Supreme Court slams CBI for delayed Indiabulls probe

• The Supreme Court has expressed dissatisfaction with the CBI's failure to update the court on the progress of investigations into allegations of financial irregularities involving Indiabulls Housing Finance Limited.
• The court questioned the agencies' inaction, asking 'What has CBI done from January to July?' and expressing concern that innocent parties may be implicated if the investigation is not conducted with due diligence.
• A court-monitored SIT probe was sought by the Citizens Whistle Blower Forum, which concerns accusations of siphoning funds, round-tripping, large-scale corporate irregularities, and violations of the Companies Act by Indiabulls, its promoters, and related entities.

The negligence of the investigating agencies is 'highly questionable.'

The Supreme Court has expressed dissatisfaction with the Central Bureau of Investigation (CBI) and Delhi Police's Economic Offences Wing (EOW) for failing to update the court on the progress of investigations into allegations of financial irregularities involving Indiabulls Housing Finance Limited, now known as Sammaan Capital Ltd. The court questioned the agencies' inaction, asking 'What has CBI done from January to July?' and expressing concern that innocent parties may be implicated if the investigation is not conducted with due diligence. The court's order notes that the negligence of the investigating agencies is 'highly questionable.'

The case concerns accusations of siphoning funds, round-tripping, large-scale corporate irregularities, and violations of the Companies Act by Indiabulls, its promoters, and related entities. A Bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi, and Justice V Mohana had taken up the plea seeking a court-monitored SIT probe. Advocate Prashant Bhushan, appearing for the petitioner, argued that the material on record justified a court-directed FIR and proposed an SIT consisting of officers from SEBI, CBI, ED, and SFIO.

The court's criticism comes after it had previously delivered sharp criticism against the Securities and Exchange Board of India (SEBI) and the Central Bureau of Investigation (CBI) for their reluctance to pursue investigations into allegations against Indiabulls Housing Finance Ltd. (now Sammaan Capital). The regulator's approach was described as reflecting 'double standards' by Justice Kant, who noted that when it came to possession and sale of attached properties, SEBI claimed exclusive jurisdiction but hesitated when the issue was investigation.

The case highlights the importance of timely updates on investigation progress in cases involving large-scale corporate irregularities and alleged violations of the Companies Act. The court's order notes that the Ministry of Corporate Affairs had allegedly compounded around 100 violations within just two days, raising questions about what 'interest' prevented deeper scrutiny. The court also expressed concern about the CBI's approach, noting an unusually 'cool attitude' in handling the matter.

The case has significant implications for lawyers and compliance officers who advise clients on investigations involving large-scale corporate irregularities and alleged violations of the Companies Act. They may need to advise their clients on the importance of timely updates to the court on investigation progress and the potential consequences of delayed or inadequate investigations.

The Supreme Court's criticism of the CBI and EOW highlights the need for effective regulation and oversight in cases involving large-scale corporate irregularities. The case also underscores the importance of transparency and accountability in investigation processes, particularly when public funds are involved. As the court noted, 'when statutory powers exist, the regulator should exercise them rather than suggest an absence of jurisdiction.'

Lawyers and compliance officers should watch for the potential implications of this case on their clients' investigations, particularly in cases involving large-scale corporate irregularities and alleged violations of the Companies Act. They may need to advise their clients on the importance of timely updates to the court on investigation progress.

Source: Original reporting via [Source]