Court rules State Police must register FIR without preliminary inquiry when ED's information under Section 66(2) of PMLA discloses cognizable offences under Prevention of Corruption Act; Special Investigation Team formation without Government order declared unauthorized.
In a landmark judgment dated October 9, 2026, the Kerala High Court, presided over by Justice A. Badharudeen, has firmly established the legal mandate requiring the State Police to register a First Information Report (FIR) immediately upon receipt of information under Section 66(2) of the Prevention of Money Laundering Act (PMLA), 2002, when such information discloses the commission of cognizable offences under the Prevention of Corruption (PC) Act, 1988.
The case arose from a writ petition filed by Advocate K.M. Shajahan, a lawyer and social activist known for his anti-corruption stance, who challenged the inaction of the Kerala State authorities in registering an FIR based on the detailed information shared by the Enforcement Directorate (ED) under Section 66(2) of the PMLA. The ED's report exposed allegations of corporate fraud and bribery involving prominent political figures including the former Chief Minister of Kerala, Shri Pinarayi Vijayan, his daughter Smt. Veena Thaikkandiyil, and former Cabinet Minister Shri Mohamed Riyas.
The ED's comprehensive investigation revealed a complex scheme of illicit financial transactions, including sham consultancy payments totaling over Rs. 3.28 crores made to Smt. Veena T and her company, M/s Exalogic Solutions Pvt. Ltd., without provision of any services. The investigation unearthed further incriminating evidence like hawala transactions routed through associates, foreign currency dealings, and detailed handwritten accounts seized during searches. The report explicitly identified these transactions as proceeds of crime, constituting offences under the PC Act and the PMLA.
Despite this, the Kerala Police had refrained from registering an FIR, opting instead to constitute a Special Investigation Team (SIT) to conduct a preliminary enquiry. The petitioner contested this approach, asserting that the law mandates immediate FIR registration without any preliminary enquiry when the information from the ED discloses cognizable offences.
The High Court meticulously examined the legal framework, referencing a series of Supreme Court judgments including Vijay Madanlal Choudhary v. Union of India (2023), Lalita Kumari v. Government of Uttar Pradesh (2014), Charansingh v. State of Maharashtra (2021), and Pradeep Nirankarnath Sharma v. State of Gujarat (2025), among others. The Court underscored that while preliminary enquiry is discretionary and limited to ascertaining whether the information prima facie discloses an offence, it is not mandatory in corruption-related cases when credible information is already available.
The Court also clarified that the formation of a Special Investigation Team by the Director General of Police (DGP) without a government order, as per Section 21(1) of the Kerala Police Act, 2011, was unauthorized. The statute requires the government's direct involvement to constitute such specialized units.
Importantly, the Court recognized the petitioner's locus standi as a citizen and whistleblower, rejecting contentions that he lacked the standing to file the writ petition despite earlier contempt proceedings involving him.
In its order, the Kerala High Court set aside the government's decision to conduct a preliminary enquiry through the SIT and directed the Director of Vigilance and Anti-Corruption Bureau (VACB), Thiruvananthapuram, to register the FIR forthwith based on the ED's report. The VACB was also directed to proceed with the investigation and submit the final report without delay. The Court further instructed the DGP and SIT head to transfer all relevant documents to the VACB immediately.
This judgment reinforces the principle that law enforcement agencies cannot delay FIR registration on the pretext of preliminary enquiry when authoritative investigation reports disclose prima facie cognizable offences. It also emphasizes the legal obligation of state agencies to act promptly on the ED's information under the PMLA to ensure that alleged corrupt public servants do not evade prosecution.
The decision is expected to have far-reaching implications for anti-corruption investigations in India, particularly in cases where the ED uncovers predicate offences related to money laundering and corruption.
Bottom Line:
Upon receipt of information under Section 66(2) of the Prevention of Money Laundering Act (PMLA) disclosing the commission of cognizable offences under the Prevention of Corruption (PC) Act, the State Police is generally obligated to register an FIR without conducting a further preliminary enquiry, subject to independent evaluation of the information's adequacy.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Section 66(2), Prevention of Corruption Act, 1988 Section 13(1)(b), Kerala Police Act, 2011 Section 21(1), Code of Criminal Procedure, 1973 (CrPC) provisions on FIR registration
Adv.K.M.Shajahan v. State of Kerala, (Kerala) : Law Finder Doc Id # 2994127
