Kerala High Court Reserves Order on KIIFB Challenge to ED’s Masala Bond Notice

Overview

• Justice V. G. Arun heard arguments from KIIFB and the Enforcement Directorate and reserved order on whether the petition to quash the ED complaint and show-cause notice is maintainable, after the agency said the matter belongs before a FEMA forum.
• KIIFB seeks a stay on adjudication proceedings, asserting that acquiring land for public infrastructure does not constitute the ‘real estate activity’ barred by RBI end-use rules.
• The ED alleges that Rs 467 crore from KIIFB’s 2019 masala bond proceeds was used to purchase land in violation of FEMA and RBI prescriptions.
• KIIFB argues the land acquisition was an exercise of eminent domain for state projects and not a commercial or speculative transaction.
• The ED’s show-cause notice also names Chief Minister Pinarayi Vijayan, former finance minister Thomas Isaac, and senior official K. M. Abraham, while KIIFB warns the proceedings are hurting its ratings and access to funding for ongoing projects.