The Kerala High Court on Thursday (December 18, 2025) stayed for three months any action under the show cause notice issued by the Enforcement Directorate (ED) to Chief Minister Pinarayi Vijayan in the spice bonds case.
Justice VG Arun, former state finance minister Thomas Isaac and Vijayan’s chief principal secretary and KIIFB chief executive K. The same interim relief was given to M. Abraham also. The order came on a joint petition filed by Vijayan, Isaac and Abraham, seeking quashing of the show cause notice issued to them by the ED in November regarding the use of masala bond funds by the Kerala Infrastructure Investment Fund Board (KIIFB) to acquire land for infrastructure projects.
The court said that since further proceedings against KIIFB’s petition have been stayed as per the notice issued against it, petitioners Vijayan, Isaac and Abraham are also entitled to similar interim relief. Along with the petition of KIIFB, the court fixed the next hearing on this matter for January 23, 2026.
While granting interim relief to KIIFB, the single judge had on December 16 observed that the definition of real estate activity as per the External Commercial Borrowings (ECB) framework of the Reserve Bank of India (RBI) does not include activities related to the infrastructure sector. This framework came into effect from 16 January 2019 and Masala Bonds operate under it. However, according to the central probe agency, land acquisition for infrastructure projects is a real estate activity and cannot be done with the money raised from masala bonds.
In November, the ED had booked Chief Minister Vijayan, former finance minister Isaac and KIIFB CEO K.M. in the KIIFB masala bond case. A show cause notice of Rs 467 crore was issued to Abraham for violation of the Foreign Exchange Management Act (FEMA).
The notice pertains to alleged violations of FEMA provisions and RBI guidelines by KIIFB and its officials, amounting to Rs 466.91 crore. KIIFB is the lead agency of the state government, responsible for financing large and critical infrastructure projects. In 2019, it had raised Rs 2,150 crore through its first masala bond issue. This was part of its plan to raise a total of Rs 50,000 crore for large and critical infrastructure projects in the state.
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