Kerala HC refuses to stay ED summons to KIIFB

Published on Aug 17, 2022 12:53 AM IST

The ED had registered a case against KIIFB two weeks back and served notices to its officials and former finance minister Thomas Issac, who is the ex-officio vice chairman of the board meant to mobilise funds for infrastructural projects.

The Kerala high court on Tuesday refused to stay summons issued to the Kerala infrastructure investment development fund board (KIIFB) by enforcement directorate (ED) on charges of alleged violation of the foreign exchange management act (FEMA). (ANI)
The Kerala high court on Tuesday refused to stay summons issued to the Kerala infrastructure investment development fund board (KIIFB) by enforcement directorate (ED) on charges of alleged violation of the foreign exchange management act (FEMA). (ANI)
By, Thiruvananthapuram

The Kerala high court on Tuesday refused to stay summons issued to the Kerala infrastructure investment development fund board (KIIFB) by enforcement directorate (ED) on charges of alleged violation of the foreign exchange management act (FEMA).

The ED had registered a case against KIIFB two weeks back and served notices to its officials and former finance minister Thomas Issac, who is the ex-officio vice chairman of the board meant to mobilise funds for infrastructural projects.

The case relates to the alleged FEMA violations while raising 2,150 crore masala bonds in London Stock Exchange in 2019.

Masala bonds are bonds issued outside India denominated in Indian rupees instead of normally preferred US dollar. In 2021, the comptroller and auditor general of India had questioned the move, saying masala bonds caused a liability worth several crores of rupees to the exchequer.

In the plea questioning the ED move, KIIFB said notices were issued with mala fide intensions and obstructing the ongoing infrastructural projects carried out by it.

It also said masala bonds were raised with the permission of the Reserve Banks of India and the ED has no jurisdiction to register a case against it.

The ED later sought more time to furnish a detailed reply, and the court posed the petition to Sept 2. But it refused to stay summons till then.

Last week, the court pulled up ED officials over why former finance minister Issac was asked to furnish details of his assets at the preliminary stage of a case and directed it not to question him till next week.

Justice VG Arun raised the question while hearing a petition filed by Issac, questioning summons in connection with financial transactions of KIIFB.

In the petition, he said the ED had sought details about his properties and family’s assets.

Issac said the ED had issued two summon to him under the FEMA, income tax act and code of civil procedure seeking details of his role in the KIIFB with respect to issuing masala bonds. But the agency failed to reveal the nature of the violation committed by him, he said.

All actions of the KIIFB were performed legally and details are available in public domain, Issac said in his petition.

The KIIFB was constituted by the state government on the lines of a corporate financial institution to mobilise funds for infrastructure development in the state.

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