No sanction needed to prosecute Vellappally Natesan in SNDP microfinance case: Kerala High Court

The Kerala High Court on Friday held that no prior sanction is required from the State to prosecute officials allegedly involved in the SNDP microfinance fraud case, including Vellappally Natesan and former managing directors of the Kerala State Backward Classes Development Corporation (KSBCDC) [MS Anil v State of Kerala & anr and connected case].

Justice A Badharudeen passed the interim order while hearing petitions concerning the investigation in the case.

"Interim order passed, holding that no prosecution sanction is required," the Court said.

The matters will be considered next on November 17.

The micro finance scam case concerns allegations that approximately ₹15.85 crore in government funds disbursed under a microfinance scheme intended to benefit members of marginalised communities was misappropriated.

These funds were given in the form of loans to the Sree Narayana Dharma Paripalana (SNDP) Yogam, which were allegedly then misappropriated.

The Vigilance and Anti-Corruption Bureau (VACB) had registered a case in 2016 over the alleged involvement SNDP Yogam office-bearers, including then-SNDP Yogam General Secretary, Vellappally Natesan and others.

Petitions were later filed before the High Court seeking an effective investigation by a Special Investigation Team (SIT).

In August, 2026, the investigating officer (IO) informed the Court that the involvement of various accused persons had been identified in eight cases and that a prosecution sanction was required from the State before proceeding further.

Since there were allegations that the microfinance scam was carried out in connivance with officials of the Kerala State Backwards Classes Development Corporation (KSBCDC), the State is required to give sanction before such officials can be prosecuted, the IO had said.

However, State Attorney Anoop V Nair maintained that such sanction was not required against the accused officials since SNDP Yogam was not a nodal agency of the State's department and did not fall within the definition of public servant under the Prevention of Corruption Act.

The Court today passed an interim order on this aspect, to clarify that the prosecution of the accused can proceed without any need for prior sanction from the State.

Advocate D Anil Kumar, OV Maniprasad, Jose Antony and S Shiv Shankar appeared for the petitioners.