Indiabulls Housing Finance Limited, the flagship company of the Indiabulls group, collaborated with large conglomerates including the Reliance Anil Dhirubhai Ambani Group and the DLF Group to divvy up vast amounts of public money by rerouting it through shell companies, according to a public-interest litigation submitted today in the Delhi high court. The PIL stated that IBHFL borrowed large sums from various private and public banks, and used a complex maze of shell companies to extend loans to the tune of thousands of crores to firms owned by these large business groups. In turn, the petition said, the groups invested money in entities owned by the promoters of Indiabulls, including its founder and chairman, Sameer Gehlaut. “The intent of all these methods is to create private wealth out of public money,” the PIL noted. It termed these transactions “round tripping” and a “scam” of those carried out by the ICICI Bank and Dewan Housing Finance, in which a “huge amount of public money involving lakhs of crores is being looted.” The PIL stated: “The clout of the promoters of these companies is such that the regulators have closed their eyes to these frauds happening right under their noses.”
The companies named in the PIL include Anil Ambani’s Reliance ADAG; the DLF Group, promoted by Kushalpal Singh; the Americorp Group, promoted by Harish Fabiani, a Spain-based non-resident Indian; the Vatika Group and the Chordia Group, both real-estate companies. According to the petition, IBHFL loaned close to Rs 9,248 crore to these five companies. It stated that Reliance ADAG received Rs 1,580 crore in loans and invested Rs 570 crore back in Indiabulls, while DLF received Rs 1,705.54 crore as loans and invested at least Rs 66 crore in a company owned by Gehlaut. IBHFL lent a whopping Rs 4,601.01 crore to 51 companies of the Vatika Group, owned by Gautam Bhalla, the petition said. It further stated that many Indiabulls shell companies have been indulging in various other malpractices, involving several thousand crores of rupees.
The PIL was filed by the Citizen Whistle Blowers Forum, a civil-society group that aims to provide a platform to whistleblowers and to litigate on their behalf. The “round tripping” of funds by IBHFL and its promoters is in violation of statutes relating to income-tax evasion, Reserve Bank of India regulations and the rules of the Securities and Exchange Board of India and National Housing Bank, the petition stated. It demanded a special investigation team look into Indiabulls’ finances and the “illegalities, violations and siphoning” committed by the IBHFL’s promoters.
IBHFL is the second-largest home-finance company in India, with 220 branches in 110 cities and towns. According to the PIL, it contributes roughly eighty percent of the group’s turnover. The PIL described IBHFL’s financial status based on documents in the public domain: in the financial year 2017–18, IBHFL disbursed loans worth Rs 1,22,578 crore, a growth of 34.3 percent from the previous year. Its revenue grew by 25.1 percent from the previous year, to Rs 14,640 crore, while its profit after tax was Rs 3,847 crore. However, the PIL noted, the company’s outstanding debt was Rs 96,204.58 crore. As of March 2019, its liabilities stood at Rs 1,13,463.50 crore—about thirteen crores higher than the previous year. Its net worth is Rs 17,258.92 crore. The PIL emphasised that IBHFL had borrowed from a number of public-sector undertakings. This means that “public money is at stake, along with the money invested in IBHFL by its shareholders and investors,” the PIL said.