The Supreme Court of India on Monday has chosen not to intervene in the decisions made by the Delhi and Bombay High Courts concerning Indiabulls Housing Finance Ltd (IHFL). This decision came to light following the Enforcement Directorate’s (ED) attempt to challenge the High Courts’ orders, which had previously quashed police and ED investigations against IHFL. The apex court’s stance effectively directs the ED to explore alternative legal avenues, including the possibility of seeking a review of the High Courts’ rulings.
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The controversy began when the Bombay High Court, in May of the preceding year, acceded to IHFL’s request to nullify an FIR lodged in Wada, Palghar district. The FIR, initiated by a shareholder, accused IHFL of cheating, criminal breach of trust, among other charges. Following the registration of this FIR, the ED embarked on an investigation against the company and its officials, citing the FIR as a predicate offense. However, IHFL contested the ED’s proceedings in the Delhi High Court, which, in September of the same year, ruled in favor of quashing the ED’s probe.
In response to these High Court rulings, the ED escalated the matter to the Supreme Court. During the proceedings, Additional Solicitor General S V Raju represented the ED, arguing for the continuation of the investigation against IHFL. Conversely, Senior Advocates Mukul Rohatgi and Siddharth Luthra, representing IHFL, contended that the ED lacked the standing to challenge the quashing of the FIR by the police, which consequently led to the termination of the ED’s investigation.
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After careful consideration of the arguments presented by both sides, the Supreme Court observed that the Bombay High Court had annulled the FIR after scrutinizing the behavior of the complainant who had filed the FIR. Notably, the court made its decision without the ED’s input. This observation underlines the Supreme Court’s rationale in deciding against interfering with the High Courts’ judgments, thereby upholding the principle of judicial independence and the importance of following procedural norms in legal proceedings.
This case highlights the complex interplay between corporate entities, shareholders, and regulatory bodies within India’s legal framework. It underscores the judiciary’s pivotal role in adjudicating disputes that have significant implications for corporate governance and regulatory oversight. As the ED contemplates its next steps, this episode serves as a reminder of the legal challenges and considerations that can arise in the pursuit of corporate accountability and integrity.
