The Supreme Court criticised SEBI for showing “double standards” in the Indiabulls financial irregularities case and questioned the CBI’s unusually soft stance. The Court said even partial truth in the allegations warrants immediate FIR and coordinated action.
New Delhi: The Supreme Court, while hearing a petition filed by the Citizens Whistle Blower Forum seeking an SIT probe into alleged financial irregularities at Indiabulls Housing Finance Ltd. (now known as Sammaan Capital), strongly criticised the Securities and Exchange Board of India (SEBI).
Justice Surya Kant questioned why SEBI was refusing to carry out an investigation when it has full legal authority to do so.
He pointed out what he called “double standards”, saying that SEBI insists on having total control when it comes to taking over or selling properties, but suddenly claims lack of power when an investigation is required.
During the hearing, Justice Kant also raised concerns about SEBI’s past actions. The bench remarked that SEBI has auctioned properties worth crores at very low prices and questioned the accountability of officers involved.
He asked why SEBI was hesitant to investigate serious allegations when public money may be involved.
Justice Surya Kant did not limit his criticism to SEBI alone. He also questioned the Central Bureau of Investigation’s approach, saying that the CBI appeared too soft in a case that involves possible misuse of large amounts of public money.
He said the CBI’s behaviour looked unusually “friendly” and not aggressive enough for such a serious matter.
In addition, the court took note of the Ministry of Corporate Affairs (MCA) compounding nearly 100 violations in just two days, calling the quick closure suspicious and asking why the matter was wrapped up so fast.
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The bench emphasised that if even a small portion of the allegations is true, then there is enough reason to register an FIR. Without an FIR for the predicate offence, agencies such as the Enforcement Directorate (ED), Serious Fraud Investigation Office (SFIO) and SEBI cannot act effectively.
The judges stressed that an FIR would allow the agencies to investigate the matter properly.
The case involves serious accusations such as round-tripping of funds, violations of the Companies Act and possible siphoning of money by Indiabulls promoters and its subsidiary companies.
Earlier, the CBI had submitted that there was prima facie material indicating money laundering, which allowed the ED to continue its probe. However, the lack of an FIR on the predicate offence has remained a major issue before the court.
Additional Solicitor General (ASG) SV Raju informed the bench that attempts to get an FIR registered under Section 156(3) CrPC as well as efforts before the Delhi Police’s Economic Offences Wing (EOW) had not worked.
Advocate Prashant Bhushan, appearing for the petitioners, urged the court to order the CBI to file an FIR and requested the formation of a multi-agency SIT to supervise the probe.
The court was informed that the CBI Director would call a joint meeting with senior officers of the CBI, SFIO, ED and SEBI to coordinate actions.
SEBI’s unwillingness to participate in this coordinated effort drew further criticism from Justice Kant, who questioned the regulator’s reluctance.
The bench then directed the CBI to submit a fresh affidavit and asked the Delhi Police’s EOW to produce the records of its inquiry based on the ED’s complaint.
Through the hearing, the Supreme Court sent a clear message that agencies cannot act casually when allegations involve public funds, and that cooperation between institutions is essential for a fair and complete investigation.
Case Title:
CITIZENS WHISTLE BLOWER FORUM V UNION OF INDIA AND ORS.
SLP(C) No. 2993/2025
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