ED can initiate civil action even without predicate offence: Kerala High Court refuses to quash PMLA probe against CMRL

A Division Bench of the Kerala High Court on Friday 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].

The Bench of Justices Raja Vijayaraghavan V and KV Jayakumar passed the order on an appeal filed by the CMRL challenging a single-judge's refusal to quash the ED's investigation into its activities.

The Court turned down CMRL's argument that registration of a predicate offence (an underlying criminal offence which generates illegal money and which is required to charge a person with money laundering offence) is essential for ED to initiate probe.

The Court said that it is a prerequisite only for criminal prosecution and not for civil action like attachment or for inquiry under the Prevention of Money Laundering Act (PMLA).

"We hold that non-registration of FIR or non-filing of complaint in respect of scheduled offence will not bar the ED from initiating civil action under the PMLA. The registration of a scheduled offence is a prerequisite only for initiation of penal prosecution under Section 3 and not for civil action of attachment under Section 5 or the exercise of inquiry powers under Section 50 of PMLA," the Court ruled.

As regards the prayer to to quash the Enforcement Case Information Report (ECIR), the Court held that since the ECIR is not a statutory document and even the non-registration of ECIR does not impede the commencement of civil action, the prayer to quash ECIR cannot be granted.

Hence, the Court dismissed CMRL's appeal.

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 is that CMRL made illegal payments to Exalogic Solutions Pvt. Ltd., an IT firm owned by Veena Thaikkandiyil, the daughter of former Chief Minister Pinarayi Vijayan.

Apart from the ED, the matter is being probed by the Serious Fraud Investigation Office (SFIO) as well.

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 CMRL, this delay of nearly 2 years in delivering the judgment caused grave prejudice to them especially since the judge relied on the SFIO report that was produced only after judgment was initially reserved.

They 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.

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

The ED was represented by Additional Solicitor General of India ARL Sundaresan, Special Counsel Zoheb Hossain and Standing Counsel Jaishankar V Nair.

[Live Coverage]