Thomas Isaac, a former state finance minister, and the Kerala Infrastructure Investment Fund Board are suing the Enforcement Directorate (ED), and the High Court is about to rule on their case (KIIFB). The contentious ‘masala bonds’ issued by the Kerala government entity established to generate money for infrastructural projects are the subject of the ED action.
Isaac and KIIFB’s petitions to have the ED summons thrown out will soon receive a ruling from Justice V G Arun’s bench.
During the case’s arguments, the ED asked the Court to look into whether the money collected through masala bonds had been used for any other purpose. ED made it clear that, it is looking into whether the money was routed to the real estate industry.
Issac countered that the ED’s investigation violates privacy. According to the State Government’s position, the Reserve Bank of India (RBI) conditions and regulations have not been broken, and the ED investigation is intended to undermine public confidence in KIIFB.
Based on the Comptroller and Auditor General’s (CAG) report that the actions of KIIFB do not adhere to federal legislation and that there are inconsistencies, the ED investigation was started. The investigation focuses on the failure to properly request permission from the RBI to issue masala bonds and the receipt of cash from abroad without the consent of the Central Government.
The case was filed with the ED in March 2021.
Masala bonds are bonds that are priced in rupees. It is a debt instrument issued by an Indian firm in international markets to raise funds in rupees rather than dollars or local denominations.
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