Legal Battle Over KIIFB's Masala Bond Funds Intensifies

Kerala CM Pinarayi Vijayan and others moved the High Court against ED notices concerning KIIFB's Masala Bond fund usage. The court temporarily stayed proceedings as ED appealed, arguing KIIFB's petition is premature and misapprehends legal frameworks. KIIFB criticized the misuse claims under FEMA and RBI guidelines.

Kerala Chief Minister Pinarayi Vijayan and other prominent figures have approached the Kerala High Court, challenging the Enforcement Directorate's show cause notices regarding the Kerala Infrastructure Investment Fund Board's (KIIFB) Masala Bonds. Former state finance minister Thomas Isaac, alongside KIIFB CEO K M Abraham, joined Vijayan in this legal move.

The dispute stems from the ED's claims issued in November, accusing KIIFB of misusing the Masala Bond funds for real estate activities, specifically for acquiring land for infrastructure, which they argue contravenes FEMA and RBI guidelines. The High Court granted a three-month interim stay on proceedings, leading the ED to file an appeal against this decision.

The ED contends that the interim stay misrepresents both legal and factual elements, asserting the petition against them is immature within the legal framework established by FEMA. The central agency's appeal emphasizes that legal objections must be addressed before the proper adjudicating authority, including any challenges regarding RBI directives and the nature of real estate activities.

(With inputs from agencies.)