Delhi High Court slaps ₹1.25 lakh costs on advocate for multiple pleas against real estate firm

The Delhi High Court recently imposed costs of ₹1.25 lakh on a lawyer for filing repeated petitions seeking probe by Central Bureau of Investigation (CBI) against real estate company IREO Residences.

The Court was hearing a petition filed by advocate Gulshan Babbar (petitioner) seeking CBI probe against the real estate company and its directors, Lalit and Sapna Goyal, for alleged diversion of company funds to shell entities.

Justice Manmeet Pritam Singh Arora questioned Babbar's locus and imposed costs of ₹25,000 on each of the five petitions filed by him after finding that he had knowingly concealed the fact that he had filed multiple petitions on the issue.

"In view of the foregoing, all the writ petitions filed by the Petitioner are dismissed on the grounds of lack of locus standi and non-maintainability. Further, a cost of ₹25,000 for each petition is imposed upon the petitioner for knowingly concealing the pendency of other petitions, making a false declaration of non-filing, and misrepresenting the contents of the previous orders passed by this Court. The said total cost of ₹1,25,000 shall be deposited with the Delhi High Court Legal Services Committee (DHCLSC) within a period of two (2) weeks and an affidavit of compliance shall be filed by the Petitioner within one (1) thereafter," the Court said.

Further, the Court rejected the petitioner's allegations of inaction by the Enforcement Directorate (ED) regarding the alleged diversion of bank loan amounts by the firm, noting that no criminal complaint has been filed by the banks in this regard.

ED counsel contended that Babbar not being an aggrieved party in the IREO matter lacks the locus standi to seek directions from the court.

In light of this, the Court noted that Babbar does not qualify as a homebuyer or a directly affected party in the matter. As such, he is not an aggrieved person and cannot invoke the Court’s extraordinary jurisdiction under Article 226 of the Constitution, it added.

Further, the Court found no merit in the prayer for a court-monitored investigation after noting that ED had already registered an Enforcement Case Information Report (ECIR), filed prosecution complaints and attached properties worth ₹1,376 crore.

Since the investigation is active and monitored by the special PMLA court, no further oversight is needed, it was said.

“ED has stated that the loan transaction of Rs 600 crore and its alleged illegal diversion though to its knowledge has not been made a part of the instant PMLA case as the lender banks have not filed any criminal complaint with any LEA (law enforcement agency) and, therefore, in the absence of any registered predicate offence this transaction is not part of a scheduled offence and the provisions of PMLA cannot be invoked to investigate the said transaction."

The Court further observed that the ED has investigated the known transactions and is pursuing the matter on behalf of the aggrieved homebuyers.

There was no evidence to suggest laxity or inaction by the ED, the Court noted.

The Court further found Babbar's conduct to be dishonest and a clear abuse of judicial process since he had failed to disclose details about earlier petitions filed by him in relation to the issue.

"The conduct of the petitioner in failing to disclose the filing and pendency of the earlier writ petitions, the deliberate misrepresentation of the contents of the orders passed by this Court and the false assertion with respect to being a financial investor in the IREO Projects evidence that the Petitioner has approached this Court with unclean hands. The writ proceedings are decided on the basis of pleadings supported by affidavits affirming the truthfulness of the contents set out therein. The Petitioner has made false declarations contrary to record exhibiting no fear for violating the process of Courts with an intent to mislead the Court," it stated.

With these observations, the Court directed Babbar to pay costs of ₹25,000 per petition (₹1,25,000 total) for suppression of facts, false declarations and misrepresentation.

The amount has to be paid to the Delhi High Court Legal Services Committee within two weeks.

[Read Order]