SC Pulls Up CBI, Slams SEBI's 'Double Standards' Over 'Reluctance' to Probe Allegations Against Indiabulls

Questioning the CBI and SEBI's "reluctance" to probe allegations of "dubious transactions" against Indiabulls Housing Finance Limited (IHFL), now known as Sammaan Capital Limited, the Supreme Court on Wednesday ordered the agency director to hold a meeting with SEBI, SFIO and ED to look into the matter.

A bench of Justices Surya Kant, Ujjal Bhuyan and N Kotiswar Singh, which also pulled up the Ministry of Corporate Affairs (MCA) for the compounding of multiple offences committed by IHFL, came down heavily on the Securities Exchange Board of India (SEBI) over the "double standards" adopted by the market regulator in different cases over its jurisdiction to probe into illegalities.

The top court asked what was preventing authorities from filing an FIR and probing the allegations. It said that in the meeting to be held by the CBI director with officials of SEBI, SFIO and the ED, the closure of cases by the MCA shall not be an impediment and all allegations levelled by NGO 'Citizens Whistle Blower Forum', represented by advocate Prashant Bhushan, will be looked into.

The top court also asked the Delhi Commissioner of Police to furnish original records of the complaints made by the Enforcement Directorate (ED) for probing into the allegations against IHFL and the basis on which the said complaint was refused to be probed by the Economic Offence Wing (EOW).

It directed that a senior official of the EOW of Delhi Police should be physically present with all original records on the next date of hearing on December 3.

During the hearing, the Chief Justice of India designate, Justice Kant, said, "We are surprised to see that the CBI has adopted a very cool kind of attitude and approach in this case. We have never seen such a friendly attitude, as we find in this case. We are sorry to observe this." The bench further said, "This is ultimately public money, it's not somebody's private self-earned money that is being circulated here and there. There is a strong element of public interest involved. Even if 10 per cent of allegations are correct, there are some large-scale transactions which can be dubbed as dubious".

It added that once a doubt is created, the Central Bureau of Investigation (CBI) has to register an FIR, which may not be against 'A' person or 'B' person.

"During the investigation, somebody may or may not be found involved. But registering an FIR will strengthen the hands of the ED, SFIO, SEBI. What really is preventing the authorities? Why is the MCA indulging in closing the matter like this? What is their interest in this?" the bench told Additional Solicitor General SV Raju, appearing for the Centre and probe agencies.

Bhushan alleged large-scale irregularities in the affairs of Indiabulls, a non-banking financial company, and claimed that IHFL and its erstwhile promoters advanced dubious loans to companies owned by large corporate groups, which in turn were round-tripping the money back to the accounts of companies owned by the promoters of Indiabulls to increase their personal wealth.

During the hearing, Bhushan alleged that erstwhile promoter Sameer Gehlaut had fled the country and was now living in London and was purchasing a plane, yacht and a bungalow.

Senior advocate Abhishek Singhvi said Gehlaut had exited the company way back in 2022-23 and does not hold a single share in it. The company now is 'Sammaan Capital' where several foreign companies have their stakes.

Later, senior advocate Mukul Rohatgi, appearing for the company, refuted the allegations levelled by Bhushan.

The bench said it has not gone into the merit of the allegations and only asked the CBI director to hold a meeting with officials of other agencies to look into it.

When the order was dictated by the bench, a counsel appearing for SEBI showed reluctance in investigating the allegations, citing lack of jurisdiction.

Justice Kant observed, "When the question of taking over properties and selling comes, then you say we are the only authority in the country with jurisdiction. But when the question of investigation comes, you show reluctance and shy away. Why, because your officers have some vested interest? When we are conferring you jurisdiction, then what is the problem?".

The judge further said, "Every day we are seeing double standards of SEBI. In one of the matters where I constituted a high-powered committee, your stand was that only SEBI has the right to auction the properties. And what you have been auctioning, we know that! A property worth Rs 30 crore was sold for just Rs 2 lakh." The bench said that when the court was conferring it the responsibility, the market regulator should perform its statutory duty.

"You say you don't have power. Why are your officers getting a salary if you do not have power?" remarked Justice Kant.

The bench asked the CBI director to file an affidavit on the deliberations that are to be held by officials of other agencies.

On October 8, the top court asked the MCA to place before it the original records of the closure of illegalities pointed out by SEBI in the affairs of IHFL.

The company has refuted the allegations contained in the petition and said all were looked into by all relevant regulators and investigation agencies like RBI, MCA, SEBI, ED, CBI, EOW etc., and none of the averments were substantiated.

On July 30, the CBI told the top court that it was not investigating any irregularities in IHFL and has not found any wrong in the company disbursing loans to corporate entities.

The NGO has challenged the February 2, 2024, order of the high court refusing to order an investigation into the matter.