Kerala High Court reserves verdict on CMRL appeal against ED probe, orders status quo for now

A division bench of the Kerala High Court on Monday reserved its verdict on an appeal by the Cochin Minerals and Rutile Limited (CMRL) challenging a single-judge's refusal to quash the Enforcement Directorate's (ED's) investigation into its activities [M/S Cochin Minerals and Rutile Limited & Ors. v. Directorate of Enforcement]..A Bench of Justices Raja Vijayaraghavan V and KV Jayakumar also directed the ED not to take any further action until June 5, Friday, when the matter is likely to be listed for pronouncement of verdict."In the meantime will you (ED) maintain status quo? Don't precipitate any proceedings till Friday," the Bench orally said, addressing the ED's counsel. .CMRL, a public limited company based in Kerala and engaged in the manufacture of synthetic rutile and other industrial chemicals, has been under the 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 probe 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.Meanwhile, CMRL and four of its officials moved the High Court to quash the ED's probe.Justice TR Ravi on May 26 dismissed the petition, noting that CMRL and its officials had filed the petition at a premature stage just after summons was issued by the ED.The single-judge also noted that the 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.The day after the verdict was delivered, multiple raids were conducted by the ED at the residence of former CM Vijayan and his family members, among others..CMRL and its officials subsequently filed the present appeal, which also drew attention to the prolonged manner in which the case was considered by the single-judge. The original petition was moved in 2024 and after multiple extensive hearings, the matter was reserved for judgment by the single-judge on August 7, 2024. While the matter remained reserved, the ED filed a fresh additional affidavit in May 2025 stating that they had received additional information from the SFIO. The petition was listed again in July 2025 for further hearings when CMRL and its officials objected to the filing of additional affidavits by the ED after the judgment was reserved. After these hearings, the matter remained pending till last week when the judgment was finally delivered. According to the appellants, this delay of nearly 2 years in delivering the judgment has caused grave prejudice to them especially since the judge relied on the SFIO report that was produced only after judgment was initially reserved. The appellants also contended that if they had been given an opportunity to rebut the grounds raised in the additional affidavits, they would have pointed out that the Delhi High Court had stayed the SFIO probe. .Hearing today.Senior Advocate Sidharth Luthra, representing CMRL, today questioned the manner in which the ED had launched its probe against CMRL."Assuming that investigation was begun by SFIO, the trigger for invocation of jurisdiction under PMLA would be either filing of a complaint or an FIR. Neither has been done. All they were entitled to do was give a report to the Central government. Where was the jurisdiction of the ED to step in? I will give a simple example. I have committed an offence and I have proceeds of crime. Can ED come for me? No. Because there has to be a crime registered with a scheduled offence," he contended.He argued that the CMRL's request to furnish reasons for summons was treated by ED as an "instance of non-cooperation".."They say my response questioning the reason for issuing the summons is tantamount to non-cooperation. How is that proper? We did appear. We appeared before the ED. We were put under pressure. I won't go through it, but it is all on record. It was all rather distasteful ... We can't have a situation where ED can contend that by merely responding to a summons and coming to court, I have interdicted their investigation," Luthra said.The Senior Counsel further asserted that dire consequences would follow if the ED is allowed to proceed with an investigation without the prior registration of a predicate offence case (an FIR for an underlying criminal act that generates illegal proceeds, which may be laundered, triggering the role of the ED).He went on to question the single-judge's findings in the matter, including its observation that CMRL had approached the Court prematurely."The learned judge says the investigation is at a preliminary stage as only a summons has been issued. But the judge could not avoid the term investigation..He goes on to say registration of FIR is not necessary.. I am sorry to say, this is a hop, skip and jump," Luthra said.He also questioned how the single-judge could have factored in the SFIO probe against CMRL while denying it relief, without giving the company an opportunity to address this aspect..The ED, represented by Additional Solicitor General (ASG) ARL Sundaresan, opposed Luthra's stance that the central agency cannot step in without a predicate offence FIR."The registration of a complaint or crime with the scheduled crime is not necessary for the initiation of an inquiry under PMLA. If the competent authority is holding a probe into a predicate offence which is in the schedule, the ED can kickstart its inquiry or investigation or proceedings... If until the predicate agency completes investigation and files final report, if our hands are tied till then, we can't do anything ... Their whole case is that there is no scheduled offence. There is a scheduled offence now. If ECIR is quashed now, the position will be that we cannot go ahead even though everything is there... There is no condition that there should be a complaint before a court before we can initiate the proceedings. To collect evidence, we are entitled to issue a summons to collect evidence. Depending on the quality of the evidence we collect, we can proceed," he said. .He added that the intent of issuing summons was only to examine if a further probe is required and which provisions of law would come into play."The summons is merely for collecting material. Therefore, the summons under Section 50(2) cannot be quashed. We need to do further investigation to come to the conclusions with respect to other sections of the act. Without that, we will not proceed any further," he submitted. .Special Counsel for the ED, Zoheb Hossain, added that the April 2024 summons, which had initially prompted CMRL to approach court, is no longer operational due to the passage of time. "Therefore, the challenge to the summons no longer survives," he said. He, too, argued that there was no need for a pre-registered scheduled offence case in order for the ED to conduct an inquiry."PMLA is slowly liberating itself from the scheduled offence. However, to strengthen the mechanism, the parliament, in its wisdom, deemed it appropriate to drop the proviso in Section 17(1) PMLA - thereby dispensing with the condition that no search shall be conducted unless in relation to the scheduled offence. So the scheme of the PMLA is that an inquiry under PMLA can commence even without a pre-registered scheduled offence," he argued..CMRL and its officials were also represented by advocates M Gopikrishnan Nambiar, K John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C Abraham and Raja Kannan..[Live Coverage]