Delhi HC issues notice in plea for probe into financial irregularities by Indiabulls Housing Finance Ltd

The Delhi High Court yesterday issued notice in a petition seeking a direction for an in-depth and time-bound investigation by a Special Investigation Team into the “illegalities and violations” committed by Indiabulls Housing Finance Ltd (IBHFL), its subsidiaries and promoters.

. The petition also seeks an investigation by the Serious Fraud Investigation Office (SFIO), Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI) and National Housing Bank (NHB) into the financial affairs of Indiabulls.

. Notice was issued to Indiabulls, its promoters, the Central Government and other stakeholders by a Division Bench of Chief Justice DN Patel and Justice C Hari Shankar. The petition is filed by Citizens Whistle Blower Forum.

. It is the petitioner’s case that IBHFL, through its promoters and their various group companies and subsidiary companies, has been advancing dubious loans to companies owned by large corporate groups, which in turn have been routing the money back to the accounts of companies owned by the promoters of Indiabulls.

. It is alleged that the money loaned out to corporate groups by IBHFL is public money, as IBHFL had itself, in the past many years, taken huge loans from various public and private banks.

. The petitioner has argued that there are many newspaper reports and primary documents such as balance sheets and ROC records that are available in the public domain, to show the irregularities and illegalities committed by IBHFL.

. The petitioner has also claimed that the financial details of Indiabulls Housing, along with details of borrowings, show that over 12,000 companies are registered at the same address as that of Indiabulls, which suggests a “ staggering number of dummy companies having been created by Indiabulls “.

. To establish its claim, the petitioner has listed several instances which pertain to companies like Reliance Anil Dhirubhai Ambani Group, Vatika Group, DLF Group etc.

. The petition reads,

. “ Out of a total loan of Rs. 1580 crores that five Reliance ADAG companies received from IBHFL in loans, Rs. 570 crores were invested back in nine Indiabulls subsidiaries through debentures…

. ..IBHFL loaned about Rs. 4600 crores to 51 companies of Vatika Group, many of which were pass-through companies, with a paid-up capital of barely Rs. 1 lakhs. Agnes Developers, one of the Vatika Group companies, ploughed back Rs. 200 crores each…

. …Similarly, IBHFL has put in more than Rs. 1705 crores in 48 companies of DLF Group, many of which have negative worth. Interestingly, three DLF group companies have invested Rs. 66 crores back in EMU Realcon, an Indiabulls subsidiary.”

. The petitioner has contended that although such “round-tripping of funds” is in violation of existing laws and policy framework, the authorities concerned have failed to take any action, thus posing serious risk and threat to the public interest.

. The petitioner claims that this “scam follows close to the heels of scams such as those perpetrated by ICICI Bank, IL&FS and Dewan Housing Finance Limited”.

. “ It illustrates how promoters and persons in charge of large NBFCs have looted public monies invested in them and diverted them to their own companies using shell companies. In this process, huge amount of public money involving lakhs of crores is being looted. It is submitted that the clout of the promoters of these companies is such that the regulators have closed their eyes to these frauds happening right under their noses.”

. The matter will be heard next on December 13.

. The petitioner was represented by Senior Advocate CU Singh and Advocate Prashant Bhushan .

. IBHFL was represented by Senior Advocates Mukul Rohatgi and Abhishek Manu Singhvi .

. Earlier this month, the High Court had passed an order restraining Subramanian Swamy and web portal PGurus from publishing or disseminating or uploading any false and defamatory allegations against Indiabulls Housing Finance Ltd.

Delhi HC issues notice in plea for probe into financial irregularities by Indiabulls Housing Finance Ltd

Aditi Singh