Exalogic, a now-defunct IT company owned by Veena Vijayan, daughter of Kerala CM Pinarayi Vijayan, appealed to the Karnataka High Court today, asserting that an investigation by the Serious Fraud Investigation Office (SFIO) into alleged illegal financial transactions between Exalogic and the mining company CMRL is unwarranted. In response to the petition, the court instructed SFIO not to take any drastic actions against Exalogic in this case until a verdict is pronounced.
Additionally, the court directed Exalogic to provide all necessary documents to the SFIO. Exalogic submitted this petition to the Karnataka High Court on February 8, seeking to annul the January 31 order issued by the Union of India, which instructed the SFIO to investigate the transactions between the company and the CMRL.
Exalogic had previously highlighted in its petition that an investigation had been initiated under Section 212 of the Companies Act 2013, despite the ongoing investigation under Section 210 of the Act. The company also argued that an investigation under Section 212 cannot be authorized until the completion of the investigation under Section 210 by RoC [registrar of companies].
However, SFIO responded to this saying that two investigations cannot be tagged as two parallel investigations. Additional Solicitor General for Karnataka Arvind Kamath, who appeared for SFIO, told the court that when the SFIO investigation became on, the RoC’s investigation naturally got transferred to SFIO.
Exalogic presented the argument in front of the court that an SFIO investigation is warranted only in cases involving multi-crore amounts, such as the Sahara scam case, whereas the financial transactions between Exalogic and CMRL amount to only Rs 1.72 crore. Exalogic further contended that an SFIO investigation is akin to a UAPA case. In response to the High Court's inquiry about the status of the Registrar of Companies investigation, the company stated that it is unaware of the current status.
SFIO informed the court that an officer who had been part of the RoC team had made a primary report, and the internal board of RoC checked it, and it is based on this report that serious fraud had been alleged in this case.
Another related case emerged before the Kerala High Court this morning. The petitioner in this instance is KSIDC, a government-owned company in Kerala, holding a 13.4 per cent stake in the contentious sand mining firm CMRL. On February 8, the Kerala High Court refused to halt the Serious Fraud Investigation Office (SFIO) probe mentioned in this petition. Today, once again, the court declined to suspend the ongoing investigations into the transactions. During the hearing of this case by a single bench at the Kerala High Court, the SFIO informed the court of the necessity for a thorough investigation into the allegations. The investigative agency also informed the court of having received documents from KSIDC.
Interestingly, KSIDC did not oppose any SFIO investigation into CMRL or Exalogic. However, the industrial development corporation informed the court that SFIO's summons is tarnishing KSIDC's reputation and integrity in this probe, emphasizing that there is no prima facie evidence against KSIDC.
Representing KSIDC, Supreme Court lawyer C.S. Vaidhyanathan reiterated that the company holds a 13.4 pc equity share in CMRL but is not involved in its day-to-day business operations or management.
According to CMRL's statement before the Income Tax Interim Board for Settlement, CMRL disclosed that it had disbursed Rs 1.72 crore to Exalogic Solutions Pvt Ltd, owned by T. Veena, daughter of the chief minister. Additionally, CMRL stated that it had made cash payments totalling over Rs 134.27 crore to politicians, bureaucrats, media, and police personnel in the five years preceding its submission to the IT interim settlement board.
However, Vaidhyanathan informed the High Court that KSIDC had requested clarification from CMRL following the payment dispute that arose in August 2023 but has not yet received a response from the latter. The court instructed the senior lawyer to provide evidence of the company's request for clarification to CMRL at the next hearing scheduled for February 26.