Kerala High Court | Photo: Mathrubhumi Archives
Kochi: The Kerala High Court on Thursday reserved its order on the joint PIL moved by five LDF MLAs against the Enforcement Directorate (ED) probe into alleged violations in the financial dealings of KIIFB.
A bench of Chief Justice S Manikumar and Justice Shaji P Chaly after hearing both sides said it will pass orders in the matter.
CPI(M) MLAs K K Shailaja, I B Sathish and actor M Mukesh, CPI MLA E Chandrasekharan and Congress (Secular) MLA Kadannappalli Ramachandran moved the joint plea in the high court against the ED probe.
Advocate V M Krishnakumar, who is representing the MLAs in the matter, as well as senior government pleader Manu V, who appeared for the state, confirmed that the high court has reserved order in the matter.
In the plea, the MLAs have alleged that the ED was carrying out a fishing and roving exercise to discredit the Kerala Infrastructure Investment Fund Board (KIIFB) and as a result scare away its various investors.
"It is submitted that the constant repeated summons and enquiry conducted by the 6th respondent (ED) regarding the 'masala bond' transaction of the 5th respondent (KIIFB) which is strictly legal is resulting in tarnishing the goodwill of the 5th respondent Board.
"This will result in even the domestic financial institutions developing apprehension for financing the 5th respondent which would result in serious economic consequences for the infrastructure and development aspects of the state of Kerala," their petition has said.
They have contended that the only financial transaction under the Foreign Exchange Management Act (FEMA) which KIIFB carried out was the issuance of 'masala bonds' and the same was done with the permission of RBI which is the regulator.
"The 5th respondent (KIIFB) has raised a sum of Rs 2,150 crore from the 'masala bonds' with sanction of the 3rd respondent Reserve Bank of India under the Foreign Exchange Maintenance Act (FEMA)," the plea said.
'Masala bonds' are bonds issued outside India but denominated in Indian rupees rather than local currency, it said.
If the RBI, as the regulator, has no complaints about any FEMA violation, how can an outside agency carry out an investigation regarding the same, is the question raised by them in their plea.
The MLAs, in their plea, have claimed that the actions of ED will adversely affect or bring to a halt over 900 development projects, worth around Rs 73,000 crore, in the state.
"A total number of 993 development projects have been approved at the cost of Rs 73,869.44 crore out of which 569 projects are in the process of implementation and an amount of Rs 20,771.85 crore has already been spent on such projects," they said.
They have said that any differences between the Centre and the state should be resolved through a dispute resolution mechanism and not by using ED as KIIFB is a state-run entity.
The petition has sought a direction to the Centre and the state government to constitute a mechanism for resolution of disputes between them and their statutory organs.