Delhi HC: CRB Mutual Fund Shutdown Sparks Detailed Investigation

The Delhi High Court has thrown out appeals about shutting down the CRB Mutual Fund. The case involved claims of mishandling money and called for a detailed investigation.

Background of the Case

The CRB Mutual Fund, started in 1993, came under the spotlight of regulators, leading to a shutdown request by the Reserve Bank of India in 1997. A Special Committee was set up in 2013 to handle this process, but problems continued.

Key Events and Decisions

• Special Committee's Role: Initially, the Committee was supposed to close down the fund within a year, but their work stretched over more than ten years. They were responsible for selling off assets and giving the money to the investors.

• Claims of Poor Management: The Securities and Exchange Board of India (SEBI) and Rommel Investment Pvt. Ltd. had issues with how the Committee was working, claiming that money was wrongly given to CRB Group companies.

• Court's Directions: On September 1, 2025, Justice Harish Vaidyanathan Shankar ordered a detailed investigation and created a Special Cell within SEBI to finish the shutdown process within a year.

Controversies and Legal Arguments

• Doctrine of Merger: S.K. Tandon & Anr. argued that earlier court decisions should have been combined into the final decision, clearing them of any wrongdoing. The court disagreed, saying the decisions were not final.

• Reason for Detailed Investigation: The court said the investigation was needed because of differences in reports and the large amounts of money given to CRB-related companies.

• Committee's Responsibility: The court highlighted the Committee's role as a caretaker with a duty to act in the best interest of the investors.

Final Judgment

On January 23, 2026, the appeals by the Special Committee and CRB Group were dismissed. The court supported the need for a detailed investigation and continued SEBI's oversight to protect investor interests.

"The very objective of a forensic audit is to ascertain the truth, and not to presume wrongdoing in advance."

This decision shows the court's commitment to transparency and accountability in financial management, ensuring that investor interests remain safeguarded.