"Effective And Honest Governance Of Financial Institutions Critical To Proper Functioning Of The Economy": Bombay HC Rejects Yes Bank Promoter Rana Kapoor's Bail

Economic damage owing to offences involving huge loss of public fund is required to be viewed seriously, the Bombay High Court observed in its detailed order rejecting the bail application of YES Bank promoter Rana Kapoor, a prime accused in the Rs 5050 crore money laundering scam being investigated by the Enforcement Directorate. Kapoor was arrested in the scam on March 8, 2020 and has since been lodged in prison. According to the ED, during 2018- 2019, Kapoor entered into a criminal conspiracy with Kapil and Dheeraj Wadhawan, promoters of Dewan Housing Finance Corporation Ltd for providing the latter's companies financial assistance in lieu of "substantial undue benefit" to Kapoor and his family, through companies held by them. "There is voluminous evidence showing involvement of the applicant in the crime. In the light of nature of evidence, no case for grant of bail is made out. It is settled law that while granting bail the Court has to keeping in mind the nature of accusations, evidence in support thereof. Huge loss of public fund is required to be viewed seriously." Justice Naik observed. According to the prosecution during April to June 2018, YES Bank invested Rs.3700 Crores in short-term debentures of DHFL and simultaneously Kapil Wadhwan paid a kickback of Rs.600 Crores under garb of loan to DOIT Urban Ventures (India) Pvt. Ltd. (DUVPL) Kapoor's three daughters are 100% shareholders of DUVPL through another company, Morgan Credits Private. Senior advocate Harish Salve, appearing on behalf of Kapoor, argued that the investigation in the case is complete with two chargesheet being filed in May and July, 2020. Statements of witnesses have been recorded and properties worth Rs 600 crore have been provisionally attached, as well, he said adding that ED's interests were secured. Salve argued that Rs 600 crore loan to Kapoor's daughters' company was not a kickback but a genuine loan, reflected in Income Tax returns. The funds were not diverted outside from DUVPL but invested by it in its wholly own subsidiaries, he argued. Salve submitted that Kapoor was suffering from various ailments. ED's counsel Hiten Venegavkar on the other hand referred extensively to the agency's investigation to demonstrate Kapoor's involvement in the crime. He argued that YES bank had extended loans to entities despite incurring losses and recording a negative net worth. He cited the statement of a witness from DHFL, who said that he never interacted with Kapoor's daughters in connection with the loan to be advanced to DUVPL and it was in fact Kapoor's senior executive secretary, who would coordinate with him. He cited Kapoor's wife's statement to show that she was a housewife looking after her husband and daughters, and she had little idea about RAB Enterprises, of which she is the 100% owner. DUVPL, the company to which the Rs 600 crore loan or kickback was advanced, is a wholly owned subsidiary of RAB, he argued. Venegaonkar referred to the statements of several employees working under the Wadhawans and the Kapoors, to show how they were transferred within alleged shell companies. One of them was Wadhawan's house help, who was allegedly told he would have to become a director in one of the companies. Venegaonkar submitted that out of Rs 600 crore, being the proceeds of crime, Rs 378 crore was invested overseas. The court noted ED's allegation that Kapoor was desperately trying to dispose off his London property, provisionally attached by the ED in September, 2020 and had already put out an advertisement for its sale. If released on bail, Kapoor will make the sale happen, Venegavkar argued. Dealing with Kapoor's contention of ill health, the court observed that the has been repeatedly examined during custody but nothing worrisome was found by the doctors who examined him. "It is a settled law that economic loss of public offences involving huge funds to be viewed seriously," the court observed.

"Effective And Honest Governance Of Financial Institutions Critical To Proper Functioning Of The Economy": Bombay HC Rejects Yes Bank Promoter Rana Kapoor's Bail

Sharmeen Hakim

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