KIIFB case: Kerala HC grants relief to Thomas Isaac; tells ED he has right to privacy

It seems that it won’t be easy for the Enforcement Directorate (ED) to deal with the case against the Kerala Infrastructure Investment Fund Board (KIIFB) and the central agency’s move to interrogate former Kerala Finance Minister TM Thomas Isaac.

Senior CPI(M) leader Isaac filed a writ petition in the Kerala High Court challenging both the summonses issued to him by the ED in Kochi alleging the violation of the Foreign Exchange Management Act (FEMA) in the activities of KIIFB. He received the first summons on July 18 and the second on August 3.

On Thursday (August 11), the High Court posted the case for further hearing next Wednesday (August 17) and instructed the ED officials not to initiate any action till then. Senior Counsel Sidharth Dave appeared for Isaac on Thursday.

Also read: Kerala Masala Bonds case: Why ED needs to do solid homework before quizzing Thomas Isaac

Right to privacy

According to sources in the High Court, the judge pointed out that the allegation raised in the second summons is not mentioned in the first and asked for the reason that leads to a change in the summons.

The HC bench further said that the petitioner has a right to privacy. The bench asked the Central Government Counsel (CGC) on how it can ask for all the documents in the very preliminary stage of the case.

In the second summons, Isaac was asked to produce the entire financial transactions done by him in the last 10 years – both in personal and official capacities. The court has also asked the CGC what material it has to conclude that Isaac should produce all these details. As the CGC requested more time to furnish details, the case was posted to next Wednesday.

Also read: ED again issues notice to ex-Kerala minister Thomas Isaac

According to Isaac’s writ petition, the ED’s summonses issued to him do not disclose the nature of the violation either under FEMA or under any other rules. In his petition, he further argues that both summonses are “ex facie illegal and beyond the jurisdiction of the scope of inquiry contemplated under the FEMA since admittedly there is no violation of any provision of the said Act”.

‘Roving and fishing enquiry’

According to his petition, all actions of KIIFB were done legally. He alleged that ED has been “conducting a roving and fishing enquiry to enable them to gather material first and then see if any wrongdoing has been done”.

“Such action is clearly impermissible in law and smacks of mala fides on part of the Respondents. Further such unwarranted fishing and roving enquiry into the activities of a body corporate duly incorporated under relevant statute enacted by State Legislature, functioning in accordance with the provisions of the said statute as well as other relevant statutes is in violation of the federal structure contemplated under the Indian Constitution,” states the petition.

A writ petition filed in the Hon`ble HC of Kerala seeking to restrain ED from enforcing my personal appearance before them for an offence that they are not willing to divulge. Such a fishing & roving enquiry is contrary to the spirit of decision of the Apex Court of India.

— Thomas Isaac (@drthomasisaac) August 10, 2022

Isaac’s petition further argues that an investigation can be conducted only upon an accusation of wrongdoing which has to be disclosed to the person from whom the information has been sought. “The fact that the summons fails to disclose any wrongdoing or offence having been committed clearly demonstrates that the Respondents (ED) do not have material to show wrongdoing on part of the Petitioner. Further, the summons ought to disclose on what basis information is sought from the Petitioner,” according to the petition.

Also read: Why Kerala thinks Centre’s fiscal policy is stifling state’s coffers

He further argues that there are enough means otherwise to obtain the details called for in the summons. The details pertaining to KIIFB can be collected otherwise as they are there in the public domain, he said.

According to the petition, Isaac has been declaring his assets in every other election to the Kerala Legislative Assembly, which he has contested from 2001 onwards. All such details are available in the public domain. The ED could collect these details from the Income Tax Department by making an application under Section 138 of the Income Tax Act, 1961.

In the summons, ED has also asked the I-T returns and the details of assets of his family members as well. “None of his family members are dependent on him and hence he has no access to any such details,” says the petition.

‘Drama to create media hype’

Isaac has also sent a letter to ED for withdrawing the summons. “Either they should make it clear – what violations or wrongdoings I have done and then proceed with the case, or they should withdraw the summons,” he said.

ED served me 2nd summons under FEMA for personal appearance. The roving enquiry going on against KIIFB for the last 2 years is against the spirit of orders of the SC. I have asked them to recall the summons or clarify the offence against me or KIIFB.

— Thomas Isaac (@drthomasisaac) August 10, 2022

“If they feel that there is illegality with regard to the issuing of Masala bonds, they should have better asked the Reserve Bank for clarification. KIIFB has obtained all necessary approvals from the RBI and has been submitting the reports to them every year with regard to the utilisation of the funds thus obtained,” Isaac told The Federal.

He alleged that this is “nothing but a drama to create media hype”.

“Some newspapers and Television channels got the information regarding the summons even before I got it. It is very clear that their intention is to create media reports on summoning and questioning me. This is nothing but politically motivated,” he said.