Delhi High Court slammed advocate Gulshan Babbar for filing multiple petitions over the same issue, hiding facts, and wasting judicial time. Court imposed Rs 25K per plea as penalty.
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NEW DELHI: The case Gulshan Babbar v. State of NCT of Delhi & Ors. involved multiple petitions by an advocate alleging financial fraud by the IREO Group and seeking court-monitored investigations.
The Delhi High Court dismissed the petitions, holding that the petitioner had no direct stake, falsely claimed to be a homebuyer, and misused the legal process, while enforcement agencies were already investigating the matter.
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Background of the Case
The case arose when Advocate Gulshan Babbar filed several writ petitions under Article 226 before the Delhi High Court alleging massive financial fraud, money laundering, and misappropriation of homebuyers’ funds by the IREO Group of Companies and its directors.
He claimed that Rs. 600 crores collected from homebuyers were illegally diverted to offshore accounts through shell companies.
The petitioner also alleged inaction by agencies like the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), and Serious Fraud Investigation Office (SFIO), and sought a court-monitored probe.
However, it was later revealed that the petitioner was not an investor or homebuyer and had filed multiple overlapping petitions without disclosing their pendency, raising questions about his intent and credibility.
Allegations imposed by the Petitioner:
- Misrepresentation and fraud in real estate projects.
- Illegal diversion of public money through Mauritius-based shell entities.
- Failure by ED to attach Rs. 4,246 crores of alleged proceeds of crime; only Rs. 1,317 crores attached.
- Petitioner falsely claimed to be a homebuyer to gain locus standi.
Arguments by Parties
Petitioner:
The petitioner argued that IREO Group of Companies, through its directors Mr. Lalit Goyal and Ms. Sapna Goyal, had engaged in large-scale financial fraud by siphoning off more than Rs. 600 crores collected from homebuyers and investors. These funds were allegedly routed through shell companies and diverted to overseas accounts in Mauritius, constituting “proceeds of crime” under the Prevention of Money Laundering Act, 2002 (PMLA).
Despite submitting detailed complaints to the Enforcement Directorate (ED), CBI, and other authorities, the petitioner claimed no substantive action had been taken. He submitted that the ED had attached only Rs. 1,317 crores worth of assets, although it had identified proceeds of crime amounting to Rs. 4,246 crores.
Citing the scale and seriousness of the alleged crime, and the purported inaction by the ED, the petitioner sought court-monitored investigation and immediate freezing of the Rs. 600 crores in the Escrow Account to prevent further alienation of assets.
The petitioner claimed that although he was not a direct investor, he had the right to approach the court in public interest, especially as the case involved defrauding thousands of homebuyers and public financial institutions. He cited A.R. Antulay v. R.S. Nayak (1984) 2 SCC 500, to argue that any person could initiate legal action to uphold the rule of law.
Respondent:
- Enforcement Directorate (ED)
The ED argued that a detailed investigation was already underway. An ECIR (Enforcement Case Information Report) No. GNZO/10/2021 was registered in June 2021 against IREO and its directors. It had resulted in arrests and the filing of both original and supplementary prosecution complaints, and attachment of properties worth Rs. 1,376 crores under Section 5 of the PMLA.
The ED contended that the petitioner had no locus stan as he was neither an investor nor an aggrieved party. His petitions were not filed in accordance with the Delhi High Court (PIL) Rules, and hence could not be treated as public interest litigation.
The ED clarified that while the alleged Rs. 600 crore diversion was known to them, no predicate offence (scheduled offence under PMLA) had been registered by banks or any authority, thereby limiting ED’s jurisdiction to act on it.
It was pointed out that the petitioner filed multiple writ petitions without disclosing prior ones, made false declarations, and attempted to interfere with an ongoing investigation monitored by the Special Court (PMLA), Panchkula.
- Respondent No. 7 – Mr. Lalit Goyal (Director of IREO)
Senior Counsel Viraj R. Datar, representing Mr. Lalit Goyal, argued that the petitioner abused the process of law by filing successive petitions with similar prayers and deliberately suppressing material facts from the court.
The respondent emphasized that the petitioner falsely declared himself to be a homebuyer to gain standing before the court, and later admitted that he had never invested in IREO. He also misquoted or distorted court orders in prior related matters to mislead the bench.
It was also argued that the petitions were not filed as genuine PILs, and the petitioner was essentially an interloper trying to misuse court proceedings for motives unrelated to justice or public interest.
Finding of the Court
The Delhi High Court, in its judgment, dismissed the writ petitions filed by Advocate Gulshan Babbar, concluding that the petitioner lacked locus standi as he was neither a homebuyer nor directly affected by the alleged corporate fraud.
The Court observed that the petitioner had approached the Court with unclean hands, having made false declarations about being an allottee and suppressing the fact that multiple similar petitions were already pending. The Court noted:
“The Petitioner does not fall within the category of person aggrieved so as to be entitled to invoke the extraordinary writ jurisdiction…”
It further emphasized that judicial intervention in ongoing investigations is exceptional, and found no reason to interfere where ED had already taken substantial steps, including filing prosecution complaints and attaching Rs. 1,376 crores worth of assets.
The Court relies on the judgment of Supreme Court in case Dukhishyam Benupani v. Arun Kumar Bajoria, and stated:
“It is not the function of the court to monitor investigation processes so long as such investigation does not transgress any provision of law.”
On the petitioner’s misuse of the legal process, the Court strongly remarked:
“The Petitioner has made false declarations contrary to record, exhibiting no fear for violating the process of Courts with an intent to mislead the Court.”
Accordingly, the Court held that the petitions were not maintainable, did not qualify as genuine PILs, and amounted to abuse of process, warranting outright dismissal.
Case Title: GULSHAN BABBAR ADVOCATE versus STATE OF NCT OF DELHI & ORS.
READ JUDGMENT HERE
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