KOCHI: In a major breather for former Finance Minister Thomas Isaac, the Kerala High Court on Monday ordered the Enforcement Directorate to keep in abeyance for two months further summons to Isaac in a case related to the issue of 'masala bonds' by the Kerala Infrastructure Investment Fund Board (KIIFB).
The court also restrained the ED from issuing a summons to KIIFB Chief Executive officer KM Abraham and Joint Fund Manager Ani Jula Thomas.
The court impleaded the Chief General Manager, the Reserve Bank of India, Mumbai as an additional respondent in the case and adjourned the hearing of the case on November 15, 2022.
The court observed that "although the inquiry by the Enforcement Directorate is not liable to be interdicted, there is no justification in the petitioners being repeatedly summoned by the officers of the ED."
Justice VG Arun issued the order on the petition filed by Thomas Isaac and Kerala Infrastructure Investment Fund Board (KIIFB) Chief Executive officer KM Abraham seeking to quash the summons issued by the ED against them on charges of Foreign Exchange Management Act (FEMA) violations in the issuance of Masala Bonds.
Isaac's petition stated that it was settled that the ED could conduct an inquiry only on an accusation of wrongdoing, which has to be disclosed to the persons from whom the information had been sought, he said. The summons was illegal and beyond the jurisdiction and the scope of inquiry contemplated under the FEMA since admittedly, there was no violation of any provisions of the Act.
According to KIIFB, no investigation has been initiated into the issue of the Masala bond by the Centre government entities such as the National Highway Authority of India (NHAI) and National Thermal Power Corporation(NTPC).
The KIIFB pointed out that the NTPC had issued the Masala bonds in 2016 on the London Stock Exchange(LSE) and raised Rs. 20 million for developing the renewable energy market. The NHAI launched its Masala Bonds on LSE in 2017, raising Rs.30 billion to accelerate the development of transport infrastructure. These bonds were the largest inaugural transaction in the Masala bond market. Besides, the Indian Renewable Energy Development Agency Limited(IREDA) had also launched such bonds and raised around Rs.300 million. Certain private companies including HDFC, Dewan Housing Finance
Corporation Ltd and Indiabulls Housing Finance Limited had also
issued Masala Bonds.
KIIFB pointed out that despite the High Court directive to specifically state whether the issue of Masala Bonds by any other entities was being probed, the ED was silent on it. The issuance of Masala Bonds by KIIFB has been singled out for no discernible reason and is thus arbitrary.
It also said that the present investigation entailed extremely
deleterious consequences on the projects approved by the KIFFB in the State government. The inordinate delay in the investigation had not only violated the fundamental rights of the petitioners but also affected the infrastructure plans and their executions. The present probe was a roving one. Besides, the ED had not disclosed any material reason or suspicion for launching the present investigation. Nor it had failed to disclose the alleged violation of the FEMA committed by the petitioners.