Kerala HC junks plea against ED probe into CMRL-Exalogic financial dealings

Kochi: High court has dismissed a petition filed by Cochin Minerals & Rutile Ltd (CMRL), Kochi, challenging Enforcement Directorate’s probe into alleged financial transactions between the company and Exalogic Solutions, a firm owned by T Veena, daughter of former CM Pinarayi Vijayan.

Justice T R Ravi dismissed the 2024 petition on Tuesday, holding that the challenge was premature since it was directed against proceedings at the stage of issuance of summons. HC observed that a summons issued by ED merely requires a person to appear, state the truth, make statements, and produce documents, and that such proceedings do not even require the registration of an FIR. With the dismissal of the petition, ED is now free to proceed with its investigation into the alleged transactions between CMRL and Exalogic Solutions.

The matter arose from findings of the Interim Board for Settlement of the Income Tax Department, which concluded that payments amounting to Rs 1.72 crore made to Exalogic Solutions during the assessment years 2017-18 to 2019-20 could not be treated as business expenditure. Following this, the ministry of corporate affairs, in Jan 2024, ordered an investigation by the Serious Fraud Investigation Office (SFIO). Subsequently, in April 2024, ED issued a summons to CMRL officials regarding the alleged payments under the Prevention of Money Laundering Act (PMLA), prompting the company to move HC.

CMRL argued that ED could initiate proceedings under PMLA only on the basis of a valid FIR or complaint relating to a predicate offence recognised as a scheduled offence under the Act. Opposing the plea, ED submitted that proceedings under PMLA can be initiated even without an FIR. It further argued that the petition was premature because only a summons had been issued and no rights of the petitioners had been curtailed. ED also pointed out that SFIO had filed a complaint against the petitioners in April 2025, rendering the argument regarding the absence of a scheduled offence unsustainable.

HC rejected the petitioner’s contention that ED’s powers under PMLA depend upon SFIO’s final report and held that such an argument could not be accepted. It also rejected the petitioners’ claim for immunity under Section 245H of the Income Tax Act from prosecution under the Income Tax Act, the IPC, or any central legislation in relation to matters covered by the settlement before the Settlement Commission.