Delhi High Court Dismisses Plea Seeking SIT Probe Into Alleged Siphoning Of Funds By Promoters Of Indiabulls Housing

The Delhi High Court on Friday dismissed a plea seeking an in-depth, thorough and time bound investigation by a Special Investigation Team (SIT) into alleged illegalities, violations and siphoning of funds by the promoters of Indiabulls Housing Finance Limited (IBHFL) and its subsidiaries.

A division bench of Justice Suresh Kumar Kait and Justice Neena Bansal Krishna observed that necessary investigation has already been carried out by National Housing Bank (NHB) and the Union Ministry of Corporate Affairs is in the process of conducting further probe in the matter.

The court said that the allegations levelled by Citizens Whistle Blower Forum, the organisation which filed the plea in 2019, were not substantiated as they were not supported by any evidence.

“Not only a large portion of alleged loans were repaid by the respondent- companies but also the loans were advanced against mortgages and securities furnished by the borrowers. Moreover, due to alleged complaints, the Government functionaries have already set in motion and necessary inspections have been carried out by NHB. The Ministry of Corporate Affairs is also in the process of further investigation,” the court said.

It added: “Finding no merit in the present petition, it is accordingly dismissed. Pending applications are disposed of as infructuous.”

The plea sought directions on the Union Ministry of Corporate Affairs, Registrar of Companies (ROC), Serious Fraud Investigation Office (SFIO), National Housing Bank, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) to take action against IBHFL and its promoters.

The petitioner organization alleged that IBHFL and its promoters have been advancing dubious loans to companies owned by large corporate groups which have been routing them back to the accounts of companies owned by the promoters of Indiabulls, so as to increase their personal wealth.

It was alleged that IBHFL and the companies owned by its promoters were involved in round tripping of funds in violation of the laws and policy guidelines and that their books of account did not show the true state of affairs.

The organisation further claimed that the authorities failed to do any investigation into these allegations or to take action against the erring companies, thereby posing serious risk and threat to the public interest.

While dismissing the plea, the court observed that the Auditor's report of NHB revealed that necessary investigations and inspections were carried out regarding the financial accounts of the companies belonging to the Indiabulls group. It further noted that in most of the cases, the loans advanced by IBHFL stood repaid and for the remaining, the investigation was in progress.

“In the considered opinion of this Court, due to articles published in magazine and newspaper, the tweets made by member of the petitioner-firm or a Member of Parliament, the share holders of accused-companies were jolted and they were made to suffer huge losses,” the court said.

It added that it is settled position of law that the jurisdiction of investigation lies within the realm of investigating agency and a Court has no authority to interfere in it until and unless there is grave miscarriage of justice or misuse of process of law.

“The investigation has to be transferred to CBI or SIT or any other agency only in exceptional cases and not as a matter of routine. There is no dispute to the position that necessary investigation in the present case has already been carried out by NHB and also the Ministry of Corporate Affairs is in the process of further investigation,” the court said.

Counsel for Petitioner: Mr. Prashant Bhushan, Ms. Neha Rathi and Mr. Kamal Kishore Tyagi, Advocates

Counsel for Respondents: Mr. Anurag Ahluwalia, CGSC for respondents No.1, 2 & 6; Ms. Shobhana Takiar, Advocate for respondent No.3; Mr. Ramesh Babu, Ms. Manisha Singh, Ms. Tanya Choudhary & Ms. Jagriti Bharti, Advocates for respondent No.4; Ms. Pinky Anand, Senior Advocate with Mr. Ashish Aggarwal, Ms.Saudamini, Mr. Nishchay Kapoor & Mr. Satyajit Yadav, Advocates for respondent No.7; Ms. Pallavi Kumar & Mr. Pranav Tanwar, Advocates for respondent No.9

Title: CITIZENS WHISTLE BLOWER FORUM v. UNION OF INDIA AND ORS.

Citation: 2024 LiveLaw (Del) 125

Click Here To Read Order