Kerala High Court permits ED to advance money laundering investigation into chemical firm

Kochi: The Kerala High Court has cleared the way for the Enforcement Directorate to proceed with its investigation into Cochin Minerals and Rutile Limited, rejecting the chemical company’s legal bid to halt the financial probe. The development coincides with the arrival of ED Director Rahul Navin in Kochi for a high-level briefing with regional officials, marking the first visit by the head of the agency to Kerala in nearly five years.

A Division Bench comprising Justices Raja Vijayaraghavan V. and K.V. Jayakumar dismissed an appeal filed by the company challenging a single-judge bench's previous refusal to stall the inquiry. In a further setback for the firm, the court denied a request to suspend its order for two weeks to allow the company time to appeal to the Supreme Court.

The Division Bench rejected the firm's core argument that the formal registration of a predicate or scheduled criminal offence was an absolute mandatory prerequisite for the federal agency to initiate its proceedings. The judges ruled that while a scheduled offence is necessary to launch criminal prosecution, it does not serve as a pre-condition for the agency to exercise its inquiry powers or execute civil actions, such as property attachments, under the Prevention of Money Laundering Act. Furthermore, the court refused to strike down the Enforcement Case Information Report, clarifying that an ECIR is not a statutory document and its absence does not block civil enforcement action.

The ruling significantly accelerates an investigation that carries substantial political sensitivity. The Kerala-based firm, which manufactures synthetic rutile and industrial chemicals, is under scrutiny for alleged financial irregularities and bribery. The case has drawn intense focus due to allegations that the company made unlawful payments to Exalogic Solutions Pvt. Ltd., an IT firm linked to Veena Thaikkandiyil, the daughter of former Chief Minister Pinarayi Vijayan.

The broader financial affairs of the company are also under independent scrutiny by the Serious Fraud Investigation Office. The High Court single judge had previously noted an SFIO complaint against the firm alleging offences under the Companies Act, which qualify as scheduled offences under anti-money laundering laws. Following that initial judicial clearance, the federal agency carried out searches at the residence of Vijayan and his family members.

The company's subsequent appeal had raised procedural objections, including concerns over judgment delays and the agency's submission of additional material after the case was initially reserved for orders. However, with the Division Bench dismissing those arguments, regional investigators are expected to utilize the upcoming strategy meeting with their agency director to map out immediate enforcement steps and potential asset attachments.

(Inputs from IANS)