The Supreme Court today (October 21) held that former Kerala Chief Minister Pinarayi Vijayan, his daughter Veena T and son-in-law Muhammed Riyaz(a former Minister) are entitled to file appeal before the Division Bench of the Kerala High Court challenging the Single Bench's direction to register an FIR in the CMRL-Exalogic payoff case on the basis of the information supplied to the Kerala Police by the Directorate of Enforcement.

Faulting the Division Bench's view that they do not have the locus to file the appeal, the Supreme Court set aside the Division Bench's order which refused leave to them to file an appeal. To enable them to file the appeal before the Division Bench, the Supreme Court stayed the investigation in the FIR registered by the Kerala Vigilance and Anti-Corruption Bureau for 7 days.

A special bench of Justice Joymalya Bagchi and Justice V Mohana observed that they can be held to be aggrieved parties in view of the Single Bench's view that there was materials disclosing cognizable offence against them. The petitioners were not made party in the writ petition filed before the Single Bench.

The Supreme Court expressed its inability to agree with the argument of the ED and the writ petitioner in the High Court that the petitioners had no right to be heard before the direction of registration of FIR.

The Court observed in the order :

"We are unable to agree...this is not a case where on receipt of communication under Section 66(2) PMLA, the State had registered FIR on its own. On the contrary, the registration of FIR and commencement of investigation was pursuant to the order passed by the Constitutional Court. While passing such order, the single bench had inter alia observed that the materials in the communication by the ED disclosed a cognizable offence and therefore it was obligatory for the State to register FIR. If the petitioners are not permitted to assail such finding of fact, the same shall stare at them in an independent proceeding challenging the FIR.

That apart, the scheme with regard to registration of FIR through judicial intervention through BNSS has undergone a change from what was envisaged under the CrPC. In the erstwhile Code, Section 156(3) did not require the involvement of the public servant or his superior in the process of taking a decision to issue a direction for registration of FIR. However, under Section 175(4) BNSS, such a requirement has been incorporated...we have referred to Section 175(4) BNSS not in reference to the merits of the case, but to elucidate the expansive jurisdiction envisaged in the new Code with regard to a potential accused prior to the registration of FIR.

That apart, we also observe that the single judge has not only directed to register the FIR, but also the commencement of the investigation and the filing of the final report. Commencement of investigation and taking the same to its logical conclusion under the Prevention of Corruption Act require compliance with other conditions of the special law. These facts clearly make out a prima facie case of locus for the petitioners to seek leave to appeal against the impugned judgment.

Accordingly, we set aside the impugned judgment, and permit the petitioners to pursue the appeal before the division bench. We clarify that the observations are limited to the locus of the petitioners to pursue the appeal and not on the merits of the matter. To enable them to file the appeal, we direct that the investigation in the FIR will remain stayed for 7 days, which shall not be an opinion on the interim relief which the division bench will be entitled to fashion independently in accordance with law."

Arguments

Senior Advocate Siddharth Luthra, for Vijayan, started by saying that it was a "peculiar case", where the single bench considered a writ petition in the nature of a public interest litigation despite having no roster, and the division bench refused leave to appeal.

The bench agreed that the leave to appeal should have been granted by the division bench. "Leave to appeal could have been granted," Justice Mohana said.

Justice Bagchi said that one major issue arose - whether the ED's information under Section 66(2) of the Prevention of Money Laundering Act was a mandate. "First is whether 66 (2) is a mandate. The single judge says in one paragraph that it is and in another says some degree of verification is necessary," Justice Bagchi said.

Justice Bagchi also turned to the State, saying they also could have appealed against the single bench's order, since it was against the stand of the State that preliminary enquiry was necessary.

The State informed the Court that the FIR was registered even before the matter was considered by the division bench.

Justice Bagchi disapproved of the reasoning of the division bench that the petitioners cannot be said to be aggrieved parties as there was no specific direction to register FIR against them. When the ED's information specifically names them, how can they be held to be not aggrieved, the judge asked.

"We are not against any investigation. We will maintain the FIR but no investigation until and unless the issues are decided by the appellate court," Justice Bagchi said.

Justice Mohana asked the counsel for Adv KM Shajahan(the writ petitioner in the High Court) why the writ petition was filed in haste immediately after the ED's press release, without impleading the petitioners as necessary parties.

The counsel for the writ-petitioner in the High Court submitted that the single bench's direction was legally sound as per the Supreme Court's judgment in the Vijay Madanlal Choudhary case. He contended that the accused has no right to be heard before the direction of registration of FIR, and the division bench rightly rejected leave to appeal.

Background

A single bench of the High Court, acting on a writ petition filed by one KM Shajahan, had directed the Vigilance and Anti-Corruption Bureau to register an FIR under the Prevention of Corruption Act. The allegations are against the CPI(M) leader, his daughter Veena T and son-in-law Mohammed Riyaz.

Disapproving the approach taken by the State to direct a preliminary enquiry into the matter, the single bench held that once the ED has furnished information under Section 66(2) of the Prevention of Money Laundering Act, a preliminary enquiry was not warranted.

A division bench of the High Court on October 15 refused to entertain the appeal filed by Vijayan, Veena T and Riyaz.

The allegation in the ED case is that from 2017 to 2020, CMRL (Cochin Minerals and Rutile Ltd.), a public company, made monthly payments totalling ₹1.72 crores to Exalogic Solutions Pvt. Ltd., associated with Veena T, without any actual services being rendered. Earlier this year, the plea preferred by the accused CMRL officials to quash the ED case was dismissed by the Single Bench as well as the Division Bench.

On August 19, the ED issued a press release stating that it had collected evidence regarding hawala transactions to the tune of crores in the case and thereby, offences under the Prevention of Money Laundering Act have also been committed by the accused persons.

On September 7, the ED sent a letter to the Kerala Director General of Police to register an FIR under the PC Act against Pinarayi, Veena and Riyas. However, the Home Secretary issued an order to the State Police Chief to entrust the case to Crime Branch and to constitute a Special Investigation Team for preliminary enquiry and accordingly, an order was passed by the Police Chief, it is stated.