[Masala Bonds Case] ED Summons Illegal, Individuals Need Greater Protection Than Statutory Bodies: Ex-Finance Minister Dr Thomas Isaac Tells Kerala HC

Justice T R Ravi was considering the writ petition filed by Dr Isaac challenging the second summons issued by the ED in connection with the financial transactions of the KIIFB in relation to the masala bonds case.

A separate plea has also been filed by KIIFB Challenging the summons issued against them by the ED to Dr Kandathil Mathew Abraham, (Chief Executive Officer, KIIFB) who was also the former Chief Secretary in relation to the masala bonds case. Pursuant to the Court's directions, the KIIFB officers answered the summons and appeared before the ED. During yesterday's hearing, KIIFB submitted before the Court that ED has no jurisdiction to investigate the misutilization of funds under FEMA.

Senior Advocate Jaideep Gupta, appearing on behalf of Dr Issac submitted before the Court that the nature of the summons issued by the ED is illegal and without application of mind. It was stated that the summons does not satisfy the requirements of law and that there is prima facie evidence that it is motivated. It was submitted that for a summons to be issued under the FEMA, it must be shown that there is contravention of provisions as per Section 13 of the Act.

It is submitted that the summons issued against Dr Isaac seeking documents showing bank details, property details, income tax records etc has no connections with the allegations raised by the ED in their complaint.

It is submitted that ED has been continuing its fishing and roving inquiry without stating the reasons for probing and issuing summons to Dr Isaac under FEMA. It is stated that Dr Isaac is no longer associated with KIIFB which is a statutory corporation.

It is also submitted that ED has been conducting a preliminary investigation for the past three years and even now they have not been able to identify if there is any contravention of provisions under the FEMA. It is argued that ED has the liability to demonstrate that the summons was issued for serving the purpose of an inquiry under the FEMA and that they have not issued it mindlessly.

It is submitted that the issuance of summons has serious consequences and must be justified. It was stated that Dr Isaac being an individual citizen has guaranteed fundamental rights and requires greater protection, unlike KIIFB which is a statutory corporation.

The hearing will continue next week. 

Case Title: Kerala Infrastructure Investment Fund Board V Director, Dr. T.M. Thomas Isaac V The Deputy Director

Case Number: WP(C) 1377/ 2024, WP(C) 3719/ 2024