High Court (India)

June 20, 2019

Kerala High Court Dismisses Petition Which Claimed That KIIFB Masala Bonds Violated Article 123(1) Of The Constitution

[ By Bobby Anthony ]


The Kerala High Court has dismissed a petition which had challenged the constitutional validity of the issue of financial instruments called ‘Masala Bonds’.

Masala Bonds are a debt instrument denominated in Indian rupees, but settled in foreign currency, which were recently issued to overseas investors by the Kerala Infrastructure Investment Fund Board (KIIFB).

The KIIFB had raised Rs 2,150 crore through the issue of these bonds.

The petition was filed by a Thiruvananthapuram-based chartered accountant M R Ranjith Karthikeyan, who had contended that these bonds violated Article 293(1) of the Constitution of India.

The petitioner pointed out that as per Article 293(1), the state was allowed to borrow money only within the territory of the country.

He stated that the KIIFB had been constituted to raise and administer funds for infrastructure projects in the state of Kerala.

However, after the petition came up for hearing, the court pointed out that the investment was canvassed by the KIIFB and not the Kerala state government.

Subsequently, the counsel for the petitioner sought permission to withdraw the petition.

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