Kerala High Court adjourns hearing; Enforcement Directorate counsel says former Minister Thomas Isaac need not appear till August 17

When the case was taken up for hearing, Kerala High Court asked the counsel for ED why Thomas Isaac had been asked to produce certain personal details at the preliminary stage of the inquiry.

The Kerala High Court on August 11 adjourned to August 17 the hearing on a writ petition filed by former Finance Minister T. M. Thomas Isaacchallenging the summons asking him to appear before the Enforcement Directorate (ED) to explain his role in the issue of Masala bonds by the Kerala Infrastructure Investment Fund Board (KIIFB) 

When Justice V. G. Arun adjourned the hearing, counsel for ED undertook that Mr. Isaac need not appear before the ED till August 17. The court orally made it clear that it did not want to record the undertaking, but it would be there.

When the case was taken up for hearing, the court asked the counsel for ED why Mr. Isaac had been asked to produce certain personal details at the preliminary stage of the inquiry. He had the right to privacy. It could not be breached in the first instance. 

Counsel for ED submitted that Mr. Isaac had not been made an accused. He presumed himself to be an accused. He had been summoned to collect certain details regarding the issue of the Masala bonds. In fact, certain individual acts of Mr. Issac amounted to a violation of the Foreign Exchange Management Act (FEMA). Counsel also submitted that if during the course of the investigation other officers of the KIIFB were found involved, they would also be summoned.

The ED was acting in good faith. As a public figure, Mr. Isaac was bound to comply with the summons. Counsel submitted that he would submit before the court why the ED sought personal details of Mr. Isaac after getting materials from the ED officials.

Counsel for Mr. Isaac pointed out that the summons did not reveal what was the nature of the violation of FEMA. Nor did it disclose what was the investigation about. The ED was conducting a ‘roving inquiry’ in order to gather some material to see if there was any wrongdoing on his part. He said the agency had other means to collect the material sought on KIIFB, a body corporate under relevant statute enacted by the State legislature.

It was settled that the ED could conduct an inquiry only on an accusation of wrongdoing, which has to be disclosed to the persons from whom the information had been sought. The summons was illegal and beyond the jurisdiction and the scope of inquiry contemplated under the FEMA since admittedly, there was no violation of any provision of the s Act. All actions of KIIFB were legal, he contended.