The Kerala High Court on Tuesday adjourned to September 2 the hearing on a petition filed by the Kerala Infrastructure Investment Fund Board (KIIFB), its Chief Executive Officer, and Joint Fund Manager challenging the summons issued to them by the Enforcement Directorate for allegedly violating the Foreign Exchange Management Act (FEMA) on the issue of masala bonds by the KIIFB.
When the petition came up for hearing before Justice V.G. Arun, counsel for the petitioners sought an interim stay on the summons. The court, however, said it did not intend to pass any interim order.
Counsel for the petitioners contended that the ED had been issuing repeated summons to its Chief Executive Officer and the Joint Fund Manager. He contended that there was no violation of any FEMA provisions in the case. The Reserve Bank of India (RBI) had given specific authorisation to the KIIFB in 2018 for issuing rupee denominated bonds for ₹2,672.8 crore. The RBI had also issued a loan registration number to the KIIFB.
It was not open for the ED to question the legality of the masala bonds issued by the KIIFB, especially when the RBI had granted permission. The summons issued and the investigation launched by the agency were arbitrary and illegal and without jurisdiction, Chief Executive Officer K.M. Abraham and Joint Fund Manager Anie Jula Thomas said in their petition.
ED counsel submitted that the investigation was based on a CAG report that there were contraventions of the FEMA by the KIIFB. He sought to file a detailed statement in response to the petition.
