Show at least one suspect transaction: Kerala High Court to ED in Masala Bonds case

The Kerala High Court on Friday asked the Enforcement Directorate (ED) to inform it of at least one example of a transaction where irregularities are suspected in the Kerala Infrastructure Investment Fund Board's (KIIFB) issuance of masala bonds [Dr. TM Thomas Isaac v. The Deputy Director]..Justice TR Ravi was considering petitions moved by former Former State Finance Minister Thomas Isaac and officials of KIIFB challenging the issuance of summons to them in connection with ED's probe in the case.The primary ground raised by both Isaac and the KIIFB officials is that the summons issued to them contain no mention of what transactions are being investigated. Finding the same to be true, Justice Ravi orally asked Additional Solicitor General (ASG) ARL Sundaresan, who appeared for the ED, to submit at least one example of a specific transaction which is suspect. The same is only to satisfy the Court's conscience and need not be provided to the persons who have been summoned, Justice Ravi said. "Can you show me one example where funds have allegedly been used for purposes (other than infrastructure projects)? Just to convince myself. I would like to see if there are utilisations which can be doubted so that there is some purpose in questioning them (Isaac and KIIFB officials). Otherwise there is no purpose in questioning because it will be oral evidence on written documents which is not really required... I am not saying that all this needs to be supplied to the persons you want to question because you may want to surprise them but I want an example to at least convince myself, that there is something involved," Justice Ravi orally remarked. .The case before the Court involves allegations that the Foreign Exchange Management Act (FEMA) was violated in the issuance of Masala Bonds which are rupee-denominated bonds issued outside India by Indian entities.KIIFB officials and Isaac first filed petitions before the High Court in 2022 challenging the ED summons issued to them in connection with the central agency's probe.However, in December 2023, the ED informed the High Court that it had decided to withdraw the summons.At the time, the Court had clarified that the ED was free to continue its probe in the case.However, the ED issued fresh summons to Isaac and KIIFB officials in January this year following which Isaac and KIIFB filed this fresh round of petitions challenging the same. .On April 1, the Court had ordered that status quo be maintained in the case until April 9. Today, Isaac and KIIFB officials requested the Court to extend the status quo order till May 22 when the Court will reopen after its summer holidays which are due to commence on April 15.However, the Court said that it would consider the matter again on April 9 before deciding on whether or not to extend the order. .Senior Advocate Jaideep Gupta appeared for Isaac while Senior Advocate Arvind Datar appeared for the KIIFB officials.