[Masala Bonds Case] KIIFB Moves Kerala High Court Against Summons Issued By ED To Former Chief Secretary

Today upon hearing the arguments of KIIFB and ED, Justice Devan Ramachandran directed the ED to submit a counter affidavit within a week.

“Obviously the afore assertions are more or less in the realm of facts primarily and a counter pleading will have to be filed by the ED. Ext. P28 summons to the officer on was on 10.01.2024 and it was submitted by KIIFB that they have asked for further time. I am of the view that this Court is justified in giving a week's time for the ED to respond.”, the Court stated.

Senior Advocate Arvind Datar instructed by Advocate Harindranath for the KIIFB submitted before the Court that all the documents were already submitted before the ED and it was not necessary for issuance of summons to the former Chief Secretary. Relying upon a recent Apex Court decision, it was submitted that officials like the former Chief Secretary could not be summoned. Further, it was stated that the summons was mischievous and was issued only to ridicule the KIIFB.

Additional Solicitor General of India (ASGI) A.R.L.Sundaresan, instructed by Standing Counsel for ED Jaishankar V.Nair, submitted that documents submitted before the ED earlier were not certified copies and were only photocopies without any authentication. It was also argued that the principal officer of KIIFB was merely asked to give evidence in the nature of statements. It was also argued that the Court may not interdict upon the process of the ED since it has only asked for certified copies of the documents.

The Court held that it would not permit the ED to issue summons over and over again to officers for the production of documents if they were already given. However, the Court stated that the KIIFB can submit authenticated copies, instead of photocopies. The Court orally observed that:

“After all this is my state, I know what KIIFB is doing here. Most of the projects are funded by the KIIFB, it is in my interest as a citizen and as a judge perhaps or as a lawyer that KIIFB is allowed to operate in the manner they are permitted to. But that does not mean that you can keep away information when it is asked. I will ensure that you are not arrested or that there is no coercion, nothing like that. I think as a state agency, you are obligated to give...you give me an affidavit saying whatever you have given is authenticated documents...”

Background

KIIFB and former minister Dr Thomas Issac had filed separate petitions before the High Court challenging the issuance of the summons by the ED alleging violations of provisions under the Foreign Exchange Management Act (FEMA) for raising funds by issuing rupee-denominated bonds (masala bonds) abroad.

A Single Judge Bench of Justice V.G. Arun had, in October 2022, stayed further issuance of summons against KIIFB and Dr Thomas Issac for a period of two months.

On November 24, 2023, Justice Ramachandran permitted the issuance of fresh summons to Isaac and KIIFB, subject to further orders of the Court. This was later set aside by a Division Bench on December 7, 2023, citing technical grounds, that that such a modification of an earlier Interim Order could not have been issued.

Justice Ramachandran observed that the ED cannot conduct a roving inquiry and had noted that investigation can be conducted even without issuance of summons.

In December last year, the ED withdrew the summons issued to the KIIFB and Dr Thomas Issac. On the above submission, Justice Ramachandran mentioned that left open all the issues since there were no pending proceedings.

"In any event, since the impugned summons are now stated to have been withdrawn, or to be withdrawn, I do not propose to enter into this at all, because as matters now stand, there does not appear to be any substance on which the petitioners need to impel their apprehensions to challenge the proceedings. They are at liberty to do so as and when it becomes warranted in future".