Kerala High Court refuses to stay probe against CM Vijayan’s daughter Veena’s firm

The order came on the plea seeking to quash the Union government order directing an investigation by SFIO under the Companies Act.

BySouth First Desk

Published Feb 07, 2024 | 7:41 PMUpdatedFeb 07, 2024 | 7:41 PM

Veena Vijayan

The Kerala High Court on Wednesday, 7 February, declined to stay the Serious Fraud Investigation Office (SFIO) probe into state-run KSIDC, now-defunct Exalogic Solutions Private Limited and Kochi-based mines company CMRL.

The Bengaluru-based consultancy firm was owned by Kerala Chief Minister Pinarayi Vijayan’s daughter Veena Thaikandiyil.

Justice Devan Ramachandran refused to put on hold the probe by SFIO into the three companies on a plea moved by the Kerala State Industrial Development Corporation’s (KSIDC), senior central government counsel (SCGC) RV Sreejith said.

Meanwhile, the SFIO on Wednesday visited the KSIDC’s head office in Kochi.

A senior official posted at the head office of the state-run KSIDC confirmed the SFIO team’s arrival but could not give any more details, reported PTI.

As part of its investigation, SFIO had reportedly inspected the Kochi office of CMRL on Monday.

Related: SFIO to probe charges against firm of Kerala CM Vijayan’s daughter Veena

The hearing

The SCGC, who appeared for the Ministry of Corporate Affairs and SFIO, said the court also declined to interfere with the notices directing KSIDC to produce documents sought by the probe agency.

The court, however, gave them the liberty to seek time to file the book of accounts, maintained in Tally or any other software, for the period from 2012-13 to date, SCGC Sreejith said.

The order came on the plea moved by KSIDC seeking to quash the Union government order directing an investigation by SFIO under the Companies Act into the affairs of KSIDC.

The KSIDC has claimed in its plea that the central government order was illegal as it was passed without hearing it.

Besides KSIDC, the Ministry of Corporate Affairs also ordered an SFIO probe against Cochin Minerals and Rutile Ltd (CMRL) and the CM’s daughter’s firm Exalogic Solutions Pvt Ltd.

The KSIDC also termed as illegal the notice issued by the Registrar of Companies (RoC) regarding an inspection at its office on 8 and 9 February and the SFIO notice seeking documents from the state-run entity.

The High Court listed the matter for further hearing on 12 February.

Related: Opposition seeks probe over I-T charge against Kerala CM daughter

The investigation

The investigation is also expected to look into the financial transactions of the public-sector Kerala State Industrial Development Corporation (KSIDC) and private firm Cochin Minerals and Rutile Limited (CMRL), which mines and separates beach mineral sand from Kerala’s central and southern coasts.

According to an order dated 31 January, a six-member team would probe the controversial financial dealings involving the three companies under Section 212 (1)(a) and (c) of the Companies Act of 2013. The team has been asked to complete the probe within eight months.

The Union ministry instructed the SFIO to probe Exalogic a day after Vijayan claimed in the Kerala Assembly that his daughter floated the company using the retirement benefits of his schoolteacher wife Kamala Vijayan.

The SFIO has the right to summon and interrogate those accused of committing financial fraud, and it could prosecute the accused.

Related: Mathew Kuzhalnadan, the MLA who has got under the skin of CM

The controversy

A controversy erupted over financial transactions between CMRL and Veena and her IT firm.

Evidence showed that the company had dealings with top leaders of both the ruling CPI(M) as well as the opposition Congress-led UDF.

The issue came to the fore when a Malayalam daily, Malayala Manorama, created a sensation by carrying the news that Vijayan’s daughter Veena had allegedly received ₹1.72 crore from CMRL in monthly installments over the past three years.

The news report, citing a ruling of an Interim Board for Settlement, said the Kochi-based company previously had an agreement with Veena’s IT firm for consultancy and software support services.

Even though no service had been rendered by her firm, the amount was paid every month “due to her relationship with a prominent person”, the report said, citing the deposition of the minerals company authorities before the Income Tax Department.

(With PTI inputs)