[Masala Bonds Case] Former Kerala Finance Minister Thomas Isaac Moves High Court Challenging Second Summons Issued By ED

Justice Devan Ramachandran issued notice to the respondents and posted the matter for hearing. Standing Counsel for the ED, Jaishankar V Nair took notice for the ED (1^st and 2^nd respondents), Senior Advocate Sumathi Dandapani took notice for the Reserve Bank of India (3^rd respondent) and Government Pleader took notice for the state government (4^th respondent).

The Court remarked orally, 'It is only a summons after all…Your Client (Dr Issac) has never appeared.. In the other case, they (KIIFB) say, they have appeared several times..”

Senior Advocate Jaideep Gupta, appearing on behalf the Dr Issac submitted that the first summons was withdrawn by the ED pursuant to the orders of the Court and now a second summons was issued.

Senior Advocate Arvind Datar, appearing on behalf of KIIFB submitted that the summons has been issued like a show cause notice and that it was issued without jurisdiction and has to be quashed. He thus sought a detailed hearing.

The Court also stated that Additional Solicitor General of India (ASGI) A.R.L.Sundaresan to submit pleadings on behalf of the ED.

A fresh summon was also issued to KIIFB seeking the submission of documents and for taking oral evidence and the Court had directed the KIIFB to submit authenticated copies of documents sought by ED for conducting the investigation. Last week, the Court directed KIIFB to respond to the summons issued by ED.

Background

KIIFB and 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 had stayed further issuance of summons against KIIFB and Dr Thomas Issac for a period of two months.

Then, 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 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 Thomas Issac. On the above submission, Justice Ramachandran left open all the other issues since there were no pending proceedings.

The matter has been posted for hearing on February 9, 2024.

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

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