The Supreme Court on Wednesday witnessed sharp exchange of words between Senior Advocate Harish Salve and advocate Prashant Bhushan during the hearing of a plea for an investigation into alleged financial irregularities and fund diversion by Indiabulls Housing Finance Ltd (IHFL), now renamed Sammaan Capital Ltd .
A Bench of Justices Surya Kant, Ujjal Bhuyan and NK Singh was hearing a petition filed by the NGO, Citizens Whistleblower Forum (CWBF), which has sought a court-monitored probe into alleged round-tripping of funds and money laundering by IHFL and its promoters.Appearing for CWBF, Bhushan at the outset contended that the company and its promoters had extended massive loans to shell entities and diverted funds back into promoter-linked firms. He said that the allegations were supported by affidavits from the Securities and Exchange Board of India (SEBI).
Explaining the scale of the alleged transactions, Bhushan submitted that one of the companies with negligible financial worth had received loans exceeding Rs1,000 crore.“Indiabulls, now known as Sammaan Capital, has given some Rs400 crores of loans to many of these companies. One company of net worth of Rs1 lakh was given a loan of Rs1,000 crore. Sameer Gehlaut (founder and chairman of IHFL) had fled the country and is living in London. He didn’t answer multiple summons issued by CBI in the Yes Bank case. Just see the findings in the SEBI affidavit. They are shocking. They substantiate the allegations we had made,” Bhushan said.
Salve, representing IHFL founder Gehlaut, strongly opposed the petition, calling it an instance of misuse of public-interest litigation.“This is such blackmail litigation. If an investigation is needed, it is into these NGOs. All the agencies have filed affidavits and nothing has come out. What is this kind of witch-hunting? Who is this stranger? I am objecting to the maintainability of this petition,” Salve said.
As the exchange grew more heated, Bhushan alleged that Salve was unaware of the case records as he was not present in India.
“Mr Salve doesn’t even know what the affidavits are. He is sitting in London,” Bhushan said. Salve replied with equal force. “Whichever city you are sitting in, you can read an affidavit written in simple English,” Salve retorted. "Mr Salve doesn’t even know what the affidavits are. He’s sitting in London", Bhushan said.
The courtroom exchanges came amid larger questions of regulatory oversight. The Bench noted that the Central Bureau of Investigation (CBI) had said the Enforcement Directorate (ED) may continue investigating IHFL’s affairs. It, therefore, sought clarity from the ED on its stand.Upon being told that most of the regulatory bodies had given a clean chit to IHFL, the Court asked Additional Solicitor General SV Raju, representing the Union, to come up with a detailed report.
"Mr. Raju we would like to see the original report. And we would also like to know in how many cases you have been so magnanimous in closing hundreds of objections. We would like to see that original report," Justice Kant said.In its order, the Court directed the Union Ministry of Corporate Affairs (MCA) to produce the original records concerning the compounding of irregularities flagged by SEBI and directed that a senior officer be present in court with the reports.
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