Supreme Court Stays Investigation Against Pinarayi Vijayan In CMRL-Exalogic Case For One Week, Keeps FIR Intact

A special Bench of Justices Joymalya Bagchi and V. Mohana, sitting during the Dussehra vacation, set aside the order of a Kerala High Court Division Bench that had refused Vijayan and the other petitioners leave to appeal, and permitted them to pursue their appeal on merits.

The Bench left it open to the Division Bench to decide any prayer for interim relief independently and in accordance with law. It expressed no opinion on the merits of the allegations, nor on the validity of the Enforcement Directorate Case Information Report (ECIR) registered subsequently in connection with the FIR.

The case arises from information shared by the Enforcement Directorate (ED) with the Kerala Police Chief under Section 66(2) of the Prevention of Money Laundering Act, 2002 (PMLA). The ED alleges that Cochin Minerals and Rutile Limited (CMRL) paid about ₹3.28 crore to Exalogic Solutions Pvt. Ltd., a firm formerly owned by Vijayan's daughter T. Veena, for IT services, and that Vijayan misused his position as Chief Minister.

The State had constituted a Special Investigation Team (SIT) to conduct a preliminary inquiry into the ED's information. On a writ petition filed by political activist K.M. Shajahan, a Single Judge of the Kerala High Court set aside that decision on 9 October and directed the Vigilance Director to register an FIR. Vijayan, Veena and her husband, former minister P.A. Mohamed Riyas, who were not parties to the writ petition, then sought leave to appeal, which a Division Bench of Justices K. Natarajan and Johnson John refused.

The Bench drew a clear line between registering an FIR and commencing an investigation. It made it plain that the FIR would not be disturbed at this stage, but said that whether the investigation could lawfully proceed required consideration of the statutory framework.

The Court was not persuaded by the argument that the investigation could go ahead simply because the FIR had been registered. Pointing to Section 17A of the Prevention of Corruption Act, 1988, which requires prior approval before any inquiry or investigation into an offence relatable to a public servant's official decisions, the Bench asked how an investigation against a former Chief Minister could commence without first addressing the sanction requirement. It insisted that counsel deal with Section 17A before arguing how the investigation could proceed.

Justice Bagchi also tested the State's position. Observing that the State was being portrayed as law-abiding, he asked what would happen if sanction were subsequently sought, and whether the State would decide the question independently or wait for the High Court or the Supreme Court to determine the course of action.

Justice Bagchi rejected the suggestion that the case could simply be treated as one involving a court-directed investigation. The Bench noted that the FIR originated from an ED communication under Section 66(2) of the PMLA, and questioned whether the legal position governing a court-directed investigation could automatically be applied to it. In the same vein, it addressed the Division Bench's reasoning that the FIR had been registered pursuant to a judicial order.

The Bench cautioned against allowing one statutory authority to extend its powers into the domain of another, telling counsel, in substance, not to use statutory powers to interfere with the statutory jurisdiction of other authorities.

The Court clarified, however, that its approach did not mean that the ED or the State police could not investigate alleged hawala transactions or offences under the PMLA. The question, it said, was whether the investigation in the present FIR could proceed without addressing the applicable legal requirements.

Early in the hearing, Justice Bagchi identified the central legal issue as whether Section 66(2) of the PMLA mandates the registration of an FIR, or whether some degree of verification is required first.

The Bench noted that the Single Judge's reasoning appeared to contain differing observations on the point. At one place, Justice Bagchi observed, the judgment treats the provision as mandatory, while elsewhere it refers to a degree of verification being necessary. The Court also noted that the Single Judge had examined the material in the case and found substantial material warranting action.

Turning to the State, Justice Bagchi asked why it had not challenged the Single Judge's order itself if it was aggrieved by the direction, instead of leaving the matter to be brought before the Court by others. The Bench observed that the State's position appeared to be that it had the power to conduct a preliminary inquiry after receiving information from the ED, and asked whether that position left the affected person without an effective remedy.

The Bench examined the difference between the position under the old Code of Criminal Procedure and Section 175(4) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). It clarified that it was referring to Section 175(4) only to explain the expanded procedural framework concerning a potential accused before the registration of an FIR, and not to express any view on the merits of the allegations.

Appearing for Vijayan, Senior Advocate Siddharth Luthra questioned the urgency with which the High Court had dealt with the matter. He argued that a person with no direct concern in the matter had approached the High Court, which directed action without hearing Vijayan, and that the matter then travelled to the Division Bench.

Luthra pointed out that the FIR already stood registered pursuant to the ED's information under Section 66(2), and argued that the matter called for proper consideration before such consequential directions were issued. He submitted that the Single Judge had not only directed registration of the FIR but had also ordered the investigation to begin and be taken to its logical conclusion. The consequences of such directions, the petitioners contended, warranted an opportunity to challenge the order in appeal.

The Bench, too, questioned the urgency behind the original writ petition. It noted that after receiving the ED's communication, the State had constituted a Special Investigation Team to conduct a preliminary inquiry, and yet a writ petition seeking registration of an FIR was filed within a day. The Court asked what the urgency was in seeking such a direction without hearing the affected parties.

Justice Bagchi first indicated a possible course of setting aside the impugned order and sending the matter back to the High Court for adjudication. The Bench made it clear that doing so would not mean that it agreed with the High Court's view on locus standi. Acknowledging the gravity of the injustice alleged by the petitioners, the Court asked counsel to address it on the issues involved.

During the hearing, Justice Bagchi also made a pointed remark on courtroom advocacy, "We are relearning advocacy in the Supreme Court." He added that advocacy should facilitate the judicial process rather than become an exercise in hearing one's own voice.

Conclusively, the Supreme Court did not quash the FIR or decide the merits of the allegations against Vijayan. It directed that the FIR would remain intact and that the investigation in it would stay for one week. It set aside the Division Bench order refusing leave to appeal and permitted the petitioners to pursue their appeal before the Kerala High Court Division Bench, including by seeking interim relief, which the Division Bench is free to decide independently in accordance with law. The Bench left the merits open, and stated expressly that it was not expressing any opinion on the validity of the subsequent ECIR, which may be raised in appropriate proceedings.

Vijayan's plea came a day after a Division Bench of the Kerala High Court dismissed applications filed by Vijayan, Veena and her husband, former minister P.A. Mohamed Riyas, seeking permission to appeal against the Single Judge's October 9 order directing the registration of an FIR in the case.

The Division Bench, comprising Justices K. Natarajan and Johnson John, held that the applicants had not established a prima facie or arguable case for granting leave to appeal. It also observed that the Single Judge's order did not prevent them from pursuing appropriate constitutional or statutory remedies against the registration of the FIR.

What did the division bench say?

Rejecting the applicants' contention that they had not been given an opportunity to present their case before the Single Judge passed the order, the Division Bench observed that an accused in a corruption case has no legal right to be heard before an FIR is registered.

The Court also held that a preliminary inquiry was not necessary where the information furnished under Section 66(2) of the Prevention of Money Laundering Act (PMLA) was accompanied by sufficient material disclosing the commission of cognisable offences.

The applicants had argued that the Single Judge's direction effectively foreclosed their options to challenge the registration of an FIR. They also sought an interim stay, contending that any delay in granting relief would render their appeals ineffective.

The Division Bench, however, declined to grant them leave to appeal, while clarifying that they could pursue appropriate remedies against the FIR.

Background Of The CMRL-Exalogic Case

The controversy arose from information shared by the Enforcement Directorate (ED) with the Kerala Police Chief under Section 66(2) of the PMLA, recommending the registration of a vigilance case against Vijayan and others over alleged financial transactions involving CMRL and Exalogic Solutions.

The ED alleged that CMRL paid approximately ₹3.28 crore to Exalogic Solutions, a company formerly owned by Veena, purportedly towards IT consultancy services. It was alleged that Vijayan entered into a criminal conspiracy with the others, abusing his official position and adopting corrupt means to obtain illicit pecuniary benefits for himself, his daughter and her company between 2016 and 2020. Mr. Riyas and Ms. Veena were also accused of involvement in hawala transactions and transferring illicit cash to foreign countries through intermediaries.

The Kerala government had earlier constituted a Special Investigation Team (SIT) to conduct a preliminary inquiry into the information supplied by the ED. A Single Judge of the Kerala High Court, hearing a petition filed by political activist K.M. Shajahan, set aside the government's decision to constitute the SIT and directed the Vigilance Director to register an FIR.

The single judge had opined that forming an SIT without first registering an FIR is illegal. The court had clarified that the Vigilance department can proceed with the investigation by registering an FIR as it prima facie opined that there is sufficient evidence to warrant an immediate case under the Prevention of Corruption Act.

The Single Judge's order prompted Vijayan, Veena and Riyas, who were not parties to the original proceedings, to seek permission to challenge it before a Division Bench. The State had argued that the preliminary inquiry was intended to determine whether the ED's information disclosed a cognisable offence. It also maintained that the State had the discretion to decide whether to register an FIR or conduct a preliminary inquiry.

The Division Bench rejected the applications seeking leave to appeal, noting that the applicants remained free to pursue appropriate legal remedies against the FIR.

Case Title: Pinarayi Vijayan v. KM Shajahan And Ors.

Bench: Justices Joymalya Bagchi and V. Mohana

Hearing Date: October 21, 2026