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Shabna Manoharan said Shaji's accusation was nothing but an election gimmick.
The suit was filed following Shaji's remarks against the imposition of frivolous charges in the murder case of Muslim League worker Ariyil Abdul Shukoor, which Jayarajan claimed were defamatory.
The court directed that the amount should be released to Shaji with the conditions to ensure recovery of the amount if he was later found guilty.
Mocking Veena George's speech in the state assembly, Shaji said she (George) doesn't "know anything". He also alleged that the public health sector in the state is not up to the mark.
The former MLA said members of LGBTQ community create anarchy in society.
Meanwhile, IUML leader K M Shaji has claimed the current controversy in the CPM was Chief Minister Pinarayi Vijayan's latest 'secret weapon' to finish off both Jayarajans.
It is alleged that Shaji used Rs 25 lakh he received as bribe from a plus-two teacher and used it to construct a house in Asha Shaji's name at Vengeri village in Kozhikode.
The legislator had claimed that the cash seized from his two houses was donations received to meet his election expenses and for his party.
The Vigilance, which had reached Shaji’s two houses at 10am on Monday, completed their check only by 2 pm on Tuesday.
The raids that began at 7am in Kozhikode and 10am at Kannur on Monday, went on till late in the night.