The scrip plunged 7.97% to close at ₹674.65 on the BSE. During the day, it tumbled 8.77% to ₹668.70.
On the NSE, shares of the company tanked 8% to close at ₹674.15.
As many as 25.70 lakh shares of the company were traded on the BSE, while over three crore shares changed hands on the NSE.
A plea was filed in the Supreme Court on Monday seeking legal action against IBHFL, its chairman and directors for alleged misappropriation of ₹98,000 crore of public money.
Terming the allegations as "bizarre", IBHFL on Monday said the writ petition filed in the apex court is an attempt to "malign" the company's reputation and create hurdles in its merger with Lakshmi Vilas Bank.
"The total loans on the books of IBHFL is approx ₹90,000 crore. The allegations of siphoning off ₹98,000 crore is bizarre," IBHFL said in a statement.