Kerala High Court Reserves Verdict on ED Appeal Over Stay of KIIFB Masala Bond Notice

Overview

• The Division Bench of Justices Sushrut Arvind Dharmadhikari and P. V. Balakrishnan heard arguments and reserved judgment on the Enforcement Directorate’s appeal.
• The bench asked why KIIFB could not file a reply before the FEMA Adjudicating Authority, noting there is no decision to prosecute and no finding of violation yet.
• Judges queried how a figure of Rs 466.91 crore surfaced at the show-cause stage; the ED said the notice cites an alleged contravention of about Rs 467 crore without quantifying any penalty.
• The ED argued the notice is a preliminary Rule 4 step and that writs against show-cause notices under financial statutes are generally premature, while KIIFB cited RBI approvals and potential market and project harm.
• A single judge stayed further proceedings for three months on December 16, following an ED show-cause issued in November that named Chief Minister Pinarayi Vijayan, former finance minister T. M. Thomas Isaac, and KIIFB CEO K. M. Abraham; KIIFB raised Rs 2,150 crore via masala bonds in 2019.