The Kerala High Court on Friday asked why the Reserve Bank of India (RBI) has not appeared before the court despite being served with notice on pleas challenging the summons issued by the Enforcement Directorate (ED) in connection with its probe into the financial transactions of the Kerala Infrastructure Investment Board (KIIFB) [Kerala Infrastructure Investment Fund Board v Director, Directorate of Enforcement] [Dr. TM Thomas Isaac v The Deputy Director].
Justice VG Arun extended for two more months, the stay previously ordered by the Court on issuance of further summons by the ED to former State Finance Minister Dr. Thomas Isaac and two officials of the KIIFB.
However, the judge noted that the RBI had not appeared before it today or on any of its previous hearings in the matter, despite having been served with notice.
"Why hasn't the RBI appeared despite notice?" the judge orally remarked.
The Court then posted the matter for hearing next on January 20.
The Court was hearing two petitions, one moved by KIIFB and another by Dr. Isaac.
The plea moved by the KIIFB challenged the repeated issuance of summons by the ED to KIIFB officers, including CEO KM Abraham, in connection with alleged violations of the Foreign Exchange Management Act (FEMA) when it issued 'Masala Bonds', i.e, rupee denominated bonds issued outside India by Indian entities.
The petition moved by Isaac, challenged the summons issued by the ED seeking his personal documents as well as those of his family members in connection with the same probe.
The petitioners contended that the probe is nothing but a fishing expedition and that the ED hasn't mentioned what contravention of FEMA it was probing in the summons.
Further, they argued that the request for personal documents of the officers and their family members at this preliminary stage of investigation, is a violation of their right to privacy.
The KIIFB, in particular, argued that the probe is adversely affecting its ability to raise funds which are necessary for infrastructure projects in the State.
In its counter affidavit, however, the ED argued that the investigation is at a preliminary stage and that the issuance of summons is perfectly legitimate as per the FEMA Act.
It was also stated that the probe was initiated on the basis of complaints regarding FEMA violations in the issuance of masala bonds by the KIIFB.
On October 10, the court had ordered that no further summons should be issued by the ED to Dr. Isaac and the two officials of the KIIFB.
The court extended this order for another two months today.
KIIFB was represented by Advocate General K Gopalakrishna Kurup, Senior Advocate Arvind Datar and advocates BG Harindranath, M Gopikrishnan and Amith Krishnan H.
Isaac was represented by Senior Advocate Siddhartha Dave and advocates Nandagopal S Kurup, N Raghuraj, Sayuja and Vivek Menon.
Additional Solicitor General of India SV Raju, Deputy Solicitor General of India S Manu, and Central Government Counsel Jaishankar V Nair appeared for the ED.