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High-level MCA meeting may mull action against Indiabulls

The meeting, set to be held this week, has been called to form a view on the Group

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Union Ministry of Corporate Affairs (MCA) has convened a high-level meeting on Indiabulls issue this week. The meeting has been called to form a view on the Indiabulls Group.

A source aware of the development said, “The high-level committee will decide whether to initiate any action on its own or wait for Delhi HC hearing scheduled on September 27.”

In a public interest litigation filed in Delhi High Court, a prayer has been made to make MCA, Serious Fraud Investigation Office, Reserve Bank of India and National Housing Board a party to the litigation.

As per sources, MCA had ordered an inspection of the Indiabulls Group entities around two years back on receiving some complaints. “Regional Director North of Ministry of Corporate Affairs was directed to complete the inspection, but inspection is still on,” a source said. If the findings of regional director's inspection report are adverse and it is felt that further deeper investigation is required, then the matter can be referred to SFIO, the specialised agency under MCA, to find if provisions of Companies Act have been violated.

On the specific question of inspection from MCA, Indiabulls replied, ”Indiabulls Housing Finance, being a regulated entity, is subject to regular inspections from regulators like RBI and NHB. Being a publicly listed company, we are also subjected to regular scrutiny/ inspections of our books by RoC/MCA. “

The NGO Citizen Whistleblowers Forum which has filed in the Delhi High Court has alleged that “activities of IBHFL and its promoters are in violation of various statutes and policies relating to Companies Act, 2013, rules and regulations of Reserve Bank of India (RBI), SEBI, National Housing Bank and other laws”.

The PIL has alleged that Section 77 of the Companies Act 2013 has been violated as the borrowing companies are required to file Charge document with the MCA showing the amount borrowed and security given to the lender company within 30 days of the transaction, but in many cases the Charge was not created. The PIL has also alleged the violation of Section 129 of Companies Act, 2013 for deviation in disclosure in financial statements. The PIL also demanded that Indiabulls and Promoters be charged with Section 447 of Companies Act which deals with issues of fraud.

The banking regulator RBI has also heightened scrutiny with respect to 'Fit and Proper' criteria for directors of Indiabulls Housing and Lakshmi Vilas Bank. Lakshmi Vilas Bank and Indiabulls Housing Finance had announced a merger in April this year. In the PIL filed by Citizen Whistleblowers Forum, It has been prayed that RBI and NHB should be made party in the case. As RBI is the regulator of banks and housing finance companies were looked by NHB. The central bank has also directed both the companies not to exchange information, Lakshmi Vilas Bank was in talks to buy some home loan portfolios of Indiabulls Housing Finance.

In the PIL Citizens Whistle Blower Forum has alleged that the documents such as balance sheets, ROC records suggest a vast web of companies involved in various dubious deals, loans, investments, round-tripping of funds to benefit companies owned by the promoters of Indiabulls. It also said the documents available in the public domain, the advancement of dubious loans and misappropriation of funds has been done to the tune of several thousand crores with an aim to amass personal wealth to the promoters of Indiabulls at the cost of huge loss to the public exchequer, investors (including banks) and shareholders.

Indiabulls has denied all allegations in PIL as baseless. On a query whether the PIL will make any impact on merger plans with Lakshmi Vilas Bank, Indiabulls Housing Finance said, ”The PIL doesn't have any bearing on the merger process, as all charges made in the PIL are absolutely baseless, false and mischievous.” 

Zee Media Newsroom

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