Kasaragod: A local court here has refused to grant bail to Manjeswaram MLA M C Kamaruddin, arrested in an investment fraud case. The Hosdurg magistrate Court rejected the Muslim League leader's bail plea on Thursday after the CPM-led Kerala government informed the court that there were no grounds to quash the case against him.

The government told the court that Kamaruddin was the kingpin of the Fashion Gold Jewellery investment fraud in which a number of people lost their hard-earned money.

An investigation is on to track where the money collected from the investors has been stashed. Kamaruddin, the director of the jewellery, is culpable in the crime. If the case is cancelled, the investigation could be sabotaged, the prosecution had told the court.

On Wednesday, the court had refused to leave Kamaruddin again in the custody of the investigation team. The legislator is in judicial custody now.

Kamaruddin was arrested last week in connection with cases registered against him in a multi-crore financial fraud relating to gold jewellery business.

The arrest was under sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code, the provisions of Kerala Protection of Interests of Depositors in Financial Establishments Act and section 3 and 5 of the Banning of Unregulated Deposit Schemes Act.

However, police said as many as 115 cases have been registered against the MLA in Kasaragod and Kannur districts on complaints from investors, mostly workers of the Indian Union Muslim League (IUML), a major ally of the United Democratic Front (UDF).

Kamaruddin has maintained that his arrest was "politically motivated."

Another district leader of IUML, T K Pookoya Thangal, who is also the Managing Director of Fashion Gold, around which the fraud has taken place, was also called to the SP office in Kasaragod, police said

The IUML leadership had given the MLA six months time to repay the amounts taken from the investors.