Former Kerala Finance Minister Thomas Issac Moves High Court Challenging ED Summons In Connection With KIIFB Transactions

Dr.Thomas Issac, former Finance Minister of Kerala and a member of the Communist Party of India (Marxist), has approached the Kerala High Court challenging the summons issued by the Enforcement Directorate seeking his appearance in connection with the financial transactions of the Kerala Infrastructure Investment Fund Board (KIIFB).

In the writ petition, Issac stated that the ED, without disclosing the real nature of investigation, has asked him to appear on August 11 to explain his role in the KIIFB . Though the summons mentions provisions of the Foreign Exchange Management Act and the Income Tax Act, it does not reveal what are the violations to which the petitioner is required to respond. It is argued that the attempt of the ED is to initiate a "fishing and roving enquiry" by keeping the petitioner in dark about the real nature of allegations. Thomas had submitted in his writ petition that the central agency had asked him to produce the details of his properties, both moveable and immoveable, as well as those of his family members

"The fishing an roving enquiry had been time and again deprecated by the the Honourable Apex Court. It is trite and settled law that the investigation can only be with regard to any offence", the petition states.

The former Minister states that KIIFB is a statutory body under the Kerala Infrastructure Investment Fund Act and his role has been in accordance with the statutory provisions. The details pertaining to KIIFB and his role are available in the public domain.

The petitioner also alleges that before the summons was actually served on him, it was leaked to the media, giving "political overtones" to the issue.  In relation to the issuance of Masala Bonds by the KIIFB in May 2019, Issac states that the same was done with the requisite permission of the Reserve Bank of India and there is no violation of the provisions of the Foreign Exchange Management Act (FEMA). It is mentioned that companies like NTPC and HDFC have also raised funds through issuing Masala Bonds.

"Such unwarranted fishing and roving enquiry into the activities of a body corporate duly incorporated under the relevant statute enacted by the State Legislature, functioning in accordance with the provisions of the said statute as well as other statutes is in violation of the federal structure under the Constitution", the petition states.

It is also said that the ED had repeatedly summoned the Chief Executive Officer, Deputy Managing Director, Joint Fund Manager and Assistant General Manager of KIIFB over a period of one and a half years starting from March 2021. As KIIFB is extending financial assistance to various development projects in the State, repeated interference by the ED will affect the body's fund mobilization efforts.

Issac argues that the ED officials are acting unfairly with malafide motives and apprehends "unlawful incarceration" at the behest of the agency. The petition filed through Advocate N Raghuraj seeks to quash the ED summons and seeks an interim relief to restrain the ED from initiating any coercive steps against him in furtherance of the summons.

Five MLAs have also filed a Writ Petition against the Enforcement Directorate for tarnishing the credibility of KIIFB, alleging that it had an adverse economic impact on the entire state of Kerala. 

The single bench of Justice VG Arun is considering the petition tomorrow.