On Monday, Shares of Indiabulls Housing Finance logged their biggest-ever daily percentage loss of 38%.
The loss was declared after Delhi High Court decided to examine the allegations, in a PIL by an NGO, of financial irregularities, siphoning of funds and other violations against the company promoters.
A fall in shares of Lakshmi Vilas Bank after the Reserve Bank of India initiated prompt corrective action plan on the lender also put pressure on Indiabulls Housing.
Indiabulls Housing slumped 38.5%, its biggest fall since July 2013, to hit a low of ₹240.10. The company’s $350 million, 6.375% notes due in 2022 fell to their lowest level since issuance in May, according to prices compiled by Bloomberg.
Indiabulls Real Estate fell 10%, while Indiabulls Ventures Ltd slumped 20%. Lakshmi Vilas Bank hit a 5% lower circuit.
Lakshmi Vilas Bank and Indiabulls Housing Finance are proposed to merge and the central bank’s move to place the former under the PCA framework may jeopardize the merger.
The court also issued notice to the Securities and Exchange Board of India (SEBI), National Housing Bank (NHB), the Serious Fraud Investigation Office (SFIO), Registrar of Companies (ROC) and Sameer Gehlaut, the founder and chairman of Indiabulls group and asked them to file their replies by December 13.
The bench decided to issue a notice in the matter after brief arguments on behalf of the company, represented by senior advocates Mukul Rohatgi and Abhishek Manu Singhvi, and the NGO, for whom advocate Prashant Bhushan appeared in the matter.
During the brief arguments, NGO ‘Citizens Whistle Blower Forum‘ told the court that around Rs 4,600 crore was allegedly loaned by Indiabulls to various shell companies which in turn routed the money through other entities back to the promoters.
The senior lawyer said that the NGO was making the allegations without doing proper research and was relying on a letter of BJP leader Subramanian Swamy to Prime Minister Narendra Modi accusing Indiabulls group of misappropriation of funds, Economic Times reported.
