The Supreme Court on Wednesday witnessed sharp exchange of words between Senior Advocate Harish Salve and advocate Prashant Bhushan during the hearing of a plea for an investigation into alleged financial irregularities and fund diversion by Indiabulls Housing Finance Ltd (IHFL), now renamed Sammaan Capital Ltd [Citizens Whistleblower Forum vs. Union of India & Ors.].

A Bench of Justices Surya Kant, Ujjal Bhuyan and NK Singh was hearing a petition filed by the NGO, Citizens Whistleblower Forum (CWBF), which has sought a court-monitored probe into alleged round-tripping of funds and money laundering by IHFL and its promoters.

Appearing for CWBF, Bhushan at the outset contended that the company and its promoters had extended massive loans to shell entities and diverted funds back into promoter-linked firms. He said that the allegations were supported by affidavits from the Securities and Exchange Board of India (SEBI).

Explaining the scale of the alleged transactions, Bhushan submitted that one of the companies with negligible financial worth had received loans exceeding ₹1,000 crore.

“Indiabulls, now known as Sammaan Capital, has given some ₹400 crores of loans to many of these companies. One company of net worth of ₹1 lakh was given a loan of ₹1,000 crore. Sameer Gehlaut (founder and chairman of IHFL) had fled the country and is living in London. He didn’t answer multiple summons issued by CBI in the Yes Bank case. Just see the findings in the SEBI affidavit. They are shocking. They substantiate the allegations we had made,” Bhushan said.

Salve, representing IHFL founder Gehlaut, strongly opposed the petition, calling it an instance of misuse of public-interest litigation.

“This is such blackmail litigation. If an investigation is needed, it is into these NGOs. All the agencies have filed affidavits and nothing has come out. What is this kind of witch-hunting? Who is this stranger? I am objecting to the maintainability of this petition,” Salve said.

As the exchange grew more heated, Bhushan alleged that Salve was unaware of the case records as he was not present in India.

“Mr Salve doesn’t even know what the affidavits are. He is sitting in London,” Bhushan said.

Salve replied with equal force.

“Whichever city you are sitting in, you can read an affidavit written in simple English,” Salve retorted.

Senior Advocate Mukul Rohatgi, appearing for one of the promotors, joined in, adding that similar complaints had been filed earlier in Mumbai.

“Some blackmailer in Bombay filed the complaint,” Rohatgi said.

Bhushan objected to this line of argument, insisting that the forum he represented comprised eminent citizens and public servants.

“Justice Shah, former Navy Chief, several Secretaries to the Government of India, and Ms Aruna Roy, all of them are trustees of the Citizens Whistleblower Forum. They are saying we are blackmailers,” Bhushan said.

Salve responded curtly.

“Yes,” he said.

Bhushan shot back immediately.

“The audacity of the gentleman who sits in London,” he said.

Salve replied with characteristic wit.

“Where I sit is not his problem. If he is jealous, he can also move to London,” Salve said.

At this point, Rohatgi intervened again.

“Mr Bhushan should also go to London next date both of you do it from London. We will be here,” Rohatgi quipped.

Justice Surya Kant responded with a brief smile but quickly steered the courtroom back to the case.

“We will not comment on all this. We will hear it on the 19th,” Justice Kant said.

Bhushan then urged that the next hearing proceed in an orderly fashion without interruptions.

“Yes, let there be an orderly hearing. Let them not go on interrupting us by saying blackmailer, blackmailer,” Bhushan said.

Salve responded once again.

“You are,” Salve said.

"Mr. Salve, you have tea with all these fellows," Bhushan retorted.

At this point, Justice Kant stepped in and assured that the next hearing would be conducted smoothly.

“We will provide you uninterrupted hearing on the next date,” Justice Kant said.

The courtroom exchanges came amid larger questions of regulatory oversight. The Bench noted that the Central Bureau of Investigation (CBI) had said the Enforcement Directorate (ED) may continue investigating IHFL’s affairs. It, therefore, sought clarity from the ED on its stand.

Upon being told that most of the regulatory bodies had given a clean chit to IHFL, the Court asked Additional Solicitor General SV Raju, representing the Union, to come up with a detailed report.

"Mr. Raju we would like to see the original report. And we would also like to know in how many cases you have been so magnanimous in closing hundreds of objections. We would like to see that original report," Justice Kant said.

In its order, the Court directed the Union Ministry of Corporate Affairs (MCA) to produce the original records concerning the compounding of irregularities flagged by SEBI and directed that a senior officer be present in court with the reports. The Bench also directed the ED to explain on affidavit the steps taken on the CBI’s request to register a case with the Economic Offences Wing, Delhi.

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