Indiabulls probe: SC slams Sebi, CBI and MCA for 'passive approach'

SC criticised Sebi, the CBI and the MCA for inconsistent and passive handling of allegations against IHFL, now Sammaan Capital, and directed coordinated action and fresh affidavits in the case

The Supreme Court on Wednesday came down heavily on the Securities and Exchange Board of India (Sebi), the Central Bureau of Investigation (CBI), and the Ministry of Corporate Affairs (MCA) for what it called a “passive approach” in probing allegations against Indiabulls Housing Finance Ltd (IHFL), which is now Sammaan Capital. 

The case arises from a petition filed by Citizens Whistle Blower Forum, a non-governmental organisation (NGO), seeking a special investigation team (SIT) probe into alleged irregularities committed by the company. The NGO’s petition alleges that loans were extended by IHFL to companies that routed the money back to firms promoted by IHFL’s erstwhile promoter Sameer Gehlaut. 

A Bench of Justices Surya Kant, Ujjal Bhuyan, and N Kotiswar Singh sharply criticised Sebi, flagging what it saw as inconsistencies in the regulator’s conduct. “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,” Justice Kant asked.

 

“(What is the problem) when we are conferring you jurisdiction. When we want to give you some authority, why are you reluctant? Every day we see double standards of Sebi," Justice Kant said.

 

Referring to a past instance where the apex court constituted a high-powered committee, Justice Kant said Sebi’s stand was that it was the only agency that had the right to auction properties.

 

"And what you have been auctioning, we know that! Thirty crore (₹30 crore worth of) property, you have sold in a few lakhs. 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.

 

The bench also expressed dissatisfaction with the CBI’s handling of the case.

 

“Very surprisingly, the 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… This is ultimately public money… Even if 10 per cent of the allegations is correct, still there are some large-scale transactions, which can be dubbed dubious. Once doubt is created, you register an FIR… What really prevents the authorities? Why is the MCA indulging in closing the matter like this? What is their interest in this,” Justice Kant asked.

 

Responding to the observations made in the court, Senior Advocate Mukul Rohatgi, representing Sammaan Capital, said: “The present petition before the Supreme Court does not contain any allegation against Sammaan Capital. The court has referred to concerns raised about the previous promoter, Mr Sameer Gehlaut, who has no shareholding or involvement in the company today. The court has clarified in its order that it has made no observations on the merits of these allegations, and has merely permitted the authorities to re-examine the matter.”

 

He added, “We have no objection to this process. Since there is no allegation from any authority against Sammaan Capital, we are fully open to any inquiry the agencies may wish to conduct — once, twice, or even thrice. We have nothing to hide.”

 

In a statement, Sammaan Capital reiterated: “The erstwhile promoter, Mr Sameer Gehlaut, had exited the company way back in 2022-23, and does not hold a single share in the company. The allegations contained in the petition have been looked into by all relevant regulators and investigation agencies like the RBI, NHB, MCA, Sebi, ED, CBI, EOW, etc., and none of the allegations against the company has been substantiated.”

 

The petition in the top court alleges wide-ranging financial irregularities involving round-tripping, violations under the Companies Act, and siphoning of funds by the promoters of Indiabulls and its subsidiaries. Earlier proceedings had noted that even the CBI’s own filings suggested that money-laundering allegations carried substance, with the ED (Enforcement Directorate) already examining related transactions. The absence of an FIR on the predicate offence, however, remains a key sticking point.

 

Additional Solicitor General (ASG) S V Raju, appearing for the CBI and Serious Fraud Investigation Office (SFIO), told the court that steps had been initiated before a magistrate under Section 156(3) CrPC (now Bharatiya Nagarik Suraksha Sanhita) and the Delhi Police’s Economic Offences Wing (EOW). But he acknowledged that these efforts had not led anywhere.

 

Advocate Prashant Bhushan, representing the petitioner, urged the court to direct the CBI to register an FIR, arguing that the affidavits filed by Sebi and the central investigative agency themselves provided enough material to initiate a probe. He also proposed forming an SIT comprising senior officers from Sebi, CBI, SFIO and ED.

 

ASG Raju assured the court that the CBI director would convene a joint meeting with senior officials of all four agencies. At this stage, it emerged that Sebi was represented by a different counsel, not the ASG, and the market regulator’s reluctance to join in prompted Justice Kant’s stern rebuke.

 

The court also sought a fresh affidavit from the CBI after being informed that the ED would soon file a new complaint with the agency. Separately, the Delhi Police commissioner was directed to appoint a senior EOW officer to submit all records relating to the earlier “inquiry” into the ED’s complaint, and explain how the conclusion was drawn that no cognizable offence was disclosed. The matter will be heard next on December 17.

 

On July 30, the CBI told the top court that it was not investigating any irregularities in IHFL, and had not found any wrongdoing in the company disbursing loans to corporate entities. The NGO has challenged the February 2, 2024, ruling of the high court refusing to order an investigation into the matter.

 

Meanwhile, Sammaan Capital shares tanked over 12 per cent after the top court remarks. The stock ended at ₹159.75 apiece, down 12.5 per cent over its previous close.