The Delhi High Court has upheld directions for a forensic audit into the winding up of the Arihant Mangal Growth Scheme of CRB Mutual Fund. It has also allowed the Securities and Exchange Board of India to take steps to recover money paid to CRB group entities if violations are found.
A Division Bench of Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar dismissed appeals filed by former members of a court-appointed special committee, former CRB Capital Markets director C.R. Bhansali, and CRB group companies, affirming a Single Judge's ruling passed in September 2025.
The bench agreed with the approach adopted by the Single Judge. It found no error in directing a forensic audit or in granting liberty to SEBI to proceed in accordance with law.
“We concur with the directions of the learned Single Judge, inter alia, directing the conduct of a forensic audit and granting liberty to SEBI to take action in accordance with law in relation to the recovery of disbursements made by the Special Committee to the CRB Group, if violations are established upon such audit,” the court observed.
CRB Mutual Fund was set up in 1993 by CRB Capital Markets Limited. It launched the Arihant Mangal Growth Scheme in 1994, with a scheduled maturity in 1999. After SEBI detected regulatory violations, CRB entities were restrained in 1996 from launching new schemes. In 1997, following the resignation of the entire board, the Reserve Bank of India moved the Delhi High Court seeking the winding up of CRB Capital Markets.
SEBI also approached the Bombay High Court, which appointed a provisional administrator to wind up the scheme. In 1999, the Bombay High Court approved a premature repayment plan for small investors but barred CRB group entities from receiving any payments. The matter was later transferred to the Delhi High Court, which in 2013 appointed a special committee for one year to complete the winding up and distribute funds. The committee ultimately disbursed about Rs. 211.65 crore and continued for several years on extensions.
In 2021, Rommel Investments Pvt Ltd, a private claimant, and SEBI approached the court alleging irregularities in the functioning of the special committee, including payments made to CRB-linked entities. In September 2025, a single judge ordered a forensic audit, restrained further payments to CRB group entities. It also handed over control of the winding-up process to SEBI and directed that unclaimed funds be transferred to an investor protection fund. The committee members and the CRB group challenged these directions.
They argued that the interim reports filed before the court contained all material information and that detailed transaction data was not annexed only due to its volume. They also said SEBI was never prevented from seeking further details.
The Division Bench rejected these submissions. It noted that the committee was expected to complete the exercise within one year but continued for more than a decade while repeatedly seeking extensions. It said the Single Judge had examined the committee's functioning, the objections over unclaimed amounts, and the entire record before issuing directions.
On the need for a forensic audit, the court said, “The very objective of a forensic audit is to ascertain the truth, and not to presume wrongdoing in advance. The existence of material raising legitimate questions itself justifies such an exercise.”
The Bench also expressed concern that a scheme that matured in 1999 remained unresolved for over two decades. It said SEBI, as both regulator and petitioner, was expected to act with greater vigilance.
For Appellants: Senior Advocates Nidhesh Gupta, Pinaki Misra, Advocates Aman Leekha, Ankur Chibber, Jaymut, Rahul Sharma, Shubham Shekhar and Himanshu Singh
For Respondents: Senior Advocate Pratap Venugopal, Advocates Abhishek Baid, Praneet Das, Avneesh Garg, Utkarsh Sharma, Iptisha, Sneha Sharma, Saloni Kapoor and Ayush Pundir