Karnataka HC dismisses plea by Kerala CM daughters company against SFIO investigation

BENGALURU: The Karnataka High Court on Friday dismissed a petition filed by Exalogic Solutions Pvt. Ltd. (a company wherein one of the directors happen to be the Kerala Chief Minister Pinarayi Vijayan's daughter Veena Vijayan) challenging the investigation by the Serious Fraud Investigation Office (SFIO) against the company.
Justice M Nagaprasanna who pronounced the order said that the detailed order will be made available tomorrow. 

While reserving the order on February 12, the Court verbally asked the SFIO to not take any coercive action against the company till the order was pronounced. 
The Court also asked the company to provide the documents sought by the SFIO.

Senior Advocate Arvind P. Datar, representing the petitioner firm, stated during the hearing that the Registrar of the Companies was already looking into the company in accordance with Section 210 of the Companies Act 2013. The Centre filed a second order under Section 212 of the Companies Act, requesting that SFIO look into the firm while that inquiry is ongoing.

According to Datar, the purpose of the SFIO is to look into situations of major fraud, such as the Sahara scam, which included hundreds of crores, rather than cases like this one, where there is a claim that a transaction of Rs 1.76 crores was not disclosed.

The only allegation against Exalogic is that it had related party transactions worth 1.76 crores with CMRL, which was already being inquired into by the Registrar of Companies under Section 210 of the Companies Act, the court was told. 

Exalogic was the target of the SFIO investigation, which was started by an order dated January 31, 2024.

The Central government's counsel refuted these claims, pointing out that parallel processes are out of the question now that the SFIO begun its investigation. 

The counsel for the Central government had claimed that the company has committed serious offenses which requires an investigation by a multidisciplinary organization such as the SFIO.

He continued, saying that Exalogic's case was linked to the Income Tax Department's disclosure that Cochin Minerals and Rutile Limited (CMRL) had given 135 crores to political figures, which it later claimed were "expenses."

A government entity, known as the Kerala State Industrial Development Corporation (KSIDC), also has a 13.4% stake in CMRL, it was pointed out.

CMRL itself was found to have undertaken several "shady" transactions, the Court was told. It was in such circumstances that the SFIO probe was launched, the government counsel said.