The court pointed out that although the inquiry/investigation by the ED was not liable to be interdicted, there was no justification for summons being repeatedly issued by the ED officials
The court pointed out that although the inquiry/investigation by the ED was not liable to be interdicted, there was no justification for summons being repeatedly issued by the ED officials
The Kerala High Court on Monday directed Enforcement Directorate(ED) to keep on hold the further summons issued to former Finance Minister Dr. T.M. Thomas Isaac and Dr. K.M. Abraham, Chief Executive officer, of Kerala Infrastructure Investment Fund Board (KIIFB) as part of the ED’s probe into the issue of Masala bonds by KIIFB.
Justice V.G. Arun passed the order on petitions filed by the former Finance Minister and the CEO of KIIB challenging the summons issued to them.
Also read: Explained | What is KIIFB?
No justification for summons
The court pointed out that although the inquiry/investigation by the ED was not liable to be interdicted, there was no justification for summons being repeatedly issued by the ED officials.
In his petition, Dr. Isaac said that the ED had issued him two summons under Sections 37 (1) of the Foreign Exchange Management Act (FEMA), Section 131 (1) of the Income Tax Act, and Section 30 of the Code of Civil Procedure asking to appear and explain his role in the issue of Masala bonds by KIIFB.
The summons did not reveal what was the nature of the violation of FEMA or details of the provision. The ED did not disclose what was the investigation, in relation to which his response was sought. The ED was conducting a ‘roving inquiry’. The summons, therefore, did not conform to the law laid down by the Supreme Court in this regard. In fact, there was no violation of any provision of FEMA, much less any violation of any law in the activities of the KIIFB. The summons was illegal and beyond the jurisdiction of the scope of inquiry contemplated under FEMA.
Masala bonds of Central government entities
Meanwhile, Dr. Abraham contended that the ED had not disclosed any material reason or suspicion for launching the present investigation nor had it revealed any alleged violation of the FEMA committed by the petitioners. He pointed out that no investigation had been initiated into the issue of masala bond by the Central government entities such as the National Highway Authority of India (NHAI) and National Thermal Power Corporation(NTPC). The investigation entailed extremely deleterious consequences on the projects approved by the KIFFB in the State. Therefore, the action of the ED was illegal.
