PIL against IIFL going ahead with public issue

A Chennai-based investor has moved the Madras High Court and SEBI against a Mumbai-based company, India Infoline Finance Ltd (IIFL), from going ahead with the public issue of secured and unsecured redeemable non-convertible debentures to the tune of about Rs.2,000 crore. Rakesh P.Sheth, a shareholder of IIFL holdings, has in a PIL, contended that the public issue was in complete breach of the prosecution of sanction by the Serious Frauds Investigation Office (SFIO) earlier this month against the company, which it alleged was one of the prime accused in the infamous NSEL scam in which "Rs.5,600 crore was swindled and 13,000 crore people left high and dry". In a first in independent India, a running exchange was forced to close down, the petitioner said.

Justices M Sathyanarayan and P. Rajamanickam observed that the counsel for the petitioner had submitted that IIFL had already been issued with a show cause notice by SEBI declaring them that they are not fit and proper to be part of the commodities. Sheth said in the petition that IIFL is none other than the associate company of IIFL Commodities with common shareholders and common directors.

"Therefore, when the same management is under investigation, the fourth respondent (IIFL) should not be allowed to access funds from the market. The detailed fraud which has happened in the NSEL scam has been captured by the Bombay High Court in its order dated 04.12.2017," he said. The petitioner prayed that the court issue a writ of mandamus directing IIFL not to proceed with the public issue.