Is the CBI Overlooking the Indiabulls Investigation?

New Delhi, July 30 (NationPress) The Central Bureau of Investigation (CBI) has informed the Supreme Court that it is not currently looking into the purported “illegalities” associated with Indiabulls Housing Finance Limited (IHFL), which has now been rebranded as Sammaan Capital Ltd.

A bench consisting of Justices Surya Kant and Joymalya Bagchi was addressing a plea from the Citizens Whistle Blower Forum (CWBF). The forum is advocating for a comprehensive, timely investigation by a Special Investigation Team (SIT) into various serious claims of “illegalities”, including the round-tripping of funds, breaches of the Companies Act, and the alleged siphoning of funds by the promoters of IHFL and its subsidiaries.

Representing the CBI, Additional Solicitor General (ASG) SV Raju stated before the Justice Kant-led bench that no wrongdoing had been identified in IHFL’s loan disbursement to corporate entities.

Senior counsels Harish Salve and Mukul Rohatgi, advocating for the promoters of IHFL, argued that the claims made by CWBF were unfounded, asserting that the forum has already retracted several related petitions.

Due to a lack of time, the Supreme Court has postponed the hearing, indicating that it will revisit the allegations at a later date.

Previously, in November, the Supreme Court had consented to review CWBF’s plea and requested responses from IHFL and other involved parties.

The plea presented to the apex court alleged that based on public documentation, including ROC records and financial statements, IHFL had been granting substantial loans to several companies, which subsequently routed a significant portion of these funds back as investments into firms owned by key shareholders and promoters of IHFL, notably Sameer Gehlaut, the founder and former Chairman.

According to CWBF’s plea, “borrowing companies provide significant advantages to key shareholders and the Chairman of IHFL in exchange for loans received from IHFL.”

It further asserted that given that the funds with IHFL primarily originate from public and private sector bank borrowings and depositor investments, “thousands of crores of public money appear to have been siphoned off by the company to financially benefit its promoters.”

Earlier, the Delhi High Court dismissed CWBF’s request for a SIT probe into serious allegations of round-tripping of funds, violations of Companies Act provisions, and fund siphoning by IHFL's promoters and subsidiaries.

The special leave petition (SLP) submitted to the Supreme Court argued that the Delhi High Court did not adequately consider that many of the companies receiving loans from IHFL possess minimal paid-up capital, lack fixed assets, and are not operational.

“The directors and registered addresses of many of these companies are also the same. Many borrower companies have also failed to file charges with the Ministry of Corporate Affairs (MCA). Just because these companies have repaid some dubious loans does not mean that Indiabulls' promoters did not gain from them,” contended the SLP, represented by advocate Neha Rathi.

It emphasized that the mere repayment of loans does not exempt a company and its promoters from criminal liability and investigation, especially when such a company has taken further loans possibly to falsely represent repayments in its financial records.

The plea claimed that IHFL and its promoters are in violation of various statutes and regulations, including income tax evasion and breaches of Reserve Bank of India (RBI), SEBI, and National Housing Bank regulations, yet no action has been taken by authorities.

The petitioner noted that this “instant scam” closely follows other notable frauds such as those involving ICICI Bank, IL&FS, and Dewan Housing Finance Limited, exemplifying how promoters and individuals in charge of large Non-Banking Financial Companies (NBFCs) have misappropriated public funds invested in them, redirecting them to their own enterprises through a network of shell companies.

Founded by Sameer Gehlaut in 1999, Indiabulls is a prominent finance company and now operates as an NBFC, having gone public with a listing on the Bombay Stock Exchange (BSE) in 2004.