Kerala HC Pauses ED Action In CMRL Case, Keeps Probe On Hold Till June 5

The Kerala High Court on Monday admitted an appeal filed by Cochin Minerals and Rutile Ltd (CMRL) challenging a single-judge order that had allowed the Enforcement Directorate (ED) to continue its money laundering investigation into the company’s financial dealings involving Veena T , daughter of former Chief Minister Pinarayi Vijayan .

A Division Bench of Justice Raja Vijayaraghavan and Justice K V Jayakumar heard the matter and posted it for judgment on June 5 , while the ED assured the court that it would not take any precipitative action until then, effectively putting the probe on hold.

The appeal challenges a May 26 verdict that held the ED could proceed under the Prevention of Money Laundering Act (PMLA) even before a formal FIR or final report from the *Serious Fraud Investigation Office (SFIO). CMRL has argued that this interpretation expands investigative powers beyond legal limits and violates natural justice* , as it was not allowed to respond to additional affidavits filed after the matter was reserved.

CMRL further contended that reliance on a later SFIO complaint alleging violations under the Companies Act cannot retrospectively justify an ED probe that began when no scheduled offence existed.

The interim stay is significant as it raises a crucial question under PMLA jurisprudence whether the ED can sustain or expand an investigation when the predicate offence itself is under formation or dispute . A ruling in favour of CMRL could tighten procedural safeguards, while an adverse ruling may broaden the ED’s investigative latitude.

The pause also reinforces the judiciary’s role in ensuring that coercive enforcement action is not advanced while legal validity is under challenge , particularly in cases involving complex financial investigations.

The case carries strong political overtones due to its linkage with allegations involving the family of a senior political figure. The ED’s earlier searches at properties linked to the former Chief Minister intensified political debate, with opposition parties alleging overreach by central agencies, while the government side defends the legality of the probe.

By halting ED action until the judgment, the High Court has temporarily shifted focus from enforcement action to judicial scrutiny , reducing immediate political escalation. The outcome is expected to influence broader discussions on the balance between federal investigative powers and political accountability in sensitive financial crime cases.

The matter traces back to Income Tax searches in 2019 and subsequent investigations initiated after complaints to the SFIO, making it a long-running and closely watched dispute.