NEW DELHI: The Supreme Court on Wednesday instructed the Ministry of Corporate Affairs to submit the original records related to the closures of irregularities identified by the Securities Exchange Board of India (SEBI) concerning Indiabulls Housing Finance Limited, now known as Sammaan Capital Limited.
A bench comprised of Justices Surya Kant, Ujjal Bhuyan, and N Kotiswar Singh requested Additional Solicitor General SV Raju, representing central investigating agencies, to clarify how many cases have been closed.
“We wish to understand the extent of your leniency in resolving hundreds of objections,” Justice Kant remarked, directing that a senior official from the Ministry bring the original records to the next hearing scheduled for November 11.
The bench also sought clarification from the Enforcement Directorate regarding the Central Bureau of Investigation’s stance on the money laundering allegations against the company.
“We require the original MCA records addressing the compounding of SEBI-highlighted irregularities. Thus, we direct that a senior officer attend court with these original documents.”
“The ED must make its stance clear concerning the CBI’s findings, particularly those suggesting potential money laundering, and outline the steps taken in accordance with the CBI’s counter affidavit.”
The Supreme Court was addressing a petition from the NGO Citizens Whistle Blower Forum, which accused Indiabulls of significant irregularities.
Senior advocates Harish Salve, Mukul Rohatgi, and Abhishek Singhvi, representing the company and its promoters, contended that multiple investigating agencies had found no wrongdoing and labeled the NGO as a “blackmailer.”
Advocate Prashant Bhushan, representing the NGO, alleged large-scale financial mismanagement, money laundering, and irregularities in the real estate sector.
A heated exchange occurred between Salve and Bhushan when the latter referenced Salve’s comments as a person in London disparaging the NGO, which includes former judges and military officers among its members.
Salve retorted, suggesting Bhushan could also move to London if he felt envious.
“This is extortion litigation. Any necessary investigation should focus on these NGOs. All agencies have submitted affidavits, yielding no findings. What type of witch hunt is this? Who is this unfamiliar figure? I contest the maintainability of this petition,” Salve argued.
Justice Kant interjected, noting the CBI’s report stating that the ED may proceed with its investigation into IHFL’s operations.
“We seek clarity on the ED’s position. We’ll listen to you on Mr. Salve’s maintainability. Do not fret,” the judge assured.
Bhushan highlighted that Indiabulls had dispensed approximately Rs 400 crores in loans to several real estate companies, including one with a claimed net worth of only Rs 1 lakh that received a loan of Rs 1,000 crore.
He referenced findings in SEBI’s affidavit, describing them as shocking and validating the NGO’s allegations.
Raju stated that the ED’s affidavit revealed serious concerns currently under investigation.
Justice Kant told Raju the court wanted to see the original records and was keen to know how many objections had been generously closed.
Bhushan indicated that countless violations were compounded in a single day, imposing a mere penalty of Rs 37 crores.
Salve contended that the RBI, the primary regulator, had filed a supportive affidavit confirming no wrongdoing regarding these loans.
On July 30, the CBI informed the top court it was not probing any irregularities in IHFL and had found no faults in the loan disbursements to corporate entities.
Earlier, on July 21, the Supreme Court criticized the CBI for failing to appear in a case against Indiabulls despite being notified.
The petitioning NGO accused IBHFL and its owners of issuing dubious loans to firms owned by major corporate groups that subsequently funneled money back to the accounts of Indiabulls’ promoters to bolster their wealth.
ASG Raju had previously indicated that the ED was investigating the matter, noting that a formal complaint is needed for the CBI’s involvement, which can only proceed upon state consent.
On May 13, the Supreme Court requested the CBI’s response concerning a challenge to the February 2, 2024, high court order.
The court acknowledged submissions from the Ministry of Corporate Affairs and SEBI regarding irregularities at IHFL.
The ED charged IHFL with multiple irregularities in its investigations, including a case in Maharashtra involving the alleged misappropriation of public funds amounting to around Rs 300 crores.
