High Court Dismisses Plea Alleging Financial Irregularities by Indiabulls; Says No Substantial Evidence Found

In a significant judgment, the Delhi High Court has dismissed a public interest litigation (PIL) seeking an in-depth investigation into the alleged financial irregularities and fund siphoning by Indiabulls Housing Finance Limited (IBHFL) and its group companies. The bench, comprising Justice Suresh Kumar Kait and Justice Neena Bansal Krishna, held that there was no substantial evidence to support the allegations.

The petitioner, Citizens Whistle Blower Forum, represented by advocates including Mr. Prashant Bhushan, had sought the court's intervention for a Special Investigation Team (SIT) probe into the alleged financial misconduct by Indiabulls. They contended that the company and its subsidiaries were involved in dubious loans and investments, violating several statutory provisions.

However, the bench observed, "Due to articles published in magazines and newspapers, the shareholders of the accused companies were jolted and they were made to suffer huge losses." The court further noted that "the jurisdiction of investigation lies within the realm of the 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."

In its detailed judgment, the court referred to the counter affidavits and inspection reports from various regulatory bodies, including the Ministry of Corporate Affairs, Reserve Bank of India (RBI), and the National Housing Bank (NHB). These reports indicated that most loans in question had been repaid and those remaining were considered standard accounts.

The court also highlighted the lack of evidence substantiating the petitioner's claims and observed that the ongoing investigations by regulatory authorities were sufficient. "The power to transfer an investigation must be used 'sparingly' and only 'in exceptional circumstances'," the court remarked, citing the Supreme Court's directives in similar cases.

Date of Decision: February 2, 2024

CITIZENS WHISTLE BLOWER FORUM VS UNION OF INDIA AND ORS.