2024 (2) TMI 246 - HC - Indian Laws

Seeking direction for an in-depth, thorough and time bound investigation by a SIT into various serious illegalities, violations and siphoning of funds committed by the promoters of Indiabulls Housing Finance Limited (IBHFL), its subsidiaries and their promoters - siphoning of funds by the IBHFL and other Indiabull group of companies - HELD THAT - Applying the dictum of the Hon ble Supreme Court in Vishal Tiwari Vs. Union of India 2024 (1) TMI 188 - SUPREME COURT to the case in hand, 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 balance sheets or other material placed on record is already available on the website of these companies and is thus already in 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. In the considered opinion of this Court, due to articles published in magazine and newspaper, the tweets made by member of the petitioner-firm or a Member of Parliament, the share holders of accused-companies were jolted and they were made to suffer huge losses. It is settled position of law that the jurisdiction of investigation lies within the realm of investigating agency and a Court has no authority to interfere in the investigation until and unless there is grave miscarriage of justice or misuse of process of law. The investigation has to be transferred to CBI or 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 NHB and also the Ministry of Corporate Affairs is in the process of further investigation. Finding no merit in the present petition, it is accordingly dismissed.

Issues Involved:

1. Allegations of illegalities, violations, and siphoning of funds by Indiabulls Housing Finance Limited (IBHFL) and its promoters.
2. Requests for investigation by a Special Investigation Team (SIT) and actions by various regulatory authorities.
3. Examination of loans and financial transactions involving IBHFL and other companies.
4. Analysis of regulatory responses and inspections by authorities like the Ministry of Corporate Affairs (MCA), SEBI, NHB, and RBI.
5. Judicial review of the adequacy and fairness of the investigations conducted.

Summary Issue-wise:

1. Allegations of Illegalities and Violations:
The petitioner, a registered organization advocating for whistleblowers, filed a writ petition under Article 226 of the Constitution of India. They sought a thorough and time-bound investigation by a SIT into various serious illegalities, violations, and siphoning of funds committed by the promoters of IBHFL and its subsidiaries. They alleged that IBHFL advanced dubious loans to companies owned by large corporate groups, which then routed the money back to the promoters of Indiabulls, increasing their personal wealth. The petitioner claimed these activities violated multiple statutes and policies, including the Companies Act, 2013, and regulations of RBI, SEBI, and NHB.

2. Requests for Investigation and Actions:
The petitioner requested directions to the Ministry of Corporate Affairs, Registrar of Companies (ROC), Serious Fraud Investigation Office (SFIO), NHB, RBI, and SEBI to take action against IBHFL and its promoters. They alleged that the concerned authorities failed to investigate and take required action, posing a serious risk to public interest. The petitioner also sought a special audit of IBHFL's accounts and further investigation by the SFIO.

3. Examination of Loans and Financial Transactions:
The petitioner provided detailed allegations of loans given by IBHFL to various companies, including Americorp Group, Reliance ADAG, Chordia Group, Vatika Group, and DLF Group. They claimed that these loans were routed back to Indiabulls promoters through investments in preference shares, compulsory convertible debentures, and mobilization advances. The petitioner alleged that these transactions were aimed at creating private wealth out of public money.

4. Regulatory Responses and Inspections:
The Ministry of Corporate Affairs (MCA) stated that an inspection under Section 206(5) of the Companies Act, 2013, was directed in respect of three companies: Indiabulls Ventures Limited, Indiabulls Housing Finance Limited, and Indiabulls Real Estate Limited. The inspection reports indicated that loans given by IBHFL to certain companies were repaid, and the remaining issues were under examination. SEBI and NHB clarified their regulatory purview and stated that necessary audits and inspections were conducted. The NHB's special audit report observed certain non-compliances by IHFL and shared the findings with MCA, RBI, and SEBI.

5. Judicial Review and Conclusion:
The court noted that the allegations were not substantiated by evidence and that a significant portion of the loans were repaid. It emphasized that the investigation lies within the realm of the investigating agency and should only be transferred to CBI or SIT in exceptional cases. The court found that necessary investigations were already carried out by NHB and MCA, and further investigations were in progress. Consequently, the petition was dismissed, and pending applications were disposed of as infructuous.

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