Four Entities Settle Indiabulls Real Estate Fund Diversion Case With SEBI For ₹10.49 Crore

Four entities have settled proceedings initiated by the Securities and Exchange Board of India (SEBI) arising out of alleged diversion and siphoning of funds from Indiabulls Real Estate Limited (IBREL) through conduit entities.

The entities collectively paid ₹10.49 crore towards settlement.

SEBI's Quasi Judicial Authority N Murugan passing the settlement order, noted,

"...In exercise of the powers conferred under Section 15JB read with Section 19 of the SEBI Act and in terms of Regulations 23 read with Regulation 28 of the Settlement Regulations, it is hereby ordered that the instant proceedings initiated against the Applicants vide Show Cause Notice dated November 01, 2023 is disposed of by this settlement order.”

SEBI had examined the consolidated financial statements of IBREL for FY 2014–15, 2015–16 and 2016–17. It observed possible diversion of funds from its subsidiary, Albasta Infrastructure Limited, to promoter-connected entities.

SEBI later conducted an investigation into the matter. It sought to ascertain whether funds were diverted, siphoned or misappropriated by IBREL and/or its wholly owned subsidiary Albasta by lending funds to promoter-connected entities through conduit entities including Agnes Developers Private Limited, Everlast Projects Private Limited, Lincoln Developers Private Limited, and Deneb Developers Private Limited.

Based on the investigation, SEBI alleged violations of Section 12A(b) and 12A(c) of the SEBI Act, 1992 read with Regulations 3(c), 3(d) and 4(1) read with Regulation 2(1)(c) of the SEBI (PFUTP) Regulations, 2003. It thereafter issued a common show cause notice dated November 1, 2023.

The entities thereafter filed settlement applications under the SEBI (Settlement Proceedings) Regulations, 2018. They proposed settlement of the proceedings without admitting or denying the findings of fact and conclusions of law.

Pursuant to revised settlement terms approved by SEBI, Agnes, Everlast, and Deneb each paid ₹2.60 crore. Lincoln Developers Private Limited paid ₹2.69 crore, including ₹9.12 lakh towards legal costs.

In view of the settlement terms and receipt of the settlement amount, SEBI disposed of the proceedings initiated against the entities.

The regulator clarified that the settlement order is without prejudice to its right to initiate enforcement action. It said such action could be initiated if any representation made during the settlement proceedings is subsequently found to be untrue, if any settlement condition is breached, or if any discrepancy is found in arriving at the settlement terms