Exalogic is a defunct IT firm owned by Veena Vijayan, daughter of Kerala CM Pinarayi Vijayan, had recently filed an appeal with the Karnataka High Court, arguing that the Serious Fraud Investigation Office investigation into purported illegal financial dealings between Exalogic and mining company CMRL is unjustified.
The Karnataka High Court on Friday has dismissed a plea by Exalogic Solutions, a company owned by Kerala’s Chief Minister Pinarayi Vijayan’s daughter Veena Thaikkandiyil, challenging a probe by the Serious Fraud Investigation Office (SFIO). This ruling underscore the judiciary’s commitment to upholding the integrity of corporate affairs and the importance of thorough investigations in cases of alleged serious fraud.
Justice M Nagaprasanna, presiding over the case, announced the dismissal, emphasizing the court’s decision to allow the SFIO investigation to proceed. The probe, initiated through an order dated January 31, 2024, seeks to unravel the complexities surrounding the financial transactions of Exalogic Solutions, particularly in relation to Cochin Minerals and Rutile Limited (CMRL).
The case has attracted significant attention due to the allegations of non-disclosure of transactions amounting to Rs 1.76 crores between Exalogic and CMRL. Senior Advocate Arvind P Datar, representing Exalogic, argued against the SFIO probe, contending that an investigation by the Registrar of Companies was already underway. Datar highlighted the redundancy of parallel investigations and described the SFIO’s approach as “more draconian,” likening it to the “UAPA,” with its potential for arrests and property attachments.
Datar’s defense rested on the assertion that the allegations did not constitute “serious fraud” warranting an SFIO investigation. He argued for the continuation of the Section 210 inquiry under the Companies Act 2013, questioning the necessity of invoking Section 212 in a case involving a relatively small transaction and no clear indication of serious fraud.
On the other side, Additional Solicitor General Arvind Kamath, representing the Central Government, presented a compelling case for the SFIO’s involvement. Kamath pointed out the multidisciplinary nature of the SFIO, which enables it to seamlessly gather information across various domains. The revelation of Rs 135 crores distributed to political functionaries by CMRL, with Rs 1.72 crores paid to Exalogic without any software services being provided, painted a picture of potentially “shady” transactions that necessitated a thorough investigation.
The government’s stance was that the serious offences and public interest involved in the Exalogic case justified the SFIO’s comprehensive probe. The involvement of the Kerala State Industrial Development Corporation (KSIDC), with a 13.4% stake in CMRL, added another layer of complexity to the case, further supporting the need for an SFIO investigation.
The Karnataka High Court’s dismissal of Exalogic’s plea marks a significant moment in the ongoing efforts to ensure corporate transparency and accountability. It sends a clear message about the judiciary’s role in safeguarding public interest and the seriousness with which allegations of financial misconduct are treated. As the SFIO probe moves forward, it will undoubtedly continue to be a closely watched case, with potential implications for corporate governance and political accountability in India.
