Indiabulls group involved in massive financial irregularities, alleges petition in Delhi High Court

The Delhi High Court on Friday issued notice to the Centre on a Public Interest Litigation that has sought an investigation into alleged financial irregularities by the Indiabulls group, the owners of the country’s second-largest housing finance company.

The petition, filed by Citizens Whistle Blower Forum, a civil society organisation, claimed that the Indiabulls Housing Finance Limited has over the years taken large loans from public and private banks. Since the alleged irregularities involve public money, the petition argued that a comprehensive investigation is a necessity.

The Delhi High Court has issued a notice to the company, the Reserve Bank of India, the Securities and Exchange Bureau of India and the Ministry of Corporate Affairs. The case comes up next on December 13.

The petition alleges that Indiabulls Housing Finance Limited and companies owned by its promoters have round-tripped large sums of money by forwarding loans to a web of companies. Some of the companies allegedly used to bring money back to the group and entities owned by its promoters have too little paid-up capital, business or assets to warrant such loans, the petition alleges. Many of them share a single address on their registration, the petition claims.

Five large group of companies have in particular been named in the petition: Anil Ambani’s Reliance ADAG; Americorp Group, promoted by Spain-based Non Residential Indian Harish Fabiani; the DLF Group; the Vatika Group and the Chordia Group, both involved in real estate business. In all, the five group of companies received loans worth over Rs 9,000 crore, the petition alleged.

“IBHFL [Indiabulls Housing Finance Limited] has been extending huge loans to various companies and these companies in turn are routing a substantial part of the money back as investment in equities to companies apparently belonging to the key-shareholders/promoters of IBHFL including Sameer Gehlaut, the founder and Chairman of IBHFL and his family members,” the petition alleges.

It adds: “In other words, borrowing companies bestow huge benefits to the key shareholders and Chairman of IBHFL for the favour they get in the form of loans from IBHFL.”

Scroll.in sent an email to Indiabulls seeking its response to the allegations made in the petition. The company is yet to respond to the email. Similarly, Scroll.in has sent emails seeking responses from Reliance ADAG and DLF. This article will be updated if a response is received.

In a statement made to Firspost on September 10, soon after the first report on the petition appeared in Caravan magazine, Indiabulls said the petition had been “leaked in the social media with malicious intent and vested interests to create turbulence in the stock price of the Company and fulfill ulterior motives... The Company is determined to fight out the petitioners in court.”

The Chordia group does not provide email contacts on its website. The phone numbers listed were not attended to. The Vatika Group website does not provide an email address for media contact and the phone line was unreachable despite several attempts. Harish Fabiani’s Americorp does not seem to have a functioning website.

This article will be updated if they respond.

Reliance ADAG group

The petition alleged that “out of a total loan of Rs 1580 crore that five Reliance Anil Dhirubhai Ambani Group companies received from Indiabulls in loans, Rs 570 crore were invested back in nine Indiabulls subsidiaries through debentures”.

The five companies named are: Reliance Inceptum Pvt. Ltd, Zapak Digital Entertainment Limited, Reliance Big Entertainment Pvt. Ltd, Reliance Communications Enterprises Pvt. Ltd and Reliance Interactive Advisors Pvt. Ltd.

The Rs 570 crore that was alleged to have been ploughed back into Indiabulls and companies owned by its promoters were spread across nine subsidiaries of the group.

DLF Group

The petition alleged that Indiabulls “has given as loans more than Rs. 1705.54 crore in 48 companies of DLF Group”.

It alleged: “Many of these companies have negative worth, and all are pass-through companies which have been used to garner huge sums of loans and use them for purposes other than intended ones”.

Of the transactions with DLF group companies, the petition said, “the most curious case” was that of Felicite Builder & Constructions. “Despite a negative worth, IBHFL gave the company a loan of Rs. 173.40 crore to Atherol Builders & Developers Pvt. Ltd, subsidiary of Felicite Builder & Constructions. Interestingly, Felicite Builder & Constructions is also holding company for 30 subsidiaries of the group and all have taken loans from IBHFL.”

Vatika Group

The petition alleged that IBHFL gave a loan of Rs 4,600 crore to 51 companies of the Vatika group, which deals in real estate.

“There are 40 companies among these with a paid up capital of Rs. 1 lakh, and all of these companies have been granted loans ranging from Rs. 16 crores in case of Garin Developers Pvt. Ltd. to Rs. 184.50 crore in case of Timor Developers,” it claimed.

It described the case of one company, Shivsagar Builders, as “the most shocking”. “Though the company has a paid-up capital of Rs. 25 lakh only, IBHFL found it worthy of granting a loan of Rs. 1575 crore,” the petition alleged.

Americorp Group

On the Americorp group, the petition claimed that loans to the tune of Rs 151.90 crore were extended by Indiabulls.

“The money thus availed through loans has been ploughed back into Indiabulls Group companies through equity investment,” it alleged. “These are Transpacific Business Services, Americorp Business Services, Americorp Capital and Chennai Business Park, which IBHFL has lent Rs. 30 crore, Rs. 30 crore, Rs. 40 crore and Rs. 30 crore, respectively.”

In turn, Fabiani, the promoter of Americorp, invested Rs 254.87 crore back into Indiabulls Group companies through his company Jasol Investment & Trading, the petition claimed.

Choradia Group

The petition claimed three companies of the real estate giant, Chordia group, received Rs 1,209.50 crore from Indiabulls.

“It is surprising to note that IBHFL granted loans of 1209.50 crore to these companies which came into existence between 2016 and 2017, each with a measly paid-up capital of Rs. 50,000,” the petition said.

“While Built To Live Realty LLP and Mahalunge Land Developers LLP are owned by Atul Chordia and Ashok Chordia in partnership, AC Realty Spaces has Atul Chordia and Ashok Chordia as partners, among others,” the petition said.

The petition claimed that the Rs 450 crore that Built To Live Realty had taken from Indiabulls in 2017-’18 was repaid the same year from Rs 740 crore that Indiabulls advanced in loans to Mahalunge Land Developers.

Responses so far

In a response to Firstpost on September 10, Indiabulls defended itself against the allegations:

“It has come to our notice through media reports that a PIL has been filed against Indiabulls Housing Finance and its Promoters in Delhi High Court. The petition hasn’t yet been filed in the High Court as per the website records of Delhi High Court, but has been leaked in the social media with malicious intent and vested interests to create turbulence in the stock price of the Company and fulfill ulterior motives. Instead of going to the right forums of various regulatory agencies and making the complaint [where 8 earlier similar complaints with exactly similar allegations are already filed under various individual names in July 2019], the petitioners have deliberately chosen the route of PIL to attract attention and play into the hands of blackmailers and corporate rivals at a sensitive time of merger process of Indiabulls Housing Finance and Laxmi Vilas Bank. The Company is determined to fight out the petitioners in court.”

In a statement to the Caravan magazine, which first reported on the petition, the Vatika Group Managing Director Gautam Bhalla said: “Vatika Limited and our group companies do not have any association with any company associated with Mr. Sameer Gehlaut. Further, Vatika Limited and any of the group companies have not made any investment in any of the companies associated with Mr.Gehlaut.”

In response to an email by Scroll.in, a spokesperson of DLF Limited sent a statement that was made to the Bombay Stock Exchange and the National Stock Exchange on September 6. “DLF group have had financing transactions with the Indiabulls group since 2011 and all such transactions were completely on an arms length. Such transactions were full compliant with all legal requirements and regulations,” the statement said. It added that the allegations made in the petition were “completely baseless and unfounded”.