The Kerala High Court has said the State Government’s earlier refusal to entrust a comprehensive CAG audit of KIIFB was “more than a matter of concern”, before closing a PIL after the Government agreed to have the Board’s accounts audited by the CAG.
Kochi: The Kerala High Court has stressed that the accounts and functioning of the Kerala Infrastructure Investment Fund Board (KIIFB) must be transparent because it is funded by the Government and its borrowings are backed by Government guarantees, and has disposed of a public interest litigation after the State accepted an expert recommendation for a CAG audit [Anilkumar P. v. State of Kerala and Ors.].
A Division Bench of Chief Justice Soumen Sen and Justice Syam Kumar V.M. passed the order on November 11, 2026 in WP(PIL) No. 23 of 2026.
The PIL
The petitioner contended that KIIFB’s Government-guaranteed borrowings amounted to off-budget borrowing that could get around the limits in Article 293(3) of the Constitution, and that keeping KIIFB and its subsidiary KIFCON Private Limited out of comprehensive CAG oversight ran against the framework of public financial accountability. He sought a direction for a full statutory audit and certification of KIIFB’s accounts, including borrowings, guarantees and off-budget liabilities.
What the CAG told the Court
The CAG said KIIFB was already audited by the Accountant General (Audit-II), Kerala, under Section 14 of the CAG’s (Duties, Powers and Conditions of Service) Act, 1971, for 2016 to 2020 and 2020 to 2024. That audit, however, covers only receipts and expenditure. A fuller audit with certification needs entrustment under Sections 19(3), 20(1) or 20(2), which the CAG sought on March 15, 2018 and again in 2019. The State declined, pointing to the Fund Trustee and Advisory Commission set up under the Kerala Infrastructure Investment Fund (Amendment) Act, 2016. KIIFB also questioned the CAG’s jurisdiction. The outstanding loan balance stood at ₹20,041.52 crore as of March 31, 2024.
What the Court said
“In view of the fact that KIIFB is funded by the Government and that the Government furnishes guarantees in respect of the borrowings made by KIIFB, it is imperative that transparency be maintained in its accounts and functioning.”
“The earlier decision of the State Government not to entrust the audit to the C&AG is something which is more than a matter of concern, particularly having regard to the enormous discrepancies noticed in the preliminary report.”
The Bench noted that a Government Order dated July 13, 2026 had called for a comprehensive restructuring plan for KIIFB, with experts appointed for the task, and said this “completely nullifies” the earlier decision to deny a CAG audit. Advocate General K. Jaju Babu told the Court, on instructions, that the Government had accepted the Expert Committee’s recommendation to have KIIFB’s accounts audited by the CAG. Finding the grievance substantially met, the Court disposed of the PIL.
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Why the order matters
Special-purpose bodies that borrow on the strength of State guarantees can leave the taxpayer liable without the debt appearing in the regular budget. The order affirms that such bodies must be open to full public audit, and that an internal monitoring body is not a substitute for the constitutional auditor’s certification.
The Court did not have to issue a mandamus because the State changed course, but its remarks on the earlier refusal place the State’s commitment on record and set a benchmark for how the promised CAG audit is carried out.
Case Title: Anilkumar P. v. State of Kerala and Ors. [WP(PIL) No. 23 of 2026; 2026:KER:86394]
Bench: Chief Justice Soumen Sen and Justice Syam Kumar V.M., Kerala High Court
Date of Order: November 11, 2026
For the Petitioner: Sherly Mol Thomas, Anitha Menon, Sreevalsan K.M., Anjaly Reji and P.K. Ramkumar
For the Respondents: Advocate General K. Jaju Babu; R. Rema (Special GP to AG); S. Chandrasekharan Nair (Standing Counsel, KIIFB); T.K. Sreekala (Standing Counsel, Indian Audit and Accounts Department); C.E. Unnikrishnan (Special GP) and others