The Supreme Court Wednesday questioned the Securities and Exchange Board of India (Sebi) why it was reluctant to probe allegations of round-tripping of funds, violations of the Companies Act, and siphoning of funds against the promoters of Indiabulls Housing Finance Limited (IHFL), now known as Sammaan Capital Limited.
Hearing a plea by the NGO Citizens Whistle Blower Forum seeking a probe by a Special Investigation Team (SIT) into the charges, Justice Surya Kant, presiding over a three-judge bench, apparently compared the market regulator’s responses in different cases.
“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… Because your officers have some vested interest? When we want to give you some authority, why are you reluctant?”
“Every day, we see 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! (Rs) 30 crore property, you have sold for a few lakhs (of rupees). When courts are instructing, you should perform your statutory duty. You say you don’t have power. Why are your officers getting a salary if you do not have power?” Justice Kant asked.
IHFL has been accused of providing questionable loans to companies with minimal net worth, which allegedly funnelled the money back to businesses owned by the promoters to increase their personal wealth.
Appearing for the petitioner, Advocate Prashant Bhushan, raised the non-registration of FIR for the predicate offence before the bench also comprising Justices Ujjal Bhuyan and N Kotiswar Singh. The court then wondered why the Central Bureau of Investigation (CBI) was keeping a “cool attitude” in the matter.
Supreme Court flags public interest
“Very surprisingly, CBI has 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. This is ultimately public money, it is not somebody’s private self-earned money that is being circulated. There is a strong element of public interest,” noted Justice Kant.
Story continues below this ad
“Even if 10 per cent of allegations are correct, still, there are some large-scale transactions which can be dubbed as dubious. Once doubt is created, you register an FIR. It need not be against A person, 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 prevents the authorities?” asked Justice Kant.
Referring to allegations that the Ministry of Corporate Affairs had compounded about 100 violations referred to in a Sebi report, he asked, “Why is the ministry indulging in closing the matter like this? What is their interest in this?”
Bhushan contended that the responses of the CBI and Enforcement Directorate (ED) in the matter provided sufficient grounds to file an FIR and urged the court to direct its registration.
Additional Solicitor General S V Raju, appearing for the CBI and Serious Fraud Investigation Office (SFIO), assured the court that the CBI director will convene a meeting of officials from all the agencies to look into the issue.
Story continues below this ad
Following Raju’s statement that they would file a fresh complaint with the CBI, the court asked the agency to file a fresh affidavit.
During the last hearing, Senior Advocate Harish Salve, appearing for IHFL, had said that the petition before the Supreme Court was a “cut-and-paste” of a similar petition dismissed by the Delhi High Court. He termed it a case of blackmail. Senior Advocate A M Singhvi also defended IHFL, saying the allegations had already been investigated by seven agencies and dismissed.
