TaxTMI 
TaxTMI 
2024 (2) TMI 246
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....p litigation on their behalf in order to provide them anonymity and to in still in them the necessary confidence to make disclosures without fear, arrange for their objective and impartial investigation and help to take such cases to their logical conclusions in a time bound manner. 2. The petitioner has filed the instant writ petition under Article 226 of the Constitution of India seeking direction for an in-depth, thorough and time bound investigation by a SIT into various serious illegalities, violations and siphoning of funds committed by the promoters of Indiabulls Housing Finance Limited (IBHFL), its subsidiaries and their promoters. The petitioner has further sought directions to the Ministry of Corporate Affairs, Registrar of Companies (ROC), Serious Fraud Investigation Office (SFIO), National Housing Bank (NHB), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) to take action against IBHFL and its promoters/owners, who through its promoters, subsidiary companies and various group of companies, has been advancing dubious loans to companies owned by large corporate groups which in turn have been routing the money back to the accounts of companies ....
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....e methods is to create private wealth out of public money. The manner in which Indiabull group of companies is manipulating the funds, has been narrated by the petitioner, which is as under: a. By investing in Preference Shares of IB group subsidiaries. b. By investing Compulsory Convertible Debentures. These debentures have been issued to the investing companies at a rate of interest of 0.01%. c. By receipt of Mobilization Advance paid to a contractor for mobilization of resources for a project. 9. The petitioner alleged that even though few of the companies belonging to IBHFL did not have any fixed assets or not even involved in any business activity still they have extended small paid-up capital loans. Even the Directors and their office addresses are also common. 10. Petitioner has averred that the Companies Act, 2013 defines 'charge' as an interest or lien, created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage. It is the duty of every company to register with the Registrar of Companies the specific 'charge' created by the company on its assets in public domain details of those who ....
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.... (2) Where a charge is registered with the Registrar under sub-section (1), he shall issue a certificate of registration of such charge in such form and in such manner as may be prescribed to the company and, as the case may be, to the person in whose favour the charge is created. (3) Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator [appointed under this Act or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] or any other creditor unless it is duly registered under sub-section (1) and a certificate of registration of such charge is given by the Registrar under sub-section (2). (4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment of the money secured by a charge." 12. The petitioner has alleged that IBHFL has extended huge sums of loans to various group of companies owned by Indiabulls, promoted by Mr. Sameer Gehlaut, which include Americorp Group, Reliance ADAG, Chordia Group, Vatika Group and DLF Group, apart from Indiabulls' promoter group companies. I. Americorp Group: The details....
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....Pvt. Ltd. (See Annexure P11) 62.28 Joindre Finance Pvt. Ltd. (See Annexure P12) 55.13 Total 254.87 II. Reliance ADAG- The details of the loans granted by the IBHFL to Reliance ADAG companies are as under:- Sr.No. Name of the Company Loaned Amount (Rs. in crore) 1. Reliance Inceptum Pvt. Ltd. A Copy of Financial Statement of Reliance Inceptum Pvt. Ltd. for the FY 2017-18 is annexed as Annexure P17. 106 2. Zapak Digital Entertainment Limited A Copy of Financial Statement of Zapak Digital Entertainment Limited for the FY 2017-18 is annexed as Annexure P18 156 3. Reliance Big Entertainment Pvt. Ltd A Copy of Financial Statement of Reliance Big Entertainment Pvt. Ltd for the FY 2016-17 is annexed as Annexure P19 210 4. Reliance Communications Enterprises Pvt. Ltd. 200 5. Reliance Interactive Advisors Pvt. Ltd. A copy of details of charges registered with ROC of Reliance Interactive Advisors Pvt. Ltd. for the FY 2017-18 is annexed as Annexure P20 908 Total 1580 According to petitioner, how amount of Rs.570 crores out of the afore-noted funds has been invested back to the I....
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....y of Balance Sheet of Built To Live Realty FY 2017-18 is annexed herewith as Annexure P34. 3. Mahalunge Land Developers LLP 2017-18 740 A copy of Balance Sheet of Mahalunge Land Developers FY 2017-18 is annexed herewith as Annexure P35. Total 1209.550 IV. Vatika Group Companies: Petitioner averred that Vatika Group of Companies has as many as 51 companies with paid-up capital of Rs.1 lakh only whereas IBHFL has granted huge loan of Rs.4,600/- crores to these companies in a dubious manner. Petitioner has alleged that out of 51 such companies, 40 companies have paid-up capital of Rs.1 lakhs who have been granted loans ranging from 16 crores in case of Garin Developers Pvt. Ltd. to Rs.184.50/- crores in the case of Timor Developers. The details of IBHFL loan to Vatika Group Companies are as under:- Sr. No. Name of the Company Paid-up Capital (Rs. in crore) Loaned Amount (Rs. in crore) 1. Garin Developers Pvt. Ltd. 0.01 16 2. Felisa Developers Pvt. Ltd. 0.01 22 3. Valda Developers Pvt. Ltd. 0.01 23 4. Valonia Developers Pvt. Ltd. 0.01 27 5. Fonzell Developers Pvt. Ltd. 0.01 28 ....
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....(Rs.32 crore received from Indiabulls Infrastructure) 51. Sahar Land & Housing Pvt. Ltd. 50.30 Total 4601.01 With regard to the Vatika Group Companies, the petitioner further averred that 40 of its companies were operating from Flat No.621-A, 6th Floor, Devika Towers 6, Nehru Place, New Delhi, which shows that IBHFL did not doubt diligence while granting huge loans to these promoters. The petitioner has alleged that none of these companies filed 'Charges' with the MCA and for many of these companies, ownership was transferred after availing the loans, even to some employees. Thereby attempts have been made to omit the name of IBHFL in the balance-sheets. Petitioner also stated that one of the Vatika Group Companies, namely, Agnes Developers has invested back in Karkinos Constructions which is 100 percent owned by Sameer Gehlaut. Petitioner has alleged that Karnikos Constructions received Rs. 200/- crores from Agnes Developers owned by Vatika Group Companies in the form of debentures and has also received a substantial amount in the form of loan from IBHFL but this company has filed no 'Charge' with the MCA. Petitioner also point....
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....therol Builders & Developers. • Loaned money used to purchase land and advance loan to related party. (Charges filed on June 11, 2019, after the PIL was filed in the SC.) 5. Camden Builders & Developers Pvt. Ltd. 15 10.00 • 100% subsidiary of Atherol Builders & Developers. • Loaned money used to purchase land and advance loan to related party. Further, the land purchased by the company out of the loaned money has been mortgaged to create security interest in favour of Standard Chartered Bank for Rs. 400 crore loan availed by DLF Utilities Ltd. (Charges not filed; 6. Jayanti Real Estate Developers Pvt. Ltd. 39 24.82 • 100% subsidiary of Atherol Builders & Developers. • Loaned money used to purchase land and advance loan to related party. (Charges filed on June 11, 2019, after PIL was filed in the SC.) 7. Nadish Real Estate Pvt. Ltd. 76 48.37 • 100% subsidiary of Atherol Builders & Developers Pvt. Ltd. • Loaned money used to purchase land and advance loan to related party. (Charges filed on June 11, 2019, after PIL was filed in the SC.) 8. Rosalind Buil....
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.... received from group companies used to purchase land and advance loan to related party. • Compensation received from LAC, Haryana. (Charges filed June 11, after the PIL was filed in the SC, 2019, charges satisfied on June 24.) 17. Adsila Builders & Developers Pvt. Ltd. 50 5.56 • 100% subsidiary of Ananti Builders & Construction. • Loan money received from Group companies used to purchase land and advance loan to related party. • Compensation received from LAC, Haryana. (Charges filed on June 11, 2019, after the PIL was filed in the SC, charges satisfied on June 24.) 18. Zanobi Builders & Constructions Pvt. Ltd. 60 21.71 • 100% subsidiary of Ananti Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. • Compensation received from LAC, Haryana. (Charges filed on June 11, 2019 after the PIL was filed in the SC, charges satisfied on June 24.) 19. Damalis Builders & Developers Pvt. Ltd. 110 58.07 • 100% subsidiary of Ananti Builders & Construction. • Loan money recei....
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.... and advance loan to related party. • Compensation received from LAC, Haryana. (Charges filed on June 11, 2019 after the PIL was filed in the SC; charges satisfied on June 24.) 26. Nayef Estates Pvt. Ltd. 36 24.00 • 100% subsidiary of Felicite Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. (Charges filed on June 13, 2019 after the PIL was filed in the SC; charges satisfied on June 27.) 27. Pegeen Builders & Developers Pvt. Ltd. 14 11.67 • 100% subsidiary of Felicite Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. (Charges filed or June 11, 2019 after the PIL was filed in the SC) 28. Shikhi Estates Pvt. Ltd. 20 16.67 • 100% subsidiary of Felicite Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. • Compensation received from LAC, Haryana. (Charges filed on June 13, 2019 after the PIL was filed in the SC; charges satisfie....
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....y received from group companies used to, purchase land and advance loan to related party. 37. Akina Builders. & Developers Pvt. Ltd. 35 22.27 • 100% subsidiary of Felicite Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. (Charges filed on June 11, 2019 after the PIL was filed in The SC, charges satisfied on June 24.) 38. Laxmibanta Estates Developers Pvt. Ltd. 37 30.83 • 100% subsidiary of Felicite Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. (Charges filed on June 13, 2019 after the PIL was filed in the SC; charges satisfied on June 24) 39. Arlie Builders &Developers Pvt. Ltd. 90 52.08 • 100% subsidiary of Felicite Builders & Construction. • Loan money received from group companies used to purchase land and advance loan to related party. (Charges filed on June 13, 2019 after the PIL was filed in the SC; charges satisfied on June 24) 40. Fabrizio Real Estates Pvt. Ltd. 29 24.17 100% subsidiary of Fe....
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.... 2. Malayeka Builders & Developers Pvt. Ltd. (DLF Group Company) 22.00 3. Naja Builders & Developers Pvt. Ltd (DLF Group Company). A copy of relevant pages of Annual Return of Naja Builders & Developers for FY 2017-18 is annexed herewith as Annexure P58. The amount given in 2014-15 and is still outstanding. A copy of relevant of pages of Balance Sheet for FY 2014-15 of Naja Builders & Developers Pvt. Ltd. Is annexed herewith as Annexure P59. 22.00 Total 66.00 Petitioner has alleged that companies owned by DLF Group Company have received huge loans from IBHFL. 14. During the course of hearing, learned counsel appearing on behalf of petitioner alleged that various irregularities have been committed by the companies promoted by the Indiabulls Group, primarily ploughing away public money into private equity by issuing compulsory convertible debentures and even though these instruments are not generally redeemable, however, the Indiabulls Group of Companies has promoted redemption thereon. It has been alleged that the amount worth thousands of crores is involved in the malpractices adopted by these companies. 15. Learned counsel relied ....
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....f about Rs.614/- crores in India Best Buy flowing of money to and fro from Myrina Builders Pvt. Ltd. 17. Mugwort Real Estate- It is a company stated to be owned by Sameer Gehlaut and has no work history and resources of finance in the financial statement. The proceeds of mobilised advance have been used to acquire equity shares of Gloxina Infrastructure, EMU Construction and Keysha Mining. Petitioner has averred that all these companies are owned and managed by Sameer Gehlaut. 18. Petitioner has alleged that in July, 2016, the Income Tax Department had carried out massive raids in the premises of Indiabulls and its companies located in Mumbai and Delhi and in the year 2019, directed Indiabulls to pay Rs. 3 crores as tax and interest charges on the undisclosed income. Reliance is placed upon news report dated 14.06.2019 published in Business Standard (Annexure P-67). Petitioner alleged that in December, 2018, the Indiabulls had settled a few cases before SEBI and paid Rs. 48 lakhs as settlement fees. To submit so, reliance is placed on news report published in Economic Times (Annexure P-68). 19. According to petitioner, in terms of Housing Finance Companies - Corporate Gove....
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....inistry of Corporate of Affairs has stated that it had ordered inspection under Section 206(5) of the Companies Act, 2013 on 23.07.2018 in respect of three companies i.e., IBVL, IBHFL and IBREL and the report was awaited. However, as per Inspection reports dated 15.11.2019 and 19.11.2019, the loans given by IBHFL to five companies, i.e. DLF, Americorp, Vatika, ADRG, Chordia, which was the subject matter of the present writ petition have been repaid and the loans given to the other entities, i.e. Vatika and Chordia, are reported to be 'Standard Accounts' and the remaining issues/violations reported in the Inspection Report were under examination. (PDF-2388) The inspection report in respect of Indiabulls Housing Finance Limited were submitted to the Central Government on 15.11.2019 and 03.02.2022 respectively and based upon these reports the Central Government vide Letter dated 13.12.2019 and 23.05.2022 issued instructions in respect of Indiabulls Housing Finance Limited. Pursuant thereto, Inspection Report and Supplementary Inspection Report in respect of Indiabulls Housing Finance Limited was submitted to the Central Government on 28.01.2020 and 03.03.2022 respectively. Based upon ....
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....al audit of IHFL was conducted. It is further stated that since NHB had the supervisory power to purview the functioning of Indiabulls Housing Finance Ltd. having granted certificate of registration by NHB, no other company mentioned in the present writ petition could be audited. In the counter-Affidavit, the NHB has further stated that the audit was conducted by M/s Ravi Ranjan & Co. LLP, (Chartered Accountants) hereinafter referred to as the Auditor. Respondent-NHB has stated that none of the companies mentioned in the writ petition except Indiabulls Housing Finance Ltd. were in the regulatory, therefore, the NHB could not get the records/transactions of the said companies verified and a Special Auditor has conducted an audit of the records/transactions of the Indiabulls Housing Finance Limited and submitted its report vide e-mail dated 07.04.2020. As per the Auditor, the investment made in Americorp Group, namely, Jasol Investment & Trading Pvt. Ltd. and Joindre Finance Pvt. Ltd. are as under:- Details of Investment by Jasol Investment and Trading Company Private Limited (Rs. In Crore) Name of the Company Mode 31.03.2016 31.03.2017 31.03.2018 31.03.....
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..... had infused funds in SG Group Companies. The Auditor's observation is that the ADAG Companies had repaid the loans during the review period. Sr.No. Borrower's Name As on 31^st March, 2019 O/s 1 Reliance Big Entertainment Pvt. Ltd. Nil ** The Ledger accounts of the same could not be extracted as Loans were fully repaid before the beginning of period under review. 2. Reliance Communications Enterprises Pvt. Ltd. 3. Reliance Interactive Advisors Private Limited ** 4. Reliance Inceptum Pvt. Ltd. 5. Zapak Digital Entertainment Ltd. 6. Big Flicks Pvt. Ltd. 7. Reliance Land Private Limited 29. With regard to investment made by Reliance Corporate Advisory Services Ltd. in SG Group Companies, the report of the Auditor observed that OCDs were issued to Reliance Capital Advisory Services Pvt. Ltd., however, the Auditor could not identify further utilisation of the funds realised through issue of the OCDs in case of Reliance Minerals Pvt. Ltd. and Meru Minerals Pvt. Ltd. The Auditor also reported that Reliance Interactive Advisors Private Limited did not have loan outstanding during the period under review. The Auditor has remarked ....
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....ed or belong to same group. However, while verifying the end use of funds from AFS the auditor observed that borrowed fund has been transferred from Dream Cart group companies to Vatika Ltd for purchase of land. 35. One hundred ninety eight loans were advanced by IHFL to fifty two Vatika Group entities as alleged in the petition and out of it, three loans were fully repaid by Vatika Group to IHFL as on 31.03.2019 and some of the loan accounts were nill as on 31.12.2019. Out of fifty two companies, one company, namely, Aspire Promoters Pvt. Ltd. did not have any outstanding. Besides ADPL, i.e. Agnes Developers Private Limited, who had further invested amount in Karkinos Construction Private Limited and India Best Buy Private Limited, the Auditor observed that the loans stood completely paid. 36. DLF Group Companies:- With regard to three companies belonging to DLF Group, namely, Naja Builders and Developers Private Limited, Cotys Buildcon Private Limited and Malayeka Builders and Developers Private Limited had advanced loans to fifty two DLF Group of Companies as on 31.12.2019 and there was outstanding balance of 0.03 crores in case of DLF Home Developers Ltd. and rest of the ....
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....from the provisions of Chapter IIIB of the RBI Act except section 45-IA of that Act. Therefore, consequent to the amendment of the NHB Act and the notification dated issued by the Reserve Bank of India, the Reserve Bank has the powers to regulate and supervise housing finance companies as provided in the NHB Act as well as in Chapter IIIB (except section 45 -lA) of the RBI Act. 39. The respondent-RBI has further averred that some of the companies mentioned in the petition, namely, Americorp Capital, Jasol Investment & Trading, Joindre Finance Pvt Ltd., Reliance Capital Limited etc. are Non Banking Financial Companies (NBFC) as per under Section 450 IA of the RBI Act, however, RBI has no information on the companies mentioned in the petition which are not NBFC nor housing finance institutions. The RBI had also conducted a scrutiny of three Americorp group of companies, namely, Jasol Investment & Trading Company Pvt. Ltd., Joindre Finance Pvt. Ltd. and Americorp Capital Pvt. Ltd., from 08.01.2020 to 10.01.2020 with regard to IBHFL had extending loans, which have been ploughed back to Indiabulls group companies through Equity investment, and it was found that IBHFL had actually len....
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....r Americorp Group companies received about Rs. 151 crores from IBHFL, which is invested back in four Indiabulls Group companies, including IBHFL. ii. Out of a total loan of Rs. 1580 crore that five Reliance ADAG companies received from IBHFL in loans, Rs. 570 crores was invested back in nine Indiabulls subsidiaries through debentures iii. Three Chordia Group companies received Rs. 1209.50 crores from IBHFL in loans. This loan was squared up through money diverted from Mahalunge Land Developers (group Company of Chordia) from the amount borrowed from IBHFL. In addition Rs.50 crores was paid as professional fee to Indiabulls Real Estate Limited. iv. IBHFL loaned about Rs. 4600 crore to 51 companies of Vatika Group, many of which were pass-through companies, with a paid-up capital of barely Rs. 1 lakh. Agnes Developers, one of the Vatika Group companies, ploughed back Rs. 400 crores in Karkinos Constructions and India Best Buy in 2014-15 in the form of debentures. V. Similarly, IBHFL has put in more than Rs. 1705 crore in 48 companies of DLF Group, many of which have negative worth." 44. For alleging the afore-noted siphoning of funds by the IBHF....
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....5) of the Companies Act, 2013 in respect of three companies i.e. IBVL, IBHFL and IBREL was directed on 23.07.2018 and as per Inspection reports dated 15.11.2019 and 19.11.2019, the loans given by IBHFL to five companies, i.e. DLF, Americorp, Vatika, ADRG, Chordia, which is the subject matter of the present writ petition, have been repaid and the loans given to the other entities, i.e. Vatika and Chordia, are reported to be 'Standard Accounts' and the remaining issues/violations reported in the Inspection Report were under examination. The final inspection reports in respect of Indiabulls were submitted to the Central Government on 15.11.2019 and 03.02.2022 and in respect of Indiabulls Real Estate limited, reports were submitted to the Central Government on 28.01.2020 and 03.03.2022. These reports were also shared with SEBI, NHB and State Government of Haryana. 48. The respondent-SEBI has in crystal clear words taken the stand that the loans advanced by the Indiabulls or its subsidiaries or group of companies fall under the purview of National Housing Board and Reserve Bank of India. In turn, the respondent National Housing Board (NHB) in its Affidavit has stated that even though....
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....ate Limited, had fully repaid the loan. 53. Hence, the Auditor's report of NHB speaks a volume that necessary investigations and inspections were carried out pertaining to the financial accounts of the companies belonging to the Indiabulls group of companies and in most of the cases, the loans advanced by IBHFL stood repaid and for the remaining, the investigation was in progress. 54. The petitioner has also relied upon a letter dated 28.07.2019 written by Dr. Subramanian Swamy to the Prime Minister in respect of alleged embezzlement of amounts by Indiabulls and his tweets in this regard. The respondent-Indiabulls is stated to have preferred CS(OS)475/2019, against Dr. Subramanian Swamy, which was dismissed as withdrawn on 11.10.2019, however, this Court vide order dated 13.09.2019 had passed interim directions to remove/ take down the offending false messages from their portals. 55. What is relevant to note here is that petitioner has also relied upon a hype created in news reports on filing of a writ petition filed by Abhay Yadav (W.P.(Crl.) 20710/2019) in the Hon'ble Supreme Court, however, according to respondent-Indiabulls the said present petition was withdrawn by hi....
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.... failed to disclose transactions with related parties and other relevant information in violation of the regulations framed by SEBI and provisions of securities' legislation, observed as under:- "34. This Court does have the power under Article 32 and Article 142 of the Constitution to transfer an investigation from the authorized agency to the CBI or constitute an SIT. However, such powers must be exercised sparingly and in extraordinary circumstances. Unless the authority statutorily entrusted with the power to investigate portrays a glaring, willful and deliberate inaction in carrying out the investigation the court will ordinarily not supplant the authority which has been vested with the power to investigate. Such powers must not be exercised by the court in the absence of cogent justification indicative of a likely failure of justice in the absence of the exercise of the power to transfer. The petitioner must place on record strong evidence indicating that the investigating agency has portrayed inadequacy in the investigation or prima facie appears to be biased. 35. Recently, in Himanshu Kumar v. State of Chhattisgarh, this Court, speaking through one of us (....
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....st be transferred to the CBI, we are guided by the parameters laid down by this Court for the exercise of that extraordinary power." (emphasis supplied)" 60. The Hon'ble Supreme Court in Vishal Tiwari Vs. Union of India (Supra), held as under:- "73. Before concluding, we must observe that public interest jurisprudence under Article 32 of the Constitution was expanded by this Court to secure access to justice and provide ordinary citizens with the opportunity to highlight legitimate causes before this Court. It has served as a tool to secure justice and ensure accountability on many occasions, where ordinary citizens have approached the Court with well-researched petitions that highlight a clear cause of action. However, petitions that lack adequate research and rely on unverified and unrelated material tend to, in fact, be counterproductive. This word of caution must be kept in mind by lawyers and members of civil society alike." 61. Applying the dictum of the Hon'ble Supreme Court to the case in hand, this Court is of the opinion that the allegations levelled by the petitioner are not substantiated as these are not supported by any evidence. The balance sheets or....