The Kerala high court’s ruling on October 9, directing the Vigilance and Anti-Corruption Bureau (VACB) to register an FIR and initiate an inquiry against leader of opposition Pinarayi Vijayan, his son-in-law and CPI(M) MLA PA Mohammed Riyas and daughter Veena T is seen as a major setback for the veteran CPI(M) leader and his party as well as a slap on the wrist for the UDF government in the state.
What the ED inquiry claims
Home Minister Ramesh Chennithala said that the police are bound to conduct a preliminary inquiry before registering a case when no cognisable offence is revealed. The consequential ruling of the high court came on a writ petition filed by activist-lawyer KM Shajahan seeking directions to charge Vijayan and others under the Prevention of Corruption (PC) Act based on the findings of the Enforcement Directorate (ED) in its inquiry into monthly payments made by Cochin Minerals and Rutile Limited (CMRL), a minerals manufacturer in Kochi, to Exalogic Solutions, the now-defunct firm run by Veena T. The IT settlement board had delivered the ruling on a petition filed by CMRL claiming the transactions with Exalogic as ‘business expenses. However, it was not the first time CMRL had run into rough weather with the tax authorities. Following the raids, the IT department flagged tax evasion by CMRL through exaggerated expenses. It had also found diary entries indicating payments made to prominent political leaders, media houses, trade union leaders and police officials. Vijayan and the CPI(M) dismissed the allegations. In February that year, the Karnataka High Court dismissed Veena’s plea seeking to quash the SFIO probe. The trial in the case is yet to begin. It also conducted subsequent raids in Kozhikode at premises linked to Riyas, CPI(M) MLA from Beypore and son-in-law of Vijayan, in August. The ED sent a communication to the state DGP in September this year, sharing details of its findings so far, and demanding that an FIR be registered under the PC Act against Vijayan, Veena and Riyas. The ED claimed that Veena ‘could not provide any documentary or electronic evidence’ of IT services rendered to CMRL. “This documentation confirms that the phrase ‘public relation avenues’ was nothing but bribes paid to the former chief minister through his daughter. After receiving the ED communication, the Congress-led government sought legal advice from the offices of the Attorney General and the Director General of Prosecution. Subsequently, the home department ordered a preliminary inquiry by a special investigation team (SIT) within the Crime Branch. He cited the Lalitha Kumari vs State of Uttar Pradesh case in the Supreme Court to justify the preliminary probe. The preliminary inquiry by the police is contrary to the mandate of law and judgments of the Supreme Court on the matter, he argued. The bench of Justice A Badharudeen, after hearing arguments from all sides, found that the information provided by the ED contained sufficient primary materials disclosing the commission of cognizable offences under the PC Act against Vijayan, Riyas, and Veena. It directed the VACB to register the FIR, investigate the allegations through competent officers and file a final report without any delay. It asked the ED to forward all necessary documents to the VACB for further action.
The CMRL case came into the limelight in June 2023, when the Income Tax Interim Settlement Board found that Veena and Exalogic, a software solutions firm based in Bengaluru, had received monthly payments from CMRL to the tune of ₹ 1.72 crore in a three-year period between 2017 and 2019 despite the former rendering no services to the latter. Exalogic and CMRL had signed an agreement in 2017 with the IT firm promising to provide software and marketing services to the minerals manufacturer in exchange for financial compensation. In January 2019, the IT department conducted raids at the CMRL premises as well as the residences of its managing director, Sasidharan Kartha, and its then chief financial officer (CFO), KS Suresh Kumar. In January, 2024, the Corporate Affairs Ministry of the Union government ordered an inquiry by the Serious Fraud Investigations Office (SFIO) into the allegations under the Companies Act. In March, 2024, ED registered a case against Veena and CMRL officials, taking cognisance of the SFIO complaint, and launching an inquiry to check whether there were violations of the Prevention of Money Laundering Act (PMLA). In April 2025, the SFIO filed a prosecution complaint before the Special Court for Economic Offences in Kochi, charging Veena and top CMRL officials as accused under sections of the Companies Act, 1956, and the Companies Act, 2013, for committing fraud. The central agency found ‘fraudulent payments of ₹ 2.70 crore benefiting Veena T and Exalogic’ made by CMRL. Kartha and other top CMRL officials were charged for making ‘fraudulent payments of ₹ 182 crore under the guise of sluice handling charges and transportation costs. The ED inquiry into the case was propelled by simultaneous raids it conducted on May 27 this year at premises linked to Vijayan and his daughter Veena in Thiruvananthapuram and Kozhikode. It said that the money transferred to Dubai, as per the notes, was 3.49 lakh AED ( ₹ 85 lakh). It did so, citing section 66(2) of the PMLA, which mandates that a specified authority share information with other law enforcement agencies if it forms a reasonable opinion that another law is being contravened. In its communication to the DGP, the ED alleged that CMRL paid a total of ₹ 2.78 crore to Exalogic under the guise of IT consultancy and marketing services while simultaneously appointing Veena as an IT and marketing consultant on a monthly retainer of ₹ 5 lakh. Veena was also reportedly paid ₹ 45 lakh, after TDS, without any invoices. The verification of bank statements shows that Veena and her company received a total of ₹ 3.28 crore from CMRL. The ED inquiry also pointed to a notebook seized from Veena, which highlighted local and overseas electronic transactions handled via a UAE-based associate named Faijaz, including a specific outbound routing of ₹ 85 lakh. However, activist KM Shajahan moved the HC, complaining that when a report under section 66(2) of the PMLA is forwarded to the state police with a preliminary finding of corruption against the accused persons, the DGP has no option but to register an FIR.
The agency claimed that Suresh Kumar, former CFO of CMRL, admitted under oath that Veena was continued to be paid by CMRL “due to the public relations avenues brought by her and her relationship with her father, Pinarayi Vijayan, the then chief minister of Kerala.
“The department has demonstrated with clinching evidence the fact that the applicant has made payments through banking channels to persons connected with a prominent person and thereby claim it as a deductible expense and by claiming to compensate a service which has not been rendered or received,” the Board had said in its order on June 12, 2023. Following the interim settlement board’s ruling, parties like the Congress and the BJP alleged that the monthly payments made to Veena and her firm in the absence of any services rendered were essentially “bribes” paid to Vijayan, then chief minister, in exchange for favours to CMRL in the mining sector. During the raids, the ED said it found handwritten notes containing names, amounts handled and money transferred to Dubai from Veena’s premises. From the digital devices seized, it said it found a photograph of a SIM card taken in another person’s name, allegedly to use a Wi-Fi router and make internet-based calls. The seizures show Veena was handling amounts beyond her known sources of income, an ED statement said. “Evidences related to the transfer of money using hawala channels are also found,” it added. The investigations show that the amounts were received without any service,” the ED said. “These systematic entries are a record of illegal gratifications received by public servants and launder them into foreign assets or private assets under the cover of benami persons and need separate investigations to prove the same under the Prevention of Corruption Act,” the ED said in its letter to the DGP. “..in the facts and circumstances of this case, no further enquiry is required in the instant case, and the matters disclosed in the information under section 66(2) of the PMLA make it obligatory for the state police to register the FIR, ruling out the scope for any other enquiry,” it said. Finding the current preliminary probe by the Crime Branch SIT to be “totally unwarranted”, the HC underlined that the competent authority to investigate the case is the department of vigilance.
How the parties responded
The HC verdict is a major blow for the CPI(M) as the party had termed the ED’s allegations against Vijayan as part of political harassment of an opposition leader by the BJP-led Union government. With the legal nod to book the former chief minister on corruption charges, the party’s moral defence will take a hit. However, CPM central committee member and LDF convenor TP Ramakrishnan has indicated that the party will explore legal avenues against the HC ruling. “The HC has delivered a ruling. But surely, there are courts above it as well. We will explore all legal avenues to expose the political vendetta against Pinarayi Vijayan. He denied that the HC verdict was a setback for the UDF government. “We went by the SC judgement in the Lalitha Kumari case. The top court made it clear that a preliminary inquiry should be conducted before registering an FIR in some categories of cases. The BJP called for Vijayan to resign as Leader of Opposition in the state Assembly. “Vijayan has no right to remain as opposition leader in the Assembly. The HC’s decision, in fact, exposes the underhand dealings between the INDIA bloc partners CPM and Congress. The UDF government tried to protect Vijayan, his daughter Veena and Riyas by ordering a simple preliminary inquiry.
We will fight it politically also,” said Ramakrishnan. Chennithala said the UDF government will not file an appeal against the HC verdict. “It is the policy of the government to comply with the HC order,” he said. We went by the legal opinion we got on the matter,” he said. That plan has been demolished by the HC,” said BJP MLA V Muraleedharan.
