CMRL challenges HC verdict upholding ED probe into Veena Vijayan's monthly pay-off case

Kochi: The Cochin Minerals and Rutile Limited (CMRL), on Friday, moved the Division Bench of the Kerala High Court against a recent Single Bench verdict that upheld the jurisdiction of the Directorate of Enforcement in the Exalogic case.

The writ appeal challenges the May 26 judgment of Justice TR Ravi, which dismissed CMRL's plea to quash the ED's Enforcement Case Information Report (ECIR) and related summonses issued under the Prevention of Money Laundering Act (PMLA).

The appeal comes just two days after the ED conducted searches at around 10 locations linked to the case, including the residences of former Chief Minister and current Opposition Leader Pinarayi Vijayan, his daughter T Veena, and senior CMRL executives.

The ED probe centres on payments amounting to ₹2.78 crore made by CMRL to Veena Vijayan and her now-defunct IT firm, Exalogic Solutions Private Limited. Investigating agencies have alleged that the payments were made without corresponding services being rendered, an allegation denied by all concerned.

The appeal has been filed by CMRL Managing Director SN Sasidharan Kartha, Chief Financial Officer KS Suresh Kumar, senior executive NC Chandrasekharan and company official Anju Rachael Kuruvila, arguing that the ED began its money laundering investigation before any underlying criminal case had been formally established and that the complaint of the Serious Fraud Investigation Office (SFIO) cannot be used to justify the probe retrospectively.

The Single Bench had dismissed CMRL's challenge to the ED's ECIR and summonses issued under Section 50 of the PMLA, holding that a challenge to an investigative summons was premature and that the ED could continue its inquiry even in the absence of a formal FIR at the initial stage.

‘No predicate offence existed when ECIR was registered’
A key ground raised in the appeal is that when the ED registered its ECIR on March 4, 2024, there was no scheduled or predicate offence in existence, which the appellants contend is a mandatory requirement under the PMLA.

According to the petition, the Single Bench committed a legal error by relying on a complaint filed by the SFIO on April 3, 2025 to sustain the ED's jurisdiction. The appellants argue that a subsequent development cannot retrospectively cure an action that was allegedly invalid from the outset.

The appellants have also questioned the court's reliance on the SFIO complaint, which contains allegations under Section 447 of the Companies Act relating to corporate fraud.

According to the appeal, the SFIO complaint itself is currently under judicial restraint. The petition points out that the Delhi High Court directed the SFIO not to proceed with its investigation report, while the Kerala High Court separately ordered status quo regarding cognisance proceedings before the Special Court.

In such circumstances, the appellants argue that the complaint cannot be treated as an active predicate offence capable of supporting the ED investigation.

CMRL and its officials have further argued that they were denied a fair opportunity to contest crucial material relied upon by the court. According to the petition, while the ED was allowed to place additional affidavits on record concerning developments that occurred after the writ petition was filed, including the SFIO complaint, the company was not given sufficient opportunity to file a detailed counter-affidavit or advance arguments on those developments.

The appellants contend that this amounted to a violation of the principles of natural justice.

Delay in judgment questioned
The appeal also highlights what it describes as an unusually prolonged judicial timeline. According to the petition, judgment in the original writ petition was reserved and re-reserved multiple times after hearings in August 2024, April 2025 and October 2025 before the final verdict was delivered in May 2026.

The appellants argue that the delay effectively allowed time for a predicate offence to emerge after the ECIR had already been registered, thereby helping address what they describe as a jurisdictional defect in the ED case.

Another ground raised in the appeal relates to proceedings before the Income Tax Settlement Commission.

CMRL contends that the financial transactions in question had already been examined by the Commission, which granted the company immunity from prosecution in June 2023. The appellants argue that matters settled through those proceedings cannot subsequently be revived through alternative criminal proceedings based on the same set of facts.

Background of the case
The controversy stems from Income Tax Department findings regarding payments made by CMRL to Exalogic Solutions between 2017 and 2020. The ED and SFIO have alleged that regular monthly payments were made to the company despite the absence of actual IT or marketing consultancy services.

Pinarayi Vijayan, Veena Vijayan and CMRL management have consistently denied wrongdoing, maintaining that the arrangement was a legitimate commercial contract, that all transactions were routed through banking channels and that the payments were properly reflected in statutory filings and tax records.

Through the appeal petition, CMRL has requested the Division Bench to call for the records and set aside the Single Bench judgment dated May 26, 2026.

As an interim relief, they have sought a stay on the operation of the judgment and an order restraining the ED from taking further investigative steps, issuing fresh summonses or initiating coercive measures against the company's officials and employees while the appeal is pending.