Delhi HC agrees to hear PIL seeking SIT probe into Indiabulls Housing

PIL alleges fund diversion, accounting irregularities at Indiabulls, seeks SIT probe into the company, HC issues notice

The Delhi High on Friday agreed to hear a Public Interest Litigation (PIL) filed against Indiabulls Housing Finance Limited, which has alleged fund diversion and accounting irregularities. A two-judge Bench led by Chief Justice D N Patel issued notice to Indiabulls Housing Finance, its promoters, the Reserve Bank of India (RBI), and the Ministry of Corporate Affairs and sought their response within 2 weeks.

The PIL, filed by non-government organisation Citizens Whistle Blower Forum has sought a Special Investigation Team-led probe into alleged irregularities, siphoning of funds, and other violations committed by the promoters of Indiabulls Housing. The plea alleges that the company “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, so as to increase their personal wealth”.

Shares of Indiabulls Housing plummeted on the news and ended the day 6.1 per cent lower. The news also had a likely cascading effect on shares of other group companies of Indiabulls such as Indiabulls Real Estate Limited and Indiabulls Ventures Limited, which ended the day nearly 10 per cent and 19 per cent lower, respectively.

Indiabulls has opposed the plea alleging that it was "malicious" and "mala fide" petition aimed to cause loss to the company and hamper its daily operations. In a statement to the exchanges, Indiabulls Housing said that “the averments made in the petition are a pack of lies motivated by vested interest and has been filed without any research even on publicly available records of the company”.

Indiabulls Housing said it had also filed an application in the Delhi high court against senior advocate Prashant Bhushan for wilfully filing a PIL full of false and incorrect information and thereby causing wilful reputational loss to the company. The housing finance company had faced a similar plea a couple of months ago in the Supreme Court, when a PIL alleged that malpractice and fraud to the tune of about Rs 98,000 crore had been done at Indiabulls Housing.

Abhay Yadav, a petitioner had alleged that Indiabulls Housing and its chairman Sameer Gehlaut, and other directors had siphoned off funds worth thousands of crores from the company accounts for their personal use. Yadav had in his plea also alleged that Gehlaut, with the help of one Harish Fabiani - a non-resident Indian based in Spain, allegedly created multiple "shell companies" to which IHFL loaned huge sums of money under "bogus and non-existent pretexts".

In June, Yadav withdrew his petition with an affidavit in the SC claiming that he had nothing to do with the case, and had been tricked into it by some people.

“I am not aware of the contents and allegations mentioned in the complaints or the petition. I now realise that such papers, affidavits, applications etc were signed by me have been misused to file false complaints and petitions against Indiabulls with malafide intentions. I apologise with folded hands for unknowingly having signed the complaints, petition, applications, etc without realising its contents,” Yadav had said in his affidavit.  

A couple of weeks later, law firm Managium Juris representing Yadav had also taken out a public apology stating that they had filed the case with malicious intent.

“We came across a public disclosure made by Indiabulls Housing Finance Ltd regarding their plans to merge with Lakshmi Vilas Bank. Sensing this as a delicate and critical phase for the company and, therefore, an opportunity for the clients to exert pressure and with a view to sensationalize the matter, certain scathing allegations were made by them in the petition involving huge numbers against the company and its officials,” the law firm had said in a statement.