Masala Bonds Case: Kerala High Court Stays ED's Show Cause Notice On CM Vijayan's Plea

The Kerala High Court on Thursday (December 18) granted an interim stay of proceedings pursuant to the Enforcement Directorate's complaint and showcause notices against Kerala Infrastructure Investment Fund Board (KIIFB) Chairperson, former Vice-Chairperson and CEO relating to the utilisation of funds raised through Masala Bonds.

Justice V.G. Arun was hearing the plea preferred by Chief Minister Pinarayi Vijayan as Chairman of the KIIFB along with its former Vice-Chairman/ex-Finance Minister Dr. T.M. Thomas Issac and Chief Executive Officer K.M. Abraham.

Earlier this week, the High Court had granted an interim stay of the notice for three months in a plea preferred by the KIIFB. When the matter came up for consideration, the Court felt that the petitioners in this case were also entitled to similar interim relief.

It observed that there shall be an interim stay of further proceedings on the show cause notices for 3 months. The Court admitted the plea and directed the respondents to file counters in the case.

Chief Minister Pinarayi Vijayan, as Chairman of KIIFB, along with its former VC and CEO moved the High Court seeking to quash the ED's complaint and showcause notices relating to the utilisation of funds raised through Masala Bonds.

In the plea, it is stated that these were issued alleging violation of the Foreign Exchange Management Act, 1999 (FEMA) and that of the Master Directions of the Reserve Bank of India (RBI) in the use of the masala bonds funds. They have further stated that all the projects funded through the proceeds of Masala Bonds are in full compliance with the RBI circulars and that the transactions on these projects are reported on a monthly basis to the RBI.

The plea points out that the issuance of summons in 2021 was right before the Legislative Assembly elections whereas the the ones in 2024 was in the wake of Parliament elections. Now, present ones were issued on the eve of the general elections to the local self government institutions. Thus, they claimed that the act of issuance of show cause notice and complaint by the ED is vitiated by malafides.

Case No: WP(C) 47684/2025

Case Title: The Chariman, KIIFB v. The Director, ED and Ors.