NEW DELHI: The Enforcement Directorate (ED) does not need to establish a predicate offence—such as an FIR registered for a scheduled offence by any enforcement agency—to initiate an investigation under the Prevention of Money Laundering Act (PMLA).
This ruling was made by the Kerala High Court on Tuesday, which vacated a stay on the ED’s investigation into Cochin Minerals and Rutile Limited (CMRL), a publicly listed company associated with the Kerala State Industrial Development Corporation. The court dismissed CMRL’s petition, stating that the ED’s money laundering investigation operates independently of any scheduled offence.
Following the Kerala High Court’s judgment, the ED conducted searches at nine locations in Thiruvananthapuram on Wednesday, including the residence of former Kerala Chief Minister Pinarayi Vijayan, who resides with his daughter Veena. She is one of the accused in the case, allegedly having received ₹2.8 crore from CMRL without delivering any IT services, as claimed.
Justice TR Ravi of the Kerala High Court dismissed CMRL’s challenge regarding the summons issued by the ED, stating, “The issuance of summons was only for the purpose of investigation and does not even require the registration of an FIR.”
Justice Ravi referenced the Supreme Court’s ruling in the Vijay Madanlal Choudhary case, asserting that “non-recording of an FIR regarding a scheduled offence does not impede the commencing of inquiry/investigation for initiating civil action of provisional attachment of property, being proceeds of crime, by the authorities referred to in Section 48 of the PMLA.”
The court further clarified that the term “investigation” as defined in Section 2(n)(a) encompasses all proceedings conducted by the Director or an authorized authority for evidence collection. A review of the summons indicated that only an investigation had been initiated.
At this stage, the outcome of the investigation remains uncertain. The court emphasized that, according to established Supreme Court law, the existence of an FIR is not a prerequisite for issuing summons under Section 50 of the PMLA.
The writ petition was deemed premature and not maintainable against the summons under Section 50 of the PMLA. Additionally, the court noted that immunity under the Income Tax settlement mechanism does not prevent PMLA proceedings, and that the ED’s powers are independent of the final report or prosecution by the Serious Fraud Investigation Office (SFIO).
In dismissing the petition, the court acknowledged that the subsequent filing of an SFIO prosecution complaint addressed the petitioners’ main objection concerning the absence of a scheduled offence.
