'Corroding Nation's Economic Fabric': Delhi High Court Denies Bail To Ex-DHFL Chairman Kapil Wadhawan In ₹34,926 Crore Bank Fraud Case

The Delhi High Court on Monday (August 04) denied bail to former Chairman of the erstwhile Dewan Housing Finance Corp Ltd (DHFL) Kapil Wadhawan in a case related to the alleged multi-crore loan scam.Justice Ravinder Dudeja observed that Wadhawan was at the helm of a conspiracy that resulted in the diversion and misappropriation of approximately ₹34,926.77 crores from a consortium of 17 banks. Stating that such “premeditated, systemic fraud” “corrode the nation's economic fabric”, the bench denied any leniency in the matter, it observed,“The court is not persuaded to grant regular bail to the applicant considering the magnitude, complexity, and gravity of the economic offences alleged against him…These acts, if proven, are not merely violations of penal statutes, but subvert the very integrity of financial institutions and investor confidence.”The bench added that while personal liberty under Article 21 is sacrosanct, it must be balanced against the collective harm caused by white-collar crimes which undermine public trust in financial systems and regulatory institutions.An FIR was lodged in June 2022 under Sections 120B, 409, 420, 477A of IPC, 13(2) r/w 13(1)(d) of PC Act, 1988 (as amended in 2018) against Kapil Wadhawan and Dheeraj Wadhawan of DHFL, on the basis of complaint filed by the DGM of Union Bank of India (UBI) on behalf of a consortium of 17 banks against DHFL. According to FIR, Wadhawan entered into a criminal conspiracy with unknown persons thereby cheating and inducing a consortium of 17 banks led by UBI to sanction huge loans aggregating to Rs. 42,000 Crores approx.Kapil Wadhawan was arrested in July 2022. The Central Bureau of Investigation probed the case and filed a charge sheet on October 15, 2022, implicating him as the principal architect behind the scam.Wadhawan's counsel submitted that he has been continuously in custody for over four years and ten months, with almost 3 years in the present case alone.The Court however stated that considerable length of custody cannot override the risk posed by his release, especially in light of his access to resources, history of alleged tampering, and multiplicity of serious pending cases.In any case, the Court noted that he was released on statutory bail in the case, which subsequently came to be cancelled by the Supreme Court and thus, his effective custody was of around 2 years and not 4 years.The counsel also stated that CBI had already filed the chargesheet yet, the trial had not commenced.The Court however noted that delay had been occasioned by repeated requests for inspection and interim applications from the side of the Wadhawan himself.Furthermore, the Court said that the quantum and nature of the evidence, over 700 witnesses and voluminous digital data, make it clear that the trial will necessarily be protracted. “This by itself cannot entitle the accused to bail when the allegations relate to fraudulent siphoning of funds on an unprecedented scale,” it said.It also noted that to ensure that the trial is not delayed, a Special Court has already been constituted.The Court also rejected Wadhawan's submissions that a substantial portion of the claims had been recovered through the IBC resolution process or that certain loans were found to be genuine.It said the same “cannot dilute the seriousness of the allegations. Resolution under IBC does not exonerate criminal liability, and recoveries made by third-party resolution applicants cannot be construed as voluntary restitutions by the applicant.”The Court further stressed that the allegations against Wadhawan are not based on conjecture or assumptions but flow from detailed forensic audit trails, crossverification of fictitious borrower accounts, money trail analysis, and statements of approvers.It also rejected the argument that non-repayment or default in repayment of loans is civil in nature and the prosecution has criminalised a commercial dispute.“The case of the prosecution is not one of mere default but of deliberate deception, diversion of public funds, creation of fictitious accounts, forgery, and laundering of money, all of which attract penal consequences. The act of fraudulently obtaining public funds and misusing them in a manner calculated to conceal the trail and mislead stakeholders falls squarely within the realm of criminal law,” Court said.It added, “Merely cloaking the misappropriation in the language of “settlement” or “IBC recovery” does not alter the nature of the offence. Such economic offences are not only crimes against specific victims but against the financial system at large.”As such, the Court dismissed his bail plea.Appearance: Mr. N. Hariharan, Senior Advocate, Mr. Arvind Nayar, Senior Advocate with Mr. Ashish Verma, Mr. Prakhar Parekh, Mr. Debopriyo Moulik, Mr. Vijay Kari Singh, Ms. Iti Agarwal, Mr. Rohan Dakshini, Ms. Tanvi Mate, Mr. Raghav Dharmadhikari, Ms. Punya Rekha, Ms. Vasundharan, Mr. Aman Akhtar, Ms. Sana Singh, Mr. Vinayak Gautam, Mr. Praveen...

'Corroding Nation's Economic Fabric': Delhi High Court Denies Bail To Ex-DHFL Chairman Kapil Wadhawan In ₹34,926 Crore Bank Fraud Case

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