Kerala HC Upholds PMLA Summons Without Prior FIR; Income Tax Settlement Immunity No Bar

Cochin Minerals And Rutile Limited Vs Directorate of Enforcement (Kerala High Court)

Kerala High Court Upholds ED’s Power to Issue PMLA Summons Without Prior FIR; Income Tax Settlement Immunity No Bar to Money Laundering Probe

The Kerala High Court dismissed the writ petition filed by Cochin Minerals and Rutile Ltd. challenging the Enforcement Directorate’s ECIR and summons issued under the Prevention of Money Laundering Act (PMLA). The Court held that a writ petition against a summons issued under Section 50 of the PMLA is premature, as a summons merely requires appearance, production of documents, and recording of statements, without affecting any legal rights. Relying extensively on the Supreme Court’s decision in Vijay Madanlal Choudhary, the Court reiterated that the ED can commence an inquiry under the PMLA even before registration of an FIR in respect of a scheduled offence, since Section 50 proceedings are in the nature of an inquiry and ECIR is only an internal document. The Court further held that immunity granted by the Income Tax Settlement Commission under Section 245H of the Income-tax Act does not extend to proceedings under the PMLA, particularly where the settlement application was filed after 1 June 2007. It also rejected the contention that the ED must await the SFIO’s final report before initiating action, observing that subsequent filing of the SFIO complaint alleging offences under Section 447 of the Companies Act (a scheduled offence under the PMLA) removed the very basis of the petitioners’ challenge. Accordingly, the writ petition was dismissed.