A bitter ‘PIL’ for Indiabulls Group: Co dismisses accounting irregularities allegations

MUMBAI: Shares of Indiabulls Group of companies crashed on Friday, on reports of a public interest litigation in the Delhi High Court seeking probe into alleged accounting irregularities at Indiabulls Housing Finance and diversion of funds by promoters.
Indiabulls Housing, the group’s flagship company, said no such PIL had yet been filed as per records on the court’s website, and claimed “malicious intent and vested interests” behind it “to create turbulence” in the company’s stock price. The allegations raised in the purported petition leaked on social media were similar to an earlier PIL that had since been withdrawn, it said.

This is the third time allegations of fraud are being levelled against Indiabulls Housing since May, when it announced a plan to merge with Lakshmi Vilas Bank. Indiabulls Housing’s market value has more than halved since April 1, eroding nearly Rs 21,000 crore of investor wealth.

The purported PIL by the Citizens Whistle Blower Forum, led by former Delhi HC Chief Justice AP Shah and activist advocate Prashant Bhushan, sought a time-bound probe by a special investigation team into the alleged illegalities. Bhushan didn’t respond to phone calls and a message seeking comment until press time Friday.

Shares of Indiabulls Housing fell 4.6% on the NSE Friday, after declining almost 9% intraday. Indiabulls Venture declined 3.5%, while Indiabulls Integrated Services plunged 5%. Indiabulls Real Estate ended marginally lower.



The purported PIL admits that allegations are the same as in an earlier petition by one Abhay Yadav, which was subsequently withdrawn, the company said in a filing with stock exchanges. The previous petitioner had admitted that the allegations were based on incorrect and twisted data, and he had filed it at the behest of a “mastermind of blackmailing racket” who was then arrested and is in jail, it claimed.

Indiabulls Housing said instead of going to regulatory agencies, the petitioners had chosen PILs to attract attention and play into hands of blackmailers and corporate rivals at a sensitive time of merger process. The company is determined to fight out the petitioners in the court, it said.

The latest purported PIL alleges that Indiabulls Housing, through its promoters and various group companies and subsidiaries, had been advancing dubious loans to companies owned by large corporate groups which in turn had been routing that back to the accounts of companies owned by the promoters of Indiabulls, so as to increase their personal wealth. It sought directions to the Ministry of Corporate Affairs, Registrar of Companies, Serious Fraud Investigation Office, National Housing Bank, Reserve Bank of India and the Securities and Exchange Board of India to take action against the company and its promoters.

In July, BJP leader Subramanian Swamy disclosed a letter he had sent to the Prime Minister alleging the Indiabulls Group of embezzling Rs 1 lakh crore from the National Housing Bank.