FIR not required for ED's civil action under PMLA: HC

New Delhi: The Kerala High Court on Friday ruled that the "non-registration of an FIR or non-filing of a complaint in respect of a scheduled offence will not bar" the Enforcement Directorate from "initiating civil action" under relevant provisions of the Prevention of Money Laundering Act (PMLA).

Elaborating, a division bench of the Kerala HC further ruled that "the registration of a scheduled offence is a prerequisite only for 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 the PMLA". The ruling was delivered by a division bench comprising Justices Raja Vijayaraghavan V and KV Jayakumar while refusing to quash the ED's PMLA case (ECIR) against Cochin Minerals and Rutile Limited (CMRL).

Upholding a single judge's order dated May 26, which had refused to quash the ECIR, the division bench held on Friday that "since the ECIR is not a statutory document and even the non-registration of an ECIR does not impede the commencement of civil action, the prayer to quash the ECIR cannot be granted in this case".


The bench further ruled that the single judge "rightly rejected" CMRL's plea. 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 allegations of bribery and money laundering. The key allegation is that CMRL made illegal payments of large sums to Exalogic Solutions Pvt. Ltd., an IT firm owned by Veena Thaikkandiyil, daughter of former CM Pinarayi Vijayan.

In a related development, ED Director Rahul Navin held a high-level meeting of senior ED officials in Kochi on Friday. Navin arrived in Kochi against the backdrop of the recent attack on ED officials by CPI(M) activists following raids conducted by the agency in connection with the CMRL-Exalogic case. Senior ED officials who participated in the searches reportedly faced protests and attacks while returning from the raid locations.

The Kerala High Court further held in its ruling that the power to issue summons under Section 50 is part of the civil limb of the PMLA and is aimed at ascertaining the existence of

proceeds of crime. The recipient of such a summons is not an accused at that stage, the court held.

The instant petition was filed by CMRL and four of its officials. The petitioners sought quashing of ED's ECIR and all proceedings initiated against them in connection with the agency's probe into the company's financial transactions. They contended that the ED did not have the jurisdiction to investigate the matter, as no scheduled offence under the PMLA could be made out from the allegations. The high court, however, rejected the appeal on Friday, finding no force in their contentions.