Delhi HC Issues Notice On PIL Seeking SIT Probe Into Alleged Scam By India Bulls Housing Finance Ltd

The Delhi High Court on Friday issued notice on a Public Interest Litigation seeking probe into the alleged financial irregularities by India Bulls Housing Finance Ltd (IBHL), its promoters and subsidiaries.

The PIL filed by Citizens Whistel Blowers Forum through Advocate Kamini Jaiswal alleged that IBHFL has been extending huge loans to various companies and these companies in turn are routing a substantial part of the loaned money back as investment in equities or as debentures with 0% rate of interest to companies apparently owned by  Sameer Gehlaut, the founder and Chairman of IBHFL and his family members. 

The bench of Chief Justice D N Patel and Justice Hari Shanker issued notice to the Union Ministry of Corporate Affairs, Serious Fraud Investigation Office, Registrar of Companies, Securities and Exchange Board of India in the case, after hearing the submissions of Senior Advocate C U Singh for the petitioner.

As per the petitioner, IBHFL and companies owned by its promoters are involved in "round tripping" of funds in violation of the Income Tax Act, rules and regulations of Reserve Bank of India (RBI), SEBI, National Housing Bank and other laws.

Since IBHFL has in the past many years taken huge sums of loans from various public and private banks, public money is at stake, the petition stated.

The petitioner alleged that the maze of transactions by IBHL illustrated "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".

The authorities and regulators have turned a blind eye to these transactions due to the clout of the promoters of these companies, alleged the petitioner.

The petition has cited transactions of IBHL with Reliance ADAG group, Vatika group, Americorp group and DLF group to explain the alleged scam. According to the petition, IBHFL advanced nearly Rs 9,248 crore as loan to these five company groups. Substantial portion of these loans were allegedly re-invested in companies controlled by IBHL founder Sameer Gehlaut,

"...borrowing companies bestow huge benefits to the key shareholders and Chairman of IBHFL for the favour they get in the form of loans from IBHFL," the petition said.

"The central government, ROC or the Ministry of Corporate affairs ought to have filed a complaint and taken action on the violation of Section 77 (creating of charge with the ROC) by the borrowing companies as laid down in Section 86 of the Companies Act 2013. ROC ought to have further exercised powers under Section 206 to call for furtheri nformation, inspection of books and conducted inquiries. Central Government ought to have further entrusted the investigation of the murky deals of IBHFL to the SFIO. National Housing Bank, under the National Housing Bank Act 1987, ought to have exercised its powers to inspect the records, to collect information from HFCs. NHB ought tohave further directed a special audit of the accounts of IBHFL by appointing its own auditors as envisaged in Section 33 of the NHB Act, 1987. The NHB should have further made a complaint about the irregularities of the dealings of IBHFL as per procedure laid down in Section 50 of the NHB Act, 1987. SEBI should have also taken action inter alia under Section 11, 11A, 11B, 11C and 11D to investigate into the affairs of IBHFL", the petition stated.

Stating that the inaction by authorities could "result in jeopardizing and undermining of public interest, rule of the law and the regulatory structure besides probable loss to the public exchequer", the petitioner sought an "in-depth, thorough and time bound" investigation by a Special Investigation Team comprising expert members of respondent authorities into the various illegalities and violations alleged.