Appearing for the state government, senior counsel Harish Salve contended before the court that the CBI directly approaching the governor and seeking his sanction for Vijayan's prosecution did not auger well for the federal structure of the country.

He pointed out to the court that if the state government had advised the governor against Vjayan's prosecution, it was not a situation without remedy.

The state government's action could have been challenged in the high court and the governor should not have directly come forward to grant his sanction for prosecution ignoring the advise of the council of ministers, which is constitutionally binding upon him, he said.

Appearing for the state governor, former union law minister Shanti Bhushan defended the decision to grant sanction to prosecute Vijayan, saying that the governor was empowered to utilize his discretion.

He said the governor had given his approval for prosecution after taking appropriate legal advise from a retired high court judge.

Vjayan is facing prosecution for his alleged role in awarding a contract in 1997 for renovation and modernization of three hydro-power plants in the state to a Canadian firm, SNC Lavalin, without any competitive bidding.

The government's official auditor later had found that the award of the contract by the Kerala State Electricity Board to the firm at the behest of the minister had resulted in a loss of Rs.3.5 billion to the exchequer.

The contract had allegedly been given to the Canadian firm ignoring a Bharat Heavy Electrical Limited report, which had said that the renovation of three power plants could have been achieved at a cost of less than Rs.1 billion.