Kochi: The Kerala High Court on Thursday stayed the Enforcement Directorate’s show cause notices issued to Chief Minister Pinarayi Vijayan, former finance minister T M Thomas Isaac and KIIFB CEO K M Abraham in connection with alleged violations in the utilisation of funds raised through Masala Bonds by the Kerala Infrastructure Investment Fund Board (KIIFB).

Granting a three-month interim stay on all further proceedings, Justice V G Arun observed that the petitioners were entitled to the same relief earlier extended to KIIFB, which had challenged the ED’s action alleging violations of the Foreign Exchange Management Act and Reserve Bank of India directions.

The petitioners have approached the High Court seeking to quash the ED’s complaint and show cause notices, which allege violations of the Foreign Exchange Management Act, 1999, and the Reserve Bank of India’s master directions in the utilisation of Masala Bonds funds.

In their plea, they contended that all projects funded through the Masala Bonds proceeds were in full compliance with RBI circulars and that transactions related to these projects were being reported to the RBI on a monthly basis.

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The petitioners also alleged mala fides, pointing out that summons were first issued in 2021 ahead of the Assembly elections, followed by notices in 2024 in the run-up to the Lok Sabha polls, and the present show cause notices were issued on the eve of the local self government elections. They argued that the timing of the ED’s actions indicated political motivation.
(With LiveLaw inputs.)

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