The Supreme Court today told the Enforcement Directorate (ED) not to meddle in the domain of other investigative agencies, while temporarily staying the investigation into a corruption FIR lodged by the Kerala Vigilance and Anti-Corruption Bureau against former Kerala Chief Minister Pinarayi Vijayan and his kin in the CMRL-Exalogic case.

A bench of Justice Joymalya Bagchi and V Mohana was hearing petitions filed by Vijayan and the other accused challenging the Kerala High Court single judge's decision to direct registration of an FIR on the basis of information supplied by the ED under Section 66(2) of the Prevention of Money Laundering Act (PMLA).

The High Court had quashed the state's decision to form a Special Investigation Team (SIT) and conduct a preliminary inquiry into the allegations.

The petitioners also challenged the High Court division bench order refusing to grant them leave to appeal against the single judge order directing registration of FIR.

During today's hearing, addressing the ED's counsel who supported the registration of the FIR and the High Court's order, the bench said that while the agency can continue with its examination of the matter under the PMLA, it cannot meddle with other agencies' domain.

“Do your PMLA examination. File your complaint under Section 4. You have got a scheduled offence. Go ahead with your prosecution. Don't extend your hand beyond your statutory limits. We are making your client (ED) very clear. Don't use the process of statutory powers to meddle into the statutory domain of other entities, okay? We are fully clear what you have done, what the High Court has done. We will maintain the FIR but no investigation until and unless these issues are decided by the appellate court”, Justice Bagchi said when Advocate Zoheb Hossain for the Enforcement Directorate defended the impugned High Court order and argued that the accused had no right to challenge it, as the ED's information disclosed a cognizable offence and thus FIR had to be registered.

Justice Bagchi clarified that the Court was not questioning the ED's authority to investigate the alleged hawala transactions or prosecute money laundering offence. He observed that the agency had the power to investigate hawala dealers and even a former Chief Minister under the PMLA. However, he emphasised that once the ED had discharged its duty by informing the State of an offence under the Prevention of Corruption Act, it was for the State to act in accordance with law.

The Court said that the ED could proceed with its investigation under the PMLA and pursue prosecution where warranted. However, whether the information supplied by the ED required the State police to register an FIR and commence a corruption investigation had to be examined separately, it said.

“Even a person not accused of a scheduled offence can be an offender under PMLA. So Mr. Zoheb (ED) has full power to investigate Hawala dealings to investigate former Chief Ministers. Nothing stops him. He has done his statutory duty. Intimated the state. Now it is for the state to act as per law,” Justice Bagchi observed,

During the hearing, the Court questioned whether the ED's communication under Section 66(2) of the PMLA automatically mandated the Kerala police to register an FIR, or whether the State police could first examine the information and decide what action was warranted.

Justice Bagchi said the Court would have to examine whether Section 66(2) imposed a mandatory obligation on the State police to register an FIR upon receiving information from the ED, or whether the agency retained discretion to conduct a preliminary inquiry.

He noted that the Kerala High Court Single Judge's order appeared to contain inconsistent reasoning on the issue, holding in one paragraph that registration of an FIR was mandatory while in another paragraph observing that some degree of verification is required.

He also questioned how an investigation against a former Chief Minister could proceed without prior approval under Section 17A of the Prevention of Corruption Act.

Hossain argued that prior approval under Section 17A of the Prevention of Corruption Act was not required in cases involving court-directed investigations, relying on a Supreme Court judgment that upheld the Bombay High Court's view on the issue.

Justice Bagchi, however, observed that the investigation in the present case was not court-directed but arose from information furnished by the ED under Section 66(2) of the PMLA.

He said that the question of whether the materials disclosed a case for investigation under the Prevention of Corruption Act had to be considered within the statutory framework governing the State agency.

“So the question is whether these materials are making out a case of investigation under the scheme of the Prevention of Corruption Act as per law is something which the agency must look into. It cannot be said that you completely shut out the agency's prerogative”, he said.

Ultimately, the Supreme Court set aside the High Court Division Bench's refusal to grant the accused leave to appeal against the Single Judge's order and directed that the appeal be considered by the Division Bench. The interim protection against investigation will operate for seven days to enable the accused to pursue that remedy.

Background

The case arises from allegations concerning payments made by Cochin Minerals and Rutile Ltd (CMRL) to Exalogic Solutions, a company owned by Vijayan's daughter, Veena T. The ED shared information with the Kerala police under Section 66(2) of the PMLA, alleging that the material gathered during its investigation disclosed offences under the Prevention of Corruption Act.

On October 9, the Kerala High Court Single Judge allowed a petition filed by K M Shajahan and directed the State Vigilance and Anti-Corruption Bureau to register an FIR against Vijayan, Veena, Riyas and other suspected persons and investigate the allegations. The court held that, on the facts of the case, the ED's information disclosed sufficient material to warrant registration of an FIR and that a further preliminary inquiry was not required.

The State had earlier constituted an SIT to conduct a preliminary inquiry. The Single Judge set aside that decision and directed the Vigilance Bureau to register the FIR on the basis of the ED's information.

On October 15, the Kerala High Court Division Bench declined to entertain the leave petitions filed by Vijayan and the other accused challenging the Single Judge's order. They subsequently approached the Supreme Court in the present case.