[Masala Bonds Case] Convince Court On Fmr Finance Minister Dr Thomas Isaac's Involvement, Allegedly Illegal Conduct: Kerala HC Tells ED

“Atleast to convince myself that there is something involved in it… Without being convinced on that, I don't want to enter into it,”, orally stated Justice T R Ravi while adjourning the matter to Tuesday for the ED to convince the Court.

The Court on April 01, 2024, had passed an interim order stating that status quo shall be maintained, and nothing shall happen in the meanwhile. This status quo order was passed in the plea filed by Dr Isaac on the new summons issued against him to appear before the ED.

The Court had earlier sought an explanation from the ED regarding the new summons issued to Dr Isaac. A separate plea was also filed by the KIIFB challenging the summons issued against it.

On an earlier occasion, the Court had sought verifiable reasons from the ED for investigating summons against Dr Isaac and KIIFB. Pursuant to the directions of the Court, the officers of the KIIFB answered the summons and appeared before the ED.

Senior Advocate Jaideep Gupta appearing on behalf of Dr Isaac submitted that his client was a candidate for election from the Pathanamthitta district and summons could not be answered during the brink of elections as prejudice would be caused.

It was submitted that ED was issuing summons to Dr Isaac without understanding the role and functions of each official in the KIIFB. Senior Advocate argued that Dr Isaac had stepped down from the KIIFB post his retirement as the Finance Minister and was unaware of the utilization of funds in connection with the masala bonds.

Senior Advocate further stated that ED could not have issued summons because there were no pending proceedings and that ED was only carrying a preliminary investigation.

Senior Advocate Arvind Datar submitted on behalf of KIIFB that all the reports and files have been regulated, audited and reported to the RBI. It was argued that the RBI had not raised any allegations of irregularities in the transactions of KIIFB. It was also argued that the first summons was issued in 2021 and now it is 2024 and even after all these years the ED was unable to prove the diversion of funds or prima facie case against KIIFB.

Senior Advocate submitted that there were no pending proceedings and issuance of summons was illegal. It was also submitted that officers of the KIIFB have appeared before the ED a minimum of four times, submitted all documents and co-operated with the investigation.

Additional Solicitor General of India (ASGI) A.R.L.Sundaresan, instructed by Standing Counsel Jaishankar V.Nair appeared on behalf of the ED and submitted that investigations were undergoing and KIIFB and Dr Issac were bound to answer the summons. It was also argued that the acceptance of returns by the RBI would not prevent the ED from investigating. Further, it was submitted that no prejudice would be caused by answering the summons and cooperating with the investigation.

The matter has been posted for hearing on Tuesday.

Case title: Kerala Infrastructure Investment Fund Board V Director, Thomas Issac v Deputy Director

Case number: WPC 1377/2024 & WPC 3719/2024