DHFL scam: HC issues notice to SEBI seeking investigation

Observing that the matter involves what the petitioner perceives to be the biggest scam in the capital market of the country, the first bench comprising Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy said, “According to the petitioner, investors may have lost an amount over Rs 40,000 crore with regulators, credit-rating agencies, auditors and others, who were required to vet and look into the functioning of DHFL, its activities and how the funds received from depositors were deployed lacking in their functioning.”However, on noting that such financial scamsters avail the best legal advice and that there is a fine line between a planned scam and a collapse, based on market fluctuation, which may not be amenable for judicial review, the bench sought the petitioner’s counsel Nithyaesh Nataraj to demonstrate how DHFL intended to defraud people, accordingly evolved a scheme to do it and ultimately succeeded in it, for the court to take up the issue.

As per the plea, DHFL’s erstwhile Chairman and Managing Director Kapil Wadhawan and its erstwhile Director Dheeraj Wadhawan had hatched a large-scale conspiracy to swindle thousands of crores received from various classes of depositors, which includes gullible and innocent investors like the petitioner herein.

DHFL had created and used various shell entities to siphon more than Rs 31,000 crores of public money by grant of loans and advances to shell companies related to Kapil Wadhawan and Dheeraj Wadhawan through proxies and associates, the plea mentioned.

It also pointed out that those monies were routed through these dubious companies and parked outside India in favour of DHFL’s primary stakeholders. However, SEBI, the regulatory authority, which is meant to take action and retrieve the money as it had done in the case of Sahara, has completely distanced itself from taking any action despite available powers under the SEBI Act, 1992, the plea stressed.

Based on this, the petitioner Ranganathan sought the court to direct SEBI to proceed against DHFL and its key managerial personnel for committing regulatory violations thereby perpetuating a scam of mammoth proportions.