Kerala HC PMLA judgment on ED powers

NEW DELHI: The ED does not necessarily require a predicate offence — an FIR registered for any scheduled offence by any enforcement agency — to initiate a probe under the Prevention of Money Laundering Act (PMLA).

While vacating a stay on the ED probe against Cochin Minerals and Rutile Limited (CMRL), a public listed company of Kerala State Industrial Development Corporation, the Kerala High Court on Tuesday dismissed a petition of CMRL on the grounds that ED’s money laundering probe is independent of the existence of a schedule offence.

A day after the Kerala High Court judgment, the ED launched searches on nine premises in Thiruvananthapuram on Wednesday, including the residence of former Keralam CM Pinarayi Vijiyan, where he was living with his daughter Veena, one of the accused who had allegedly received Rs 2.8 crore from CMRL without providing any IT services as claimed.

Justice TR Ravi of the Kerala High Court dismissed petitioner CMRL’s challenge to the summons issued by the enforcement agency, saying “the issuance of summons was only for the purpose of investigation and does not even require the registration of an FIR”.

Quoting from the Vijay Madanlal Choudhary (Supra) judgment of the Supreme Court, Justice Ravi held 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 held that “the word 'investigation' has been defined in Section 2(n)(a) to include all proceedings conducted by the Director or by an authority authorised, for the collection of evidence. A reading of the summons issued would show that what has been initiated is only an investigation”.

“At this stage it is not possible to state what the outcome of the investigation would be. As the law has already been laid down by the Supreme Court, that the existence of an FIR is not a pre-condition for issuing summons under Section 50 of the PML Act, it only needs to be followed by this court,” the judge noted.

The writ petition was held to be premature and not maintainable against summons issued under Section 50 PMLA, the court said. It further noted that immunity under the Income Tax settlement mechanism does not bar PMLA proceedings and that ED’s powers are independent of SFIO’s final report or prosecution.

Dismissing the petition, the court noted that subsequent filing of SFIO prosecution complaint “cured the petitioners’ principal objection regarding absence of a scheduled offence”.

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