Enforcement Directorate Suffers Twin Setbacks In Kerala

THIRUVANANTHAPURAM: The central investigating agency, the enforcement Directorate (ED), which is on a rampage against the Pinarayi Vijayan-led Left Democratic Front (LDF) Government in Kerala, suffered a highly embarrassing double defeat in the Kerala High Court.

In the latest rebuff to the ED, the Kerala High Court stayed the fresh summons issued by the ED to the Registrar of Cooperative Societies in connection with the siphoning off of the deposits in Karuvannur Service Cooperative Bank in Thrissur district. The order was passed on a petition filed by Registrar TV Subhash challenging the fresh summons issued by the ED.

As the petition came up for hearing, the ED counsel submitted that it had no intention to proceed with the summons. It may be mentioned that the Court had frowned upon the first summons on the ground that it was not issued in accordance with the provisions of the Prevention of Money Laundering Act, 2002. After a close look at the present summons, the Court opined that the same would be stayed till the disposal of the writ petition. A larger issue had to be decided in the case, the Court observed.

The new summons wanted the Registrar to show the amount granted out of the deposit credit guarantee scheme and produce all the circulars issued by the Registrar.

The petitioner’s allegation was that it was to discredit the cooperative sector of the state in its entirety that the summons had been issued. The ED could conduct a probe only into a predicate offence, the petitioner claimed. He further argued that the scope and purport of the investigation by the ED should be strictly restricted to the laundering of the proceeds of the predicate offence.

The Court order effectively frustrated the ED’s plan to conduct a roving enquiry into the affairs of the cooperative sector in the State. The LDF Government’s criticism against the ED was that it was being used by the Union Government to further its political agenda of discrediting and destabilizing the only communist government in the country.

In another setback to the ED, which meant a major victory for former Kerala finance Minister Thomas Isaac, the investigating agency was forced to inform the High Court that it was withdrawing the summons issued to him and the Kerala Infrastructure Investment Board (KIIFB) as part of its investigation into the issuance of masala bonds.

Justice Devan Ramachandran allowed the plea filed by Isaac against the summons issued by the ED. The Court also partly allowed the petition filed by the KIIFB officials. Last time, the Court had asked the ED whether it intended to withdraw the summons issued to Isaac. The agency had sought details of the bank accounts of the family members of Isaac.

The Court, however, has not gone into the merits of the ED investigation, including as to whether the probe needs to be continued or not. AQs the summons was to be withdrawn, the Court said there was no proposal to enter into the contentions that the ED’s actions were beyond the jurisdiction under the Foreign Exchange Management Act (FEMA) and other applicable statutes. The petitioners, the court observed, are, however, are free to do so should the situation warranted it in the future.

The Court, however, refused to entertain the plea by the counsel of KIIFB for prohibiting the ED from initiating any probe into the issuance of masala bonds on the ground that that it was not aware whether the investigation was confined only to the issuance of masala bonds.

A close look at the order would reveal that the ED suffered a major defeat. The Court had pulled up the central investigating agency for its overzealousness in conducting the investigation, especially in opposition-ruled States. Isaac’s victory is a morale booster for other leaders facing the ED probe in other opposition-ruled states as well. (IPA Service)