Avon Solution and Logistics Pvt Ltd v. Directorate of Enforcement

What happened

Avon Solution and Logistics Pvt Ltd, on the basis of a forensic audit dated 28 November 2025, said that three former officials, its COO, a project manager and a manager, had dishonestly misappropriated and cheated it to the tune of ₹23,59,70,373. A complaint to the Chennai Crime Branch led to an FIR, Crime No. 228 of 2025, under sections 406, 420 and 34 of the Indian Penal Code, 1860. Since section 420 is a scheduled offence under the PMLA, the petitioner sought a mandamus directing the ED to initiate proceedings on its representation of 2 May 2026. It also relied on an internal Technical Circular of the Department dated 22 December 2022, providing that an investigation should be carried out where the amount exceeds ₹10 crore.

Questions before the court

• Can the High Court direct the Enforcement Directorate to register an ECIR and start PMLA proceedings because a predicate offence has been registered?

Why the court ruled this way

Under the PMLA scheme the Authorised Officer may act on a predicate case for a scheduled offence on his satisfaction about the involvement of proceeds of crime, with reasons to believe recorded in writing at each stage (paragraph 3). The Court relied on R. Madhavan Pillai v. Rajendran Unnithan, where the Supreme Court set aside a High Court direction to register an ECIR merely because a predicate offence existed (paragraphs 3 and 4). It held that an internal circular is only an administrative guideline that can neither supplement nor supplant the statute (paragraph 5). It noted that the alleged perpetrators, who would be affected, had not been made respondents, and adverse directions cannot be issued behind their back (paragraph 6). A mandamus lies only to compel performance of a mandatory duty, whereas initiating inquiry under the PMLA is a discretionary, quasi-judicial function (paragraph 7).

Controlling point

The Court cannot direct the ED to register an ECIR or initiate proceedings merely because a predicate offence exists, and a departmental circular cannot override the statutory requirement of the Authorised Officer's satisfaction.

Order and next steps

The writ petition was dismissed. The Court made clear that it is entirely for the ED to decide whether to initiate any proceedings under the PMLA on the material available, and expressed no opinion on the merits of the allegations. There was no order as to costs.

Practical implications

A complainant whose FIR discloses a scheduled offence can give the ED the material, but cannot compel an ECIR by writ; the decision rests on the ED's recorded satisfaction.

Limits of this ruling

• The Court expressed no view on whether the allegations disclose money laundering; the ED remains free to act.