Supreme Court to examine plea for probe into alleged illegalities by Indiabulls Housing Finance

New Delhi: The Supreme Court on Friday agreed to examine a plea filed by the Citizens Whistle Blower Forum seeking an investigation into allegations of illegalities, violations, and siphoning of funds by the former promoters of Indiabulls Housing Finance Limited (IBHFL).

A bench of Justices Abhay S Oka and Augustine George Masih sought a response from IBHFL, now known as Sammaan Capital Ltd, a mortgage-focused non-banking financial company (NBFC), regulated by the RBI.

The plea also made the Union government, RBI, Serious Fraud Investigation Office, Securities and Exchange Board of India as respondents.

It also sought a court-monitored special investigation team probe into the alleged financial misconduct by IBHFL, its subsidiaries, and their promoters.

Senior advocate Abhishek Manu Singhvi represented IBHFL strongly opposed the petition.

The plea filed through advocate Neha Rathi, challenged the final judgment and order of February 2, 2024, of the Delhi High Court, rejecting the petition for an in-depth, thorough and time-bound investigation by a SIT into various serious illegalities including round-tripping of funds, violations of provisions of Companies Act, and siphoning of funds committed by the promoters of Indiabulls Housing Finance Limited (now renamed as Sammaan Capital Ltd), its subsidiaries and their promoters.

"Based on public records, ROC documents and financial statements of the said company, the petitioner in the instant case had shown how the respondent company had been extending huge loans to various companies and these companies in turn have been routing a substantial part of the money as investment in companies belonging to the key shareholders/promoters of IBHFL, including Sameer Gehlaut, the founder and the then Chairman of IBHFL," the plea said.

It contended the High Court failed to appreciate that many of the companies to which IBHFL has extended these loans have a small paid-up capital, do not have any fixed assets and are not even engaged in any business activities.

"The directors and office addresses of many of these companies are also common. A majority of these borrower companies have also failed to file charge with the Ministry of Corporate Affairs (MCA). That merely because the borrowing companies have paid back some of the dubious loans advanced to it, does not imply that the promoters of Indiabulls did not benefit from the same,” the plea said.

Indiabulls, on its part, had consistently denied the allegations, asserting that its financial practices adhered to regulatory standards set by the RBI, SEBI, and NHB.