KOCHI: The Kerala High Court on Friday directed the Enforcement Directorate (ED) to file a counter affidavit explaining whether it had initiated investigation against the issuance of masala bonds by any PSU other than the KIIFB.
Justice V G Arun instructed ED to file the counter affidavit by September 18. Till then the understating that no coercive action will be taken against the petitioners will continue, the court said.The order was issued on petitions filed by former finance minister T M Thomas Isaac, KIIFB Chief Executive Officer K M Abraham and Joint Fund Manager Ani Jula Thomas challenging ED’s summons to them in connection with the issue of Masala bonds.
The petitioners counsel contended that just like KIIFB, many other public sector undertakings such as the National Highways Authority of India, the Power Trading Corporation and the National Thermal Power Corporation had floated Masala bonds with identical RBI permission. However, these bonds had not been under the scanner of the ED. KIIFB had been singled out.
In fact, the ED proceedings had drastic ramifications on KIIFB’s borrowing plans, which would, in effect, stall various developmental projects in the state, the petitioner submitted.When one approaches foreign financial institutions to raise funds, the first question they will ask is whether any proceedings are pending against the institution.
“Let the ED file an affidavit stating that how many masala bonds have been issued and how many are there under their scanner. There is no reason to single out KIIFB alone,” submitted the counsel.The petitioner also sought to fix a timeline for filing of counter affidavit since the enquiry has been going on for over 18 months.
The petitioners contended that it was not open for the ED to question the legality of the masala bonds issued by the KIIFB, especially when the RBI had granted permission.The summons issued and the investigation launched by the agency were arbitrary and illegal and without jurisdiction.