No prosecution sanction under the Prevention of Corruption Act is needed to proceed in the SNDP microfinance fraud case, the Kerala High Court has held in an interim order covering SNDP Yogam general secretary Vellappally Natesan and the other accused, former Managing Directors of KSBCDC among them. The allegations are yet to be tested at trial and no view has been expressed on their merits.
Kochi: In an interim order on Friday, November 6, 2026, the Kerala High Court held that no prosecution sanction is required to proceed against the accused in the alleged Rs 15.85 crore SNDP microfinance fraud case, among them Vellappally Natesan and former Managing Directors of the Kerala State Backward Classes Development Corporation Ltd (KSBCDC). The matter will come up for further consideration on November 17 [M.S. Anil v. State of Kerala and Others].
Justice A. Badharudeen pronounced the order in open court while hearing two 2020 petitions that seek a Special Investigation Team headed by an efficient officer to probe the crime registered by the Vigilance and Anti-Corruption Bureau (VACB) in 2016. “Interim order passed holding that no prosecution sanction is required,” the Court said.
The crime behind the petitions
The VACB registered the crime in 2016. The prosecution case is that office-bearers of the SNDP Yogam and former Managing Directors of KSBCDC were involved in irregularities in loans released under a microfinance scheme. These allegations are yet to be tested at trial, the Court has expressed no view on their merits, and all the accused are presumed innocent until proven guilty.
What the State argued
In September, the Court heard detailed arguments from counsel for the petitioners, D. Anil Kumar, and State Attorney Anoop V. Nair, who appeared for the Home and Vigilance departments and the Backward Classes Development Department (BCDD).
The State Attorney said the government’s position was that sanction was not required. He submitted that the SNDP Yogam was not a nodal agency of the BCDD and did not fall within the definition of “public servant” under the Prevention of Corruption Act, and that KSBCDC had sanctioned the microfinance loans to the SNDP in its capacity as an NGO, which was permitted to release the amount to various persons.
What the petitioners said
The petitioners contended that sanction to prosecute was required, and the Court reserved its decision on that question.
On an earlier occasion, the Court had orally criticised the differing positions taken within the State machinery. The BCDD Secretary had reported that sanction was not required, while the Special Public Prosecutor for Vigilance had said it was needed, before the State Attorney argued that sanction was not required.
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Why the order matters
Prior sanction under the Prevention of Corruption Act protects public servants from prosecution without the approval of the competent authority. Whether that shield applies depends on whether the accused are “public servants” and whether the acts alleged relate to their official duties. A finding that no sanction is needed removes a procedural hurdle that can otherwise hold up a corruption prosecution for years.
The order is interim, and the reasons are yet to be made available. The petitions seeking a Special Investigation Team remain pending and will come up again on November 17, 2026.
Case Title: M.S. Anil v. State of Kerala and Others, and connected case [WP(C) No. 14599 of 2020 and Crl.M.C. No. 5539 of 2020]
Bench: Justice A. Badharudeen, Kerala High Court
Date of Order: November 6, 2026
Appearances: D. Anil Kumar, O.V. Maniprasad, Jose Antony and S. Shiv Shankar for the petitioners; State Attorney Anoop V. Nair for the respondents
