Karnataka High Court dismisses plea by Kerala CM’s daughter challenging SFIO probe against her company

The court order

The order was issued by a high court bench headed by Justice M Nagaprasanna who said that a detailed order would be uploaded to the court website by Saturday morning.

The plea was filed by making the Union government and the director of SFIO the respondents.

It was filed in the Karnataka High Court as the now-defunct company was headquartered in Bengaluru.

Exalogics had claimed that the ₹1.72 crore payment made by CMRL to Exalogics was in exchange for services rendered. However, an interim settlement board probe revealed that no services were rendered by Exalogic.

Members of the Human Resources (HR) team of Exalogics appeared in the court on behalf of Veena. The plea was filed questioning the parallel investigation by the SFIO while there was an ongoing probe by the registrar of companies.

Also Read: Kerala HC refuses to stay probe against CM Vijayan’s daughter Veena’s firm

Kerala HC order

The Kerala High Court on 12 February had asked the state-run KSIDC to provide documents to prove it had sought an explanation from CMRL over the alleged financial transactions made to Exalogics.

The court was hearing a plea by (KSIDC) seeking to quash the Union government order directing an investigation into its affairs by SFIO under the Companies Act.

KSIDC submitted before the High Court that it had no role in any of the alleged transactions mentioned in the case and sought to exempt it from the probe.

It also submitted before the court that it had sought an explanation from the CMRL in connection with the matter.

Justice Devan Ramachandran, who heard the plea, asked KSIDC to provide documents to prove that it had sought an explanation from CMRL.

KSIDC has 13.4 percent shares in CMRL.

The corporation said the SFIO probe would affect its credibility and reputation. The court, however, said that no coercive action should be taken against KSIDC while the petition is pending.

The court has now listed the matter for further hearing on 26 February.

On 7 February, the court refused to put on hold the SFIO probe into the three companies on a plea moved by the KSIDC.

The SFIO had on 7 February, visited the KSIDC’s head office in Thiruvananthapuram.

It had also visited the office of CMRL, which has been accused of making payments to Veena’s firm Exalogic without receiving any of the company’s services in return.

Also Read: Kerala HC asks KSIDC to prove it sought KMRL‘s explanation over transactions

The controversy

A controversy erupted in Kerala after the Malayalam daily Malayala Manorama reported last year that CMRL had paid a total of ₹1.72 crore to Veena, the Chief Minister’s daughter, between 2017 and 2020.

The news report cited the ruling of an interim board for settlement and said that CMRL previously had an agreement with Veena’s IT firm for consultancy and software support services.

It also alleged that although no service was rendered by her firm, the amount was paid on a monthly basis “due to her relationship with a prominent person”.

Veena is already facing the charge of committing financial fraud involving CMRL for over a year, with the Income Tax (I-T) Interim Settlement Board ruling that the private company paid Exalogic Solutions ₹1.72 crore between 2017 and 2020.

The agency observed that despite the money being accepted, no service was rendered to CMRL.

Meanwhile, sources in the MCA said it was an illegal transaction and that a probe would be conducted under a joint director at the Office of the Director General of Corporate Affairs in Bengaluru.

CMRL MD Kartha, in a sworn statement to the I-T Department, said, “Both these vendors (Veena and Exalogic) have not provided any work, services, software maintenance, consultancy, or any other form of service to our expectations till date. However, monthly payments are being made as per the agreements.”

Although the transactions were made through banks and such payments for business expenses were permissible, the board ruled that the transactions to Veena and Exalogic were “illegal” as no services were rendered.

Veena has faced charges of financial misappropriation in the past as well. She was accused of accepting favours to protect the accused in the sensational diplomatic-channel gold-smuggling case that rocked Kerala.