Delhi HC dismisses plea seeking probe into Indiabulls Housing Finance

The Delhi High Court on February 2 dismissed a plea to look into alleged siphoning of funds by the promoters of Indiabulls Housing Finance Limited (IBHFL), its subsidiaries, and their promoters.

The Public Interest Litigation (PIL) was filed in 2019 by the NGO Citizens Whistle Blower Forum, which is linked to lawyer Prashant Bhushan.

The court said, "Finding no merit in the present petition, it is accordingly dismissed. Pending applications are disposed of as infructuous.”

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

"The investigation has to be transferred to the CBI, 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 the National Housing Bank (NHB) and also the Ministry of Corporate Affairs is in the process of further investigation," the bench of Justices Suresh Kumar Kait and Neena Bansal Krishna said.

The PIL sought direction for an in-depth, thorough, and time-bound investigation by a Special Investigation Team (SIT) into various serious illegalities, violations, and siphoning of funds committed by the promoters of IBHFL, its subsidiaries, and their promoters.

It further sought 'directions to the Ministry of Corporate Affairs, Registrar of Companies (ROC), Serious Fraud Investigation Office (SFIO), National Housing Bank (NHB), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) to take action against IBHFL and its promoters/owners, who through its promoters, subsidiary companies, and various groups of companies, has been allegedly 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'.

The Board of Directors of IBHFL noted the Delhi High Court’s order of dismissal of the PIL and 'shared the anguish felt by the innocent shareholders of the Company who were made to suffer huge losses due to the unsubstantiated, false, and malafide PIL that was filed with ulterior motives.'

The court said that due to articles published in a magazine and newspaper, the tweets made by a member of the petitioner-firm or a Member of Parliament, the shareholders of the accused companies were jolted and they were made to suffer huge losses.

"This Court is of the opinion that the allegations levelled by the petitioner are not substantiated as these are not supported by any evidence," the court said.

The court stated that the balance sheets or other material placed on record are already available on the website of these companies and are thus already in the public domain.

"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.