In a significant setback to Cochin Minerals and Rutile Limited (CMRL) as well as former Kerala CM Pinarayi Vijayan, the Kerala High Court on Tuesday dismissed a writ petition filed by the company and its top executives seeking to quash the Enforcement Directorate’s (ED) money laundering investigation.
The ED’s probe stems from findings of a 2019 Income Tax raid on CMRL, which allegedly revealed that the company had inflated expenditures by over Rs 133.82 crore between 2012–13 and 2018–19 by booking bogus expenses under transportation and sludge-handling heads. The cash generated was reportedly used for illegal payments to politicians, political parties, media houses, and public servants.
A particularly damaging allegation involves Rs 1.72 crore paid by CMRL to Exalogic Solutions Pvt Ltd, a company owned by Veena Vijayan, daughter of Pinarayi Vijayan. The company claimed the payment was for software services, but investigations found that no such services were actually rendered.
The Interim Board for Settlement (Income Tax) accepted the findings of the Income Tax Department regarding the inflation of expenses by CMRL, the generation of cash for illegal payments, and the fictitious payment of Rs 1.72 crore to Veena Vijayan and her company, M/s Exalogic Solutions Pvt. Ltd. The Settlement Commission also disallowed 30 per cent of the expenses claimed by CMRL as “eligible expenses.”
The ED’s money laundering probe is now linked to this transaction. The summons issued by the ED to CMRL officials specifically demanded documents relating to agreements and payments made to Exalogic Solutions Pvt. Ltd. and Veena Vijayan.
Notably, the court, in its verdict delivered today, held that the writ petition challenging the ECIR registered by the ED and the summons issued under Section 50 of the PMLA was premature. The court observed that the mere issuance of a summons does not create a cause of action for invoking writ jurisdiction. It also ruled that the immunity granted to CMRL by the Income Tax Settlement Commission does not extend to proceedings under the PMLA, as the two statutes operate independently.
“The Settlement Commission constituted under Section 245B of the Income Tax Act has not been vested with any power to deal with complaints regarding money laundering and can only deal with settlement of cases [under the Income Tax Act],” the court observed.
Dismissing the writ petition, the court clarified that the ED can initiate inquiries and issue summons even in the absence of a formal FIR for a scheduled offence. The court noted that the existence of an FIR is not a precondition for issuing a summons under Section 50 of the PML Act.
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Notably, during the pendency of the petition, the Serious Fraud Investigation Office (SFIO) filed a complaint alleging fraud under Section 447 of the Companies Act — an offence scheduled under the PMLA. The SFIO made this move on April 3, 2025. The court considered this subsequent event and held that it further strengthened the ED’s case.
After the court pronounced its decision, the CMRL sought a 2-week extension of the interim order passed by the Court, deferring the summoning of the CMRL officials till the disposal of the plea. However, the Court did not grant this extension and orally remarked that extending the stay was not justified as the ED cannot take coercive action (like forcing appearance or arrest) without issuing a fresh notice or summons. The court also said that if and when the ED issues a new notice, CMRL can always approach the court again if needed.
