The Supreme Court on Wednesday stayed the investigation against former Kerala Chief Minister Pinarayi Vijayan in the CMRL-Exalogic case [Pinarayi Vijayan v Adv KM Shajahan & ors].

The stay will operate for a week to enable Vijayan to pursue an appeal before a division bench of the Kerala High Court against a single-judge's direction to register FIR against him in the case.

The vacation bench of Justices Joymalya Bagchi and V Mohana today took exception to the High Court acting in haste and directing registration of a first information report (FIR) against Vijayan based on the Enforcement Directorate's (ED) recommendation.

The Court noted that the State had already constituted a special investigation team (SIT) to conduct a preliminary enquiry and hence, the High Court should not have acted in haste and ordered an FIR without hearing Vijayan.

The Court also cautioned the ED against meddling into the domain of other probe agencies.

"The FIR is registered. That is it. We will allow the FIR to exist, but we will stall the investigation. This is not a court-directed investigation. This is an ED request, or a PMLA request under Section 66(2). The single-judge quotes Charanjit and passes an order. Do your PMLA examination, file your complaint under Section 4. Even if you have got 417, you have got a scheduled offence. Go ahead with your prosecution. Don't extend your hand beyond your statutory limits. We are making it 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 forum," the Court said.

The Court also took exception to the complainant KM Shajahan filing a petition before the High Court seeking FIR against Vijayan without waiting for the State SIT to conclude its preliminary probe.

"Please understand, we are not against any FIR investigation. It's about giving an opportunity even to somebody. Section 4 says even a person not accused of a scheduled offence can be an offender under PMLA. So they have their business. ED has full power to investigate hawala dealers, to investigate former Chief Ministers. Nothing stops him. He has done his statutory duty. He intimated the State. Now it is for the State to act as per law. Whether the State is acting as per law, the High Court, according to us, could not have directed investigation when it relies on Charanjit Lal. This issue needs to be decided, sir. When the complaint from ED came, the State had constituted an SIT to look into the complaint and to file a preliminary investigation report. Without waiting for that, within one day, you filed a writ petition, independent of that. You can say that you are not aware of it, so your writ was independent. But what was the... Therefore, your prayer was, within one day, within one day of the constitution of the committee, you wanted the FIR to be registered," the Court said.

Pertinently, the Court said that the issue of whether a State agency is obligated to register an FIR in a corruption case based on a recommendation made by ED is an issue that needs examination.

"Our problem is now we read judgments like statutes. Vijay Madanlal Choudhary has now been conflated to become a mandate on the State, to the agency under Section 66(2). The judgment says it will be information to the agency as per law. Now what is "as per law" is for the agency to decide. Neither Vijay Madanlal Choudhary addresses that issue, nor will the PMLA be the super-administrator mandating everything everywhere," Justice Bagchi remarked.

The Court also noted that Vijayan was not heard by the single-judge before an order for FIR was passed against him.

Hence, the bench eventually said that the division bench of the High Court has to hear Vijayan's appeal on merits against the single-judge's order.

"It has forcefully been contended that the State was obliged to register an FIR in terms of the communication made to it under Section 66(2) of the PMLA by ED and petitioners, being accused persons, do not have a right of hearing at the time of registration of such FIR. We are unable to agree to such contention advanced before us. This is not a case where the State had registered a First Information Report on its own," the Court said.

Hence, it sent the matter back to the High Court division bench for hearing on merits.

In the meantime, the investigation into the FIR shall remain stayed for a week, the bench directed.

"We set aside the impugned order and permit the petitioners to pursue the appeal before the Division Bench. We make it clear that our observations are limited to the issue at hand, that is, the locus of the petitioners to prefer the appeal, and not an expression of opinion on merits. To enable the petitioners to pursue the appeal on merits, we give liberty to the petitioners to pursue the appeal as well as seek interim relief in accordance with law. To enable the petitioners to do so, we direct that the investigation in the impugned First Information Report shall remain stayed for a week," the Court said in its order.

The Court was hearing a plea by Vijayan, his daughter Veena Thaikkandiyil and her husband Mohammed Riyas challenging the Kerala High Court order directing registration of a first information report (FIR) against them.

The matter is tied to alleged irregularities in the financial transactions between Cochin Minerals and Rutile Limited (CMRL) and Exalogic Solutions Private Limited, a company owned by Veena Thaikkandiyil.

The Enforcement Directorate (ED) has claimed that it unearthed certain incriminating material, which it shared with the Kerala Police. The State decided to set up a Special Investigation Team (SIT) to hold a preliminary inquiry instead of immediately registering an FIR.

A lawyer named KM Shajahan, who had also served as an additional private secretary to former CM and CPI (M) leader, late VS Achuthanandan when he was the Leader of Opposition, approached the Kerala High Court challenging this move and sought the registration of an FIR.

On October 9, a single-judge Bench of the High Court allowed Shajahan's petition and ordered the State's Vigilance and Anti-Corruption Bureau (VACB) to register an FIR based on the ED's information against Vijayan, Veena, Riyas and others suspected of corruption, including Nikhil P, Hassan Varish, Shyjal Muhammad and Nandulal M.

This was challenged before a Division Bench of the High Court by way of appeals filed by Vijayan, Veena, Riyas and others.

Notably, the appellants (Vijayan, Veena, Riyas and others) were not parties to the writ petition in which the single-judge's October 9 order was passed. Therefore, a question arose as to whether they can be given permission to challenge a judgment in a case to which they were not parties.

A Division Bench of Justice K Natarajan and Justice Johnson John on October 15 refused to permit the appellants to proceed with their appeal. It held that the appellants can still challenge the FIR itself, instead of the single-judge order for the registration of the FIR.

Vijayan and others then approached the Supreme Court challenging the High Court's direction to register an FIR.

Senior Advocate Sidharth Luthra, appearing for Vijayan, said that the single-judge of the High Court passed the order without hearing Vijayan.

"This is a peculiar situation. Why is it so? Look, I tell this Court. I put it simply. A person who has no concern comes before the High Court, and under Section 66(2), the single judge decides without hearing me. Thereafter, brought before the Division Bench, I went for leave to appeal. It's a State. It's an appeal. It's the Kerala High Court. It was an appeal, and see the order that has been passed. Already the FIR stands registered against an 82-year-old," Luthra contended.

He also questioned whether there is a mandate on the State agency to register an FIR on a recommendation by the Enforcement Directorate (ED).

"First thing is whether Section 66(2) is a mandate. And there the single judge goes flip-flop. In one paragraph he says that it's a mandate. In another paragraph he says that there is some degree of verification necessary," Luthra argued.

The counsel for respondent Shajahan argued that as per Vijay Madanlal Choudhary judgment of the Supreme Court, there is a mandate on State agency to register an FIR once ED submits a recommendation to that effect.

"It's not my complaint. I went to the High Court after I wrote two representations, and those representations were, please take the ED Section 66(2) and act on it. That obligation, Vijay Madanlal Choudhary is very clear that that is an obligation to register the FIR. That is why I went to the single judge," he submitted.

However, the bench disagreed and took exception to an interpretation of Vijay Madanlal that would make it binding on an agency to act on ED's recommendation in a corruption case.

Representing the ED, Senior Advocate Zoheb Hossain submitted that the evidence disclosed commission of cognizable offences.

"It discloses cognizable offences," Hossain said.

The bench agreed but said that the issue of whether that would be mandate for registration of FIR in a corruption case based on recommendation by ED is something that will have to be decided.

"We are fully with you. You are correct. We are seeing two things, Mr. Zoheb. How far the words saying Vijay Madanlal Choudhary obliges registration of an FIR have to be seen in respect of a corruption case," the bench said.

"Even in Vijay Madanlal, it says if a cognizable offence is made out. It can't be a mandate," Hossain said.

"So the question is whether these materials are making out a case for investigation under the scheme of the Prevention of Corruption Act, as a law, is something which the agency must look into," the bench replied.

Senior Advocate N Hariharan and advocates Mayank Jain, Gilbert George Correya, Madhur Jain and Arpit Goel also appeared for Vijayan, Veena and Riyas.