Why RBI did not appear despite being served notice: Kerala HC

Kochi: The Kerala High Court recently asked why the Reserve Bank of India (RBI) did not appear before it even after being served a 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).

Consequent to this, the court on Friday extended the stay previously ordered on issuance of further summons by the ED to former state Finance Minister Thomas Isaac and two officials of the KIIFB for two more months.

The judge noted that the RBI did not appear before it on Friday or on any of its previous hearings in the matter, despite having been served notice.

The court then posted the matter for further hearing on January 20.

The court was hearing two petitions, one moved by KIIFB and another by Isaac.

The plea moved by the KIIFB challenged the repeated issuance of summons by the ED to KIIFB officials in connection with alleged violations of the Foreign Exchange Management Act (FEMA) when it issued ‘Masala Bonds’.

Masala Bonds are 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.

Isaac had earlier pointed out that asking for personal documents of the officials and their family members at this preliminary stage of investigation was 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.

However, the ED contended 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 KIIFB.

Incidentally, in October this year the court had ordered that no further summons should be issued by the ED to Isaac and the two officials of KIIFB.

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