Kerala High Court refuses to quash ED probe into CMRL case involving former CM's daughter

The Kerala High Court on Tuesday refused to quash the Enforcement Directorate's (ED's) investigation into Cochin Minerals and Rutile Limited (CMRL) [M/S Cochin Minerals and Rutile Limited & Ors. v. Directorate of Enforcement]

Justice TR Ravi noted that CMRL and its officials had filed the petition at a premature stage just after summons was issued by the ED.

"No cause of action can be said to have been arisen at this stage, since the summons only calls upon the person to state the truth or to make statements and produce documents. I hence find that the writ petition is premature and is liable to be dismissed," the Court said.

The Court also noted that the Serious Fraud Investigation Office (SFIO) had filed a complaint against CMRL alleging commission of offences under the Companies Act which constitute scheduled offences under the PMLA.

Though this development took place after the Court reserved its judgment, the same cannot be ignored, the judge said.

"It has necessarily to be held that the foundation of the argument of the petitioners that the summons had been issued without any scheduled offence no longer exists. It is hence not necessary to interfere with the summons at this stage on the ground that there was no complaint filed by the SFIO at the time when the summons was issued. The further contention that the power of the respondent under the PMLA are dependent on the final report of the SFIO under Section 212 also cannot be countenanced. As already held, the issuance of summons was only for the purpose of investigation and does not even require the registration of an FIR," the Court's order stated.

CMRL, a public limited company based in Kerala and engaged in the manufacture of synthetic rutile and other industrial chemicals, has been under ED scanner following a slew of bribery and money laundering allegations.

The key allegation was that CMRL had made illegal payments of large sums to Exalogic Solutions Pvt. Ltd., an IT firm owned by Veena Thaikkandiyil, the daughter of former Chief Minister Pinarayi Vijayan.

Multiple petitions for vigilance probes into the allegations were rejected by vigilance courts and later the High Court. However, apart from the ED, the matter is being probed by the Serious Fraud Investigation Office (SFIO) as well.

The present petition was filed by CMRL and four of its officials, Senior Manager NC Chandrashekharan, Senior Officer Anju Rachael Kuruvila, Chief Financial Officer KS Suresh Kumar and Managing Director SN Sasidharan Kartha.

The petitioners sought to quash the Enforcement Case Information Report (ECIR) and all proceedings initiated against them by the ED in connection with the central agency's probe into the financial transactions of CMRL.

They contended that the ED did not have the jurisdiction to investigate the matter as no scheduled offence under the Prevention of Money Laundering Act could be made out from the allegations.

The petitioners also challenged the summons issued to them by the ED. During the course of the case, three of the petitioner-officials (Chandrasekharan, Kuruvila, and Kumar) complied with the summons but later alleged that they had been illegally detained by ED officials. Following the same, in June, 2024, the High Court ordered the ED to preserve and retain the CCTV visuals of the interrogation of the officials.

CMRL and its officials were represented by Senior Advocate Siddharth Luthra and advocates M Gopikrishnan Nambiar, K John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C Abraham, and Raja Kannan.

Additional Solicitor General of India ARL Sundaresan, Special Counsel Zoheb Hussain and Central Government Counsel Jaishankar V Nair appeared for ED.