[Masala Bonds Case] Kerala High Court Declines To Interfere With ED Summons Issued To KIIFB, Former Finance Minister Dr Thomas Issac

Earlier, the Court had directed KIIFB to respond to the summons issued by ED for the production of certified copies of documents.

Summons was also issued against Dr Issac to appear on February 13, 2024, for the production of documents and for oral submissions.

Justice Devan Ramachandran did not pass any formal orders against the issuance of summons and orally stated, “I am deciding it tomorrow, You can choose to go or not to go”.

Senior Advocate Jaideep Gupta, appearing on behalf of Dr Issac submitted that the issuance and utilization of masalas bonds was a decision taken by the executive and the board members. It was argued that Dr Issac, who was only one member of the board had no particular role in the issuance or utilization of masala bonds. It was also stated many other persons were also part of the board, and no one was summoned except Dr Issac. Thus, they had sought the summons issued against Dr Issac to be deferred.

Senior Advocate Arvind Datar, appearing on behalf of KIIFB submitted that the summons had not mentioned that certified copies of documents have to be produced and that the summons as such was not maintainable.

The Court stated that the counter affidavits were filed by the KIIFB as well as the ED. The Court thus posted the matters for tomorrow for the submission of counter-affidavits.

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. In October 2022, Justice V.G. Arun stayed further issuance of summons against KIIFB and Dr Issac for two months.

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

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

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

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