Karnataka High Court Issues Notice on Appeal by Exalogic Solutions Challenging SFIO Probe

The Karnataka High Court has issued a notice on an appeal filed by Exalogic Solutions Private Limited, a company associated with Kerala Chief Minister Pinarayi Vijayan's daughter, Veena Vijayan. The appeal challenges the dismissal of its plea to quash the Serious Fraud Investigation Office (SFIO) probe initiated by the Ministry of Corporate Affairs. The company contends that an investigation under Section 212 of the Companies Act, 2013, cannot be ordered before the conclusion of a probe under Section 210, which pertains to the investigation into the affairs of a company. The division bench, comprising Chief Justice Vibhu Bakhru and Justice C.M. Poonacha, acknowledged the novelty of the legal question raised and decided to examine the matter further. However, the bench declined to grant interim protection from any coercive action at this stage. Notices have been issued to the Director of SFIO and the Union of India, and the matter is scheduled for further hearing on December 3.

Exalogic Solutions has been under scrutiny following reports that it received a payment of ₹1.72 crore from Cochin Minerals and Rutile Ltd (CMRL) over three years, from 2017 to 2019. The Income Tax Interim Board of Settlement suggested that the amount was paid without any corresponding services rendered, raising allegations that the payments were kickbacks routed to the company under the guise of consideration for IT services. The Registrar of Companies initiated an inquiry under Section 206(4) of the Companies Act to examine the company's transactions with CMRL, and the company claims to have duly responded and provided the necessary documents. The SFIO subsequently initiated a probe into the affairs of Exalogic Solutions, CMRL, and the Kerala State Industrial Development Corporation (KSIDC), which allegedly holds a 13.4% shareholding in CMRL and is said to have acted under the directions of the Kerala Chief Minister. The outcome of the Karnataka High Court's examination of the legal question could have significant implications for the ongoing investigation and the legal framework governing corporate probes in India.

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