ED Opposes Bail Heavily But Takes No Step To Begin Trial: Mumbai Court While Granting Bail To Yes Bank Founder In 200 Cr Loan Fraud Case

A PMLA court in Mumbai granted bail to Yes Bank Founder Rana Kapoor in a Rs 200 Crore loan fraud case. Special Judge MG Deshpande granted him bail on a PR bond of Rs 1 lakh. However, he will not walk out of prison as he is held in other cases as well. The court also came down heavily on the Enforcement Directorate for selectively arresting Kapoor and opposing bail but not taking any steps to begin the trial."ED simply opposes bail applications heavily, but never takes any active step in proceeding with trials, particularly as per the mandate of Sec.44(1)(c) of the PML Act and accused is an undertrial prisoner. Like this, in many other cases the Court is repeatedly directing ED to follow the true spirit and mandate of Sec.44(1)(c) of the PML Act," it remarked.It also criticized the CBI for no progress on the investigation of the Predicate Offence in two years. “If the Court accepts such modusoperandi of both Agencies (ED and CBI) in extending undue incarceration of the applicant (A3) (applicant) to uncertain extent, that will amount putting premium on such illegal acts”, it added. The court found it “astonishing” that the ED never arrested Rakesh and Sarang Wadhawan, HDIL Promoters, and other top Yes Bank officials despite attributing similar roles to them in the crime. The court stated the ED cannot discriminate among accused persons having similar roles. The court noted that Kapoor is on the verge of crossing the minimum punishment of three years provided in PMLA and has already undergone incarceration for 73% of the minimum punishment. Prosecution Case Mack Star Marketing Pvt. Ltd. is a joint venture between Mauritian company Ocean Deity Investment Holdings Ltd (ODIL) and Housing Development and Infrastructure Ltd (HDIL). The Wadhawans were on Mack Star’s board of directors at various times and exercised full control over its day-to-day management and bank accounts from 2008 to 2019. According to its Articles of Association, Mack Star could not take any loan Rs. exceeding 20 lakhs without ODIL’s consent. HDIL Group was in financial distress and struggling to repay its loans. Thus, the Wadhawans took out loans worth rupees 200 Crores from Yes Bank Ltd in the name of Mack Star without ODIL’s approval, the prosecution alleged. The prosecution claimed that out of Rs. 200.3 Crores sanctioned loan, Rs. 138 Crore was credited in Mack Star’s account while Rs 64 Crore was directly transferred to HDI. Another Rs. 135 Crores were transferred from Mack Star’s account to accounts of HDIL Group companies on the same date of loan disbursement to settle their loans with Yes Bank. ODIL initially did not notice the fraudulent loans as the auditor also colluded with the Wadhawans. However, when the investors realised this in 2016 and informed Yes Bank, it still disbursed more loans to Mack Star’s account, as per prosecution. According to the prosecution, Yes Bank issued the loans without satisfying a condition of its sanction letter requiring it to obtain Non-Disposal Undertakings (NDU) from the investors. While it obtained NDU’s from the Wadhawans, it never approached the majority investors (ODIL) in order to hide the transaction from them, the prosecution alleged. Yes Bank dishonestly ignored Mack Star’s Articles of Association, it added. CBI registered an FIR under sections 120B, 409, and 420 of IPC and sections 13(2) and 13(1)(d) of PC Act against the Wadhawans, two directors of HDIL, the chartered accountant firm, two private persons and unknown public servants and private persons. Based on the FIR, ED registered an ECIR under sections 3 and 4 of PMLA and arrested Kapoor on January 27, 2021. Thus, he sought bail on medical grounds as well as parity as the other accused were either not arrested or are out on bail. Parity With Co-accused The court noted that as per the alleged roles of the Wadhawans, they are the main conspirators of this crime and everything else alleged by the prosecution is an outcome of their conspiracy allegedly in connivance with Rana Kapoor. The court noted that the loan was of a huge amount and the bank would not sanction it only on the Managing Director’s direction. It added that all Management Credit Committee members had veto rights but continued with the loan. According to the prosecution, several top officials and department heads of the bank are equally responsible for the alleged generation of proceeds of crime. Though ED had subjective satisfaction that these persons are guilty of an offence, they were not arrested under section 19 of the Prevention of Money Laundering Act, the court noted. Further, the Bombay HC granted bail to two accused who were arrested The ED explained that the Wadhawans were already in judicial custody in another crime and their statements were recorded. Further, it has the prerogative to decide who to arrest, it contended. ...

ED Opposes Bail Heavily But Takes No Step To Begin Trial: Mumbai Court While Granting Bail To Yes Bank Founder In 200 Cr Loan Fraud Case

Amisha Shrivastava

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