High Court Stay on ED Notice to Chief Minister Pinarayi Vijayan in KIIFB Masala Bond Case to Continue

Kochi: The Kerala High Court's stay on the notice issued by the ED to Chief Minister Pinarayi Vijayan — alleging violations of the Foreign Exchange Management Act (FEMA) in connection with KIIFB's Masala Bond — will remain in force. The court has scheduled the hearing on KIIFB's petition for April 25, and has made clear that no further action may be taken in the matter until the petition is heard and decided upon.

The Chief Minister, in his capacity as KIIFB Chairman, along with former Vice Chairman Dr. Thomas Isaac and CEO K M Abraham — both board members — had jointly filed the petition challenging the ED notice. A Single Bench had earlier granted a stay on all further proceedings in the case.

The ED's contention is that utilising funds raised through the KIIFB Masala Bonds for land acquisition in connection with infrastructure development projects constitutes a violation of FEMA. However, the Single Bench had granted the stay after observing that land acquisition for developmental purposes is permissible under the law and cannot be treated as a real estate transaction.

The government had also submitted before the court that the Masala Bond funds were deployed with the prior approval of the Reserve Bank of India, and that the RBI itself had not found any regulatory violation of any kind in KIIFB's transactions.