KSIDC Can't Escape SFIO Probe On Ground That It Is A Govt Agency, May Lose Reputation Before Public: Centre To Kerala High Court
The Central Government, Director General of Corporate Affairs, Registrar of Companies and Serious Fraud Investigation Office (SFIO) has filed a reply before the Kerala High Court stating that the Kerala State Industrial Development Corporation Ltd (KSIDC) could not take shelter and escape from the investigation conducted by the SFIO stating that they are a government agency and would...
The Central Government, Director General of Corporate Affairs, Registrar of Companies and Serious Fraud Investigation Office (SFIO) has filed a reply before the Kerala High Court stating that the Kerala State Industrial Development Corporation Ltd (KSIDC) could not take shelter and escape from the investigation conducted by the SFIO stating that they are a government agency and would lose reputation before the public.
The Court had earlier directed KSIDC to prove their bonafides to remove them from the investigation conducted by the SFIO into CMRL, Exalogic Solutions and KSIDC. Exaologic Solutions, an IT company owned by CM Pinarayi Vijayan's daughter, is allegedly involved in the CMRL bribery case.
Justice Devan Ramachandran today orally stated that it assumed that the KSIDC would have requested an investigation by the SFIO since they are a responsible public sector undertaking and it must get rid of all allegations of siphoning off crores of money. The Court orally remarked thus:
“It is to protect your (KSIDC) credibility that I am saying this…You should co-operate with them, actually. It is left to you to take a call, I am not saying you should, I am saying normally you should have been happier that your name is cleared because you have a nominee director on the Board of CMRL…”
Additional Solicitor General of India, Arwind Kamath instructed by Central Government Counsel R V Sreejith submitted that SFIO has the power to investigate into the transactions between CRML and KSIDC since the nominee director of KSDIC was present in the Board of CMRL and partaking in their business. It was also argued that the investigation conducted by the SFIO will help KSIDC to know if CMRL had carried out illegal transactions without the knowledge of KSIDC. It
Additionally, in the reply affidavit filed by the respondents, it was submitted that KSIDC has to be investigated pertaining to their transactions with the CMRL since KSIDC did not act vigilantly against the suspicious transactions of CMRL despite KSIDC being a state entity with 13.4 per cent shares in CMRL. It was also submitted that the action of KSIDC for ordering a forensic audit of CMRL in 2023 could only been a belated attempt or an afterthought to demonstrate that some action was taken by them even though the books of CMRL were first seized as early as in 2019.
The reply affidavit further stated that KSIDC being the investment promotion arm in Kerala was misused for perpetuating fraud in the companies in which they have invested. It was submitted that there are some lacunae in the corporate governance structure of KSIDC which is a company that has public money in its account and involves public interest.
Further, it was submitted through the reply affidavit that KSIDC should be aiding, facilitating and cooperating with the investigation conducted by the SFIO regarding the transactions that took place between KSIDC and CMRL and come clean if they have not violated any law.
Senior Advocate Vaidyanathan instructed by Advocate P.U.Shailajan appeared on behalf of KSIDC.
The matter is posted for further hearing on April 05, 2024.
Case title: Kerala State Industrial Development Corporation Ltd (KSIDC), Vs Union Of India, Shone George Vs Ministry Of Corporate Affairs
Case number: WP(C) 4896/ 2024, WP(C) 42092/ 2023