Introduction:

The Kerala High Court has stayed the registration of the FIR and further investigation into the alleged CMRL-Exalogic payoff case involving former Kerala Chief Minister Pinarayi Vijayan, his daughter Veena T. and his son-in-law, former minister Muhammed Riyas. A Division Bench comprising Justice K. Natarajan and Justice Johnson John also stayed the operation of the Single Judge’s judgment that had directed the Vigilance and Anti-Corruption Bureau (VACB) to register an FIR incorporating offences under the Prevention of Corruption Act, 1988. The Division Bench admitted the appeals filed by the three appellants and scheduled the matter for final hearing after three weeks.

The interim order arose from a dispute over the legality of the State’s decision to conduct a preliminary enquiry into information supplied by the Directorate of Enforcement (ED) concerning alleged financial transactions between Cochin Minerals and Rutile Limited (CMRL) and Exalogic Solutions, a company associated with Veena T. The case raises important questions about the circumstances in which the police must register an FIR, the scope of judicial review over investigative decisions, the use of writ jurisdiction to seek criminal investigation, and the procedural safeguards available to persons who may be directly affected by a court’s directions.

The controversy began after information relating to the transactions was communicated by the ED to the State authorities. The State initially decided to conduct a preliminary enquiry through a Special Investigation Team (SIT) to examine whether the material disclosed grounds for registering a criminal case. However, a writ petition filed by advocate K.M. Shajahan challenged the State’s approach and sought action in response to the information provided by the central agency.

The Single Judge found that the State’s decision to conduct a preliminary enquiry without registering an FIR was legally impermissible in the circumstances presented. The Court directed the VACB to register an FIR against Pinarayi Vijayan, Veena T. and Muhammed Riyas under the Prevention of Corruption Act and set aside the State’s decision to constitute an SIT for the preliminary enquiry.

The direction significantly affected the three individuals named in the proposed criminal investigation. They challenged the Single Judge’s ruling, contending that the order had been passed without hearing them and that the writ petitioner had bypassed the statutory procedure available under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). They also questioned whether the information supplied by the ED disclosed a cognizable offence under the Prevention of Corruption Act and whether the Single Judge had exceeded the permissible limits of judicial intervention in an investigation.

Initially, the Division Bench did not grant them leave to appeal. The three appellants subsequently approached the Supreme Court, which, on October 21, set aside the order refusing them permission to appeal and held that they were entitled to challenge the Single Judge’s decision before the Division Bench. The Supreme Court also granted a 10-day stay on the investigation arising from the FIR registered against them.

Following the Supreme Court’s intervention, the appeals returned to the Kerala High Court for consideration on their merits. On October 26, the Division Bench heard detailed submissions from senior counsel representing the appellants, the Advocate General appearing for the State, the Additional Solicitor General representing the ED, and counsel for the writ petitioner. After hearing the parties, the Court stayed the FIR, further investigation and operation of the Single Judge’s judgment, admitted the appeals and listed them for final hearing after three weeks.

The order is an interim development and does not determine whether the alleged transactions involved corruption or whether the persons named in the case committed any offence. Instead, the immediate controversy concerns the legality of the process adopted to initiate the criminal investigation, the respective roles of the State authorities and the judiciary, and the safeguards governing proceedings that may lead to criminal prosecution.

Arguments of the Parties:

Arguments on behalf of the appellants

Senior Advocate N. Hariharan, appearing for the appellants, argued that the writ petitioner had bypassed the statutory procedure prescribed under Section 175 of the BNSS by approaching the High Court directly. According to the appellants, the law provides a mechanism through which a person seeking police investigation can approach the appropriate Magistrate when the prescribed conditions are satisfied. Resorting to writ jurisdiction at the outset, they argued, deprived the matter of the ordinary procedural scrutiny contemplated by the criminal procedure framework.

Hariharan submitted that the manner in which the proceedings had been initiated had serious consequences for the appellants, who were not heard before the Single Judge issued directions leading to the registration of the FIR. He argued that the order directly affected their interests and that they should have been given an opportunity to place their objections before the Court. He also referred to the High Court Rules, submitting that the Court had the procedural ability to issue notice to persons whose interests would be affected by the relief sought in a writ petition.

The appellants further questioned the intervention in the State’s decision to conduct a preliminary enquiry through an SIT. They contended that the State had chosen to examine the information received from the ED before deciding whether criminal proceedings were warranted. According to their counsel, the writ petitioner, who was not himself a person directly affected by the alleged transactions, had intervened in the process and sought judicial directions that displaced the investigative course initially adopted by the State.

A central submission was that the Single Judge had entered into an area ordinarily entrusted to the investigating authorities. Hariharan argued that directing the registration of an FIR in the circumstances of the case amounted to assuming the role of the investigating officer and interfering with the executive’s responsibility to assess the information received and take action in accordance with law. He also contended that the case had the character of public interest litigation and that the procedural requirements applicable to such proceedings had not been followed.

The appellants also questioned the basis for alleging offences under the Prevention of Corruption Act. They argued that the existence of financial transactions between CMRL and Exalogic Solutions did not, by itself, establish that a public servant had committed a criminal offence. Their case was that the material relied upon did not adequately demonstrate the necessary connection between the payments allegedly made to the company and any unlawful benefit received by Pinarayi Vijayan or Muhammed Riyas.

Hariharan submitted that Veena T. headed the company that had received the payments and that the alleged receipt of money by a company associated with a relative of a public servant could not automatically establish the criminal liability of that public servant. According to the appellants, the material needed to disclose the essential elements of an offence under the Prevention of Corruption Act rather than merely raise suspicion about the nature of the transactions.

The senior counsel argued that the prosecution theory appeared to rely on an alleged quid pro quo, but the material did not clearly establish what benefit had allegedly been conferred upon the public servant, who had received that benefit or how the transactions satisfied the requirements of a corruption offence. He also submitted that there was no established allegation of disproportionate assets sufficient to support the case as framed.

The appellants maintained that the existence of a commercial relationship and the transfer of money between companies could not, without more, justify criminal proceedings against individuals merely because of their family relationships. They argued that the investigation had to be founded on information disclosing a legally identifiable offence and could not proceed solely on assumptions concerning the possible beneficiaries of the payments.

Another important submission concerned Section 17A of the Prevention of Corruption Act, which regulates the circumstances in which an enquiry or inquiry or investigation may be conducted into certain offences allegedly committed by public servants in connection with recommendations made or decisions taken in the discharge of official functions. The appellants argued that the statutory safeguards concerning prior approval and the applicable preliminary-enquiry requirements had not been followed.

They also relied upon the proceedings relating to the investigation by the Serious Fraud Investigation Office (SFIO). According to the appellants, the SFIO enquiry into the same transactions had been stayed by the Delhi and Kerala High Courts. They argued that Section 212 of the Companies Act, 2013, and the statutory framework governing SFIO investigations raised questions about the permissibility of parallel investigations by other agencies.

The appellants further contended that the SFIO and the persons directly affected had not been made parties to the writ proceedings, thereby preventing the Court from hearing submissions on matters that could have a bearing on the relief granted. They argued that, had the statutory route under the BNSS been followed, the competent Magistrate or investigating authority could have examined whether the information disclosed a cognizable offence before directing further action.

Senior Advocate Sidharth Luthra also challenged the reasoning of the Single Judge. He submitted that there were material errors in the judgment and pointed out that parts of the decision had been set aside by the Supreme Court. He further argued that the principal question considered by the Single Judge concerning the State’s duty to register an FIR upon receiving information under Section 66 of the Prevention of Money Laundering Act, 2002, had been answered in favour of the appellants.

Senior Advocates K. Gopalakrishna Kurup and T.A. Shaji also pressed for an interim stay of the Single Judge’s judgment and the proceedings initiated pursuant to it. Their submissions sought to demonstrate that the legal questions raised in the appeals required detailed examination before the directions for criminal investigation could be allowed to operate.

Arguments on behalf of the State

Advocate General K. Jaju Babu submitted that the State had initially acted on the information received from the ED by deciding to conduct a preliminary enquiry. The State had constituted an SIT to examine the material and determine whether further criminal action was warranted. According to the Advocate General, this decision had been taken as a matter of caution and was intended to ensure that the relevant information was examined before the State proceeded further.

The Advocate General explained that the State’s preliminary enquiry was challenged shortly after the SIT was constituted. Although the government did not fully agree with the Single Judge’s decision to set aside the SIT’s formation, it had chosen to respect the judgment and register the FIR. The State had taken this course because the Single Judge had examined the material supplied by the ED and had reached the conclusion that the information disclosed grounds for registering a criminal case.

The State maintained that its original decision to conduct a preliminary enquiry had been made in good faith and that the government had not sought to obstruct the investigation. It argued that the decision to comply with the Single Judge’s directions was based on the judicial assessment of the material available at that stage.

The Advocate General opposed the request to stay the proceedings, pointing out that an FIR had already been registered. He submitted that the State’s conduct had to be assessed in the context of its decision to respect the judicial order rather than continue with an investigative course that the Single Judge had declared impermissible.

Arguments on behalf of the Enforcement Directorate

Additional Solicitor General P. Sreekumar, appearing for the ED, argued that when information disclosing a cognizable offence is communicated to the State police, the authorities are required to act in accordance with the law governing the registration of criminal cases. He supported the Single Judge’s conclusion that the State could not avoid registering an FIR where the material received disclosed the commission of a cognizable offence.

The ED also disputed the appellants’ reliance on Section 212 of the Companies Act, 2013. Its submission was that the statutory framework governing investigations by the SFIO did not automatically prevent proceedings under the Prevention of Money Laundering Act, 2002, or the exercise of powers by other competent authorities under their respective statutes. The ED therefore argued that the existence of an SFIO investigation could not, by itself, resolve the question of whether the State was required to act upon information relating to a potentially cognizable offence.

The Additional Solicitor General opposed extending the stay to the investigation, maintaining that the statutory obligation to register an FIR upon receipt of information disclosing a cognizable offence should not be displaced merely because the appellants disputed the allegations or the investigative process.

Arguments on behalf of the writ petitioner

Advocate V. Sethunath, appearing for writ petitioner K.M. Shajahan, argued that the case did not require the petitioner to approach a Magistrate in the first instance. According to the petitioner, the relevant information had already been communicated to the State Police Chief, and the issue was the State’s failure to take the action allegedly required by law. He therefore contended that approaching the High Court was an appropriate course in the circumstances.

The writ petitioner also challenged the legality of the State’s decision to constitute an SIT for a preliminary enquiry. His position was that the State had not acted in accordance with the applicable legal requirements when it chose to investigate the information without registering an FIR. He maintained that the High Court was entitled to examine the State’s response and issue appropriate directions where the statutory obligations of the police had allegedly not been fulfilled.

The petitioner further defended his standing to initiate the proceedings. He disputed the appellants’ suggestion that he lacked the necessary locus standi and argued that the issues raised concerned the enforcement of criminal law and the proper response of public authorities to information about alleged corruption.

The competing submissions placed several questions before the Division Bench, including the scope of the High Court’s writ jurisdiction, the statutory procedure for seeking investigation, the circumstances requiring registration of an FIR, the applicability of the Prevention of Corruption Act and the relationship between investigations conducted under different statutory frameworks.

Court’s Judgment:

The Kerala High Court Division Bench of Justice K. Natarajan and Justice Johnson John stayed the FIR registered against Pinarayi Vijayan, Veena T. and Muhammed Riyas, along with further investigation in the CMRL-Exalogic case. The Bench also stayed the operation of the Single Judge’s judgment directing the VACB to register the FIR. After hearing the detailed submissions advanced by the parties, the Court admitted the appeals and scheduled them for final hearing after three weeks.

The significance of the order lies in the fact that the Division Bench intervened at an interim stage while the legality of the Single Judge’s directions remained under challenge. The Court’s decision to stay the FIR and further investigation does not amount to a final determination of the allegations or a finding that the appellants are innocent or guilty. Instead, it temporarily suspends the operation of the challenged directions pending a fuller examination of the legal issues raised in the appeals.

Scope of judicial intervention in criminal investigation

One of the central questions arising from the appeals concerns the extent to which a constitutional court may direct the police to register an FIR when a complainant alleges that the authorities have failed to act on information about a cognizable offence.

The appellants argued that the Single Judge had intervened in a matter that should ordinarily be dealt with by the investigating authorities under the applicable criminal procedure. They maintained that the State had chosen to conduct a preliminary enquiry through an SIT and that the High Court should not have displaced that decision without first hearing the persons directly affected.

The issue requires consideration of the distinction between judicial review of police inaction and the ordinary responsibility of investigating agencies to assess information and investigate offences. Courts may exercise their constitutional and statutory powers where the law permits, but the scope of such intervention must be determined in accordance with the governing legal principles and the facts of the particular case.

In the present matter, the appellants challenged the Single Judge’s decision to direct registration of an FIR and set aside the State’s preliminary-enquiry arrangement. The Division Bench’s interim stay means that the legality of those directions will be examined further at the final hearing. The available order does not establish that the Single Judge’s approach was ultimately unlawful; that question remains part of the pending appeals.

Section 175 of the BNSS and the availability of alternative remedies

The appellants placed considerable emphasis on Section 175 of the Bharatiya Nagarik Suraksha Sanhita, 2023, which governs aspects of police investigation and provides a statutory framework relevant to applications seeking investigation by the police. They argued that the writ petitioner had approached the High Court without first following the prescribed procedure before the competent Magistrate.

This submission raises the question of when a person seeking criminal investigation may invoke the High Court’s writ jurisdiction instead of pursuing the remedies provided under criminal procedure law. The availability of an alternative remedy can be an important consideration when a constitutional court is asked to intervene, although its existence does not automatically determine whether writ jurisdiction can be exercised in every circumstance.

The writ petitioner disputed the appellants’ position, arguing that the information had already been supplied to the State Police Chief and that the State’s response, rather than a failure to approach a Magistrate, was the central issue. He maintained that the circumstances justified approaching the High Court directly.

The Division Bench’s admission of the appeals allows these competing arguments to be examined in detail. The final decision may clarify how the statutory procedure under the BNSS interacts with the High Court’s powers when allegations concern the failure of public authorities to initiate a criminal investigation.

Whether the information disclosed a cognizable offence

Another important issue concerns the legal sufficiency of the information supplied by the ED. The appellants argued that the transactions between CMRL and Exalogic Solutins did not, by themselves, disclose a cognizable offe