Indiabulls Opposes Plea In Delhi High Court For Action Over Alleged Misappropriation Of Funds
An Indiabulls office. (Photographer: Prashanth Vishwanathan/Bloomberg News)

Indiabulls Opposes Plea In Delhi High Court For Action Over Alleged Misappropriation Of Funds

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Indiabulls today opposed a plea in the Delhi High Court seeking an investigation into the alleged illegalities, siphoning of funds and violations committed by the promoters of Indiabulls Housing Finance Ltd.

The company’s counsel argued in the court that it was ‘malicious’ and ‘malafide’ petition which was causing loss to its business and reputation.

A bench of Chief Justice DN Patel and Justice C Hari Shankar heard the arguments on the petition for nearly two hours and listed it for further hearing on Sept. 27.

The NGO alleged that in the past many years, Indiabulls Housing Finance has taken huge sums of loans from various public and private banks which means that public money is at stake, along with the money invested in Indiabulls Housing Finance by its shareholders and investors.

Also read: Indiabulls Housing Finance Refutes Allegations Of ‘Round-Tripping’ Of Money Amid Share Price Slump

The plea alleged that Indiabulls Housing Finance, through its promoters and their various group firms and subsidiaries has been advancing dubious loans to companies owned by large corporate groups.

They, in turn, have been routing the money back into the accounts of companies owned by the promoters of Indiabulls, to increase their personal wealth, it alleged.

Senior advocate Mukul Rohatgi, appearing for Indiabulls, contended that this petition was copied from an earlier plea which was filed by one Abhay Yadav in the Supreme Court and was subsequently withdrawn and the facts stated in it were also wrong.

He said the petition, based on a letter of BJP leader Subramanian Swamy to Prime Minister Narendra Modi accusing Indiabulls group of misappropriation of funds, was wrong.

He said the petitioner has mentioned in the plea that concerned authorities have failed to act against the company, so they have approached the court.

However, they have moved the court without giving any representation to any of the authorities.

Senior advocate AM Singhvi, also representing the company, said instead of a public interest litigation it was a ‘supari interest litigation’.

The senior counsel said that he was not against the mechanism of PIL but this instant petition was ‘an unruly horse’.

He claimed that Indiabulls Housing Finance is taking over The Lakshmi Vilas Bank Ltd. which is permissible under law and this merger is one of the reasons behind filing of this petition.

Even pendency of this petition is a threat to the wellbeing of the corporate firm, he said.

Senior advocate Jayant Bhushan, representing the NGO, said the facts stated in the petition are based on publicly available documents and it was not only based on Swamy’s letter but independently on facts that they know.

The counsel argued, “Rs 1 lakh crore of public money given to the company was being dealt with like this. It is the public which suffers in such matters.”

During the hearing, the bench asked the petitioner's counsel as to why they have directly come to the high court and not approached the NHB.

The PIL, filed through advocate Kamini Jaiswal, said the financial details of Indiabulls Housing Finance, with details of borrowing show that over 12,000 companies are registered at the same address as that of Indiabulls thereby suggesting a staggering number of dummy companies having been created by Indiabulls.

The petition which was filed in the apex court had alleged that money amounting to thousands of crores was siphoned off by Sameer Gehlaut, the chairman of the firm, and the directors of Indiabulls Housing Finance for their personal use.

Also read: Moody’s Downgrades Indiabulls Housing Finance’s Ratings, Changes Outlook To Negative

These companies further transferred the loan amount to other companies, which were either run, directed or operated by Gehlaut, his family members or other directors of Indiabulls, the plea had alleged.

The plea filed in the high court has sought direction to the Ministry of Corporate Affairs to investigate through the Serious Fraud Investigation Office into the irregularities into the financial affairs of Indiabulls and companies involved in transactions with it.

It has also sought direction to the Reserve Bank of India and National Housing Bank to investigate the financial affairs of Indiabulls Housing Finance and to direct a special audit of Indiabulls Housing Finance.

“The petitioner has further sought directions to the Ministry of Corporate Affairs, Registrar of Companies, SFIO, NHB, RBI, Securities and Exchange Board of India to take action against Indiabulls Housing Finance and its promoters/owners,” the plea said.

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