The Supreme Court has sought the Central Bureau of Investigation (CBI)’s response to a petition seeking a criminal case against Indiabulls Housing Finance Limited (IHFL), now known as Sammaan Capital Limited, over dubious loans to corporate entities that allegedly violated the Companies Act and misused public funds.
A bench of justices Abhay S Oka and Ujjal Bhuyan issued the notice on Tuesday and posted the matter for hearing in July after the corporate affairs ministry and the Securities Exchange Board of India (SEBI) confirmed IHFL’s alleged irregularities.
The Enforcement Directorate (ED) later on Tuesday filed a status report detailing IHFL’s alleged wrongdoings in two cases the agency has probed. The report, a copy of which HT has seen, referred to a case registered against IHFL and others in Maharashtra for allegedly siphoning off public money outside the country and cheating the investors of around ₹300 crore.
The ED cited its probe and said it found the allegations were true to a large extent and require a deeper investigation. It alleged that Indiabulls fabricated the valuation report, backdated it, and manipulated the base price for an auction in furtherance of a criminal conspiracy. The ED said it was in the process of filing its complaint in one of the cases. The ED said it has shared its investigation with the Delhi Police in the second case.
NGO Citizens Whistleblowers Forum, through advocate Neha Rathi, moved the Supreme Court seeking directions to the CBI to register a criminal case against the IHFL after the Delhi high court refused to entertain its plea. It said ED was finding it difficult to proceed against IHFL in the absence of a predicate offence.
The Supreme Court asked the ED why it was slow in its investigation. “The ED normally works very fast.”
The ED’s counsel told the court that it was in the process of filing its status report on IHFL’s alleged wrongdoings.
In its plea in the high court in 2019, the NGO accused IHFL of sanctioning dubious loans to corporate entities. It linked the loans to financial irregularities, including round-tripping, and creating private wealth at the expense of public money.
The petition accused the IHFL and its group companies of questionable financial practices, such as preference shares, mobilisation advances, and convertible debentures. It alleged that certain borrower companies shared directors and office addresses with IBHFL, while others, lacking tangible assets or operational businesses, were given loans.
The high court ruled that the allegations were unsubstantiated and not backed by sufficient evidence. It observed that the documents the NGO submitted, including balance sheets, were in the public domain and failed to support the claims of financial impropriety.
The IHFL moved an application before the high court seeking perjury proceedings against the petitioner, accusing Citizens Whistleblowers Forum of making unsubstantiated allegations.
In November 2024, the Supreme Court agreed to examine this petition and sought responses from the Union government, the Reserve Bank of India, SEBI, and ED.