AG, P. Sreekumar - ASGI, V. Sethunath