Economic offences require a cautious approach during bail considerations, balancing individual rights and public interest due to their profound impact.

JUDGMENT :

RAVINDER DUDEJA, J.

1. The present application under Section 485 of the Bharatiya Nagarik Suraksha Sanhita, 2023 read with Section 439 of the Cr.P.C., has been filed by the Applicant/Accused No. 1, Kapil Wadhawan, seeking necessary orders and directions from this Court for grant of regular bail in FIR/RC No. RC2242022A0001 dated 20.06.2022, registered under Sections 120B read with 409, 420, 477A IPC, Section 13 (2) read with 13(1)(d) of the Prevention of Corruption Act, 1988, and subsequently added Sections 411, 424, 465, and 468 IPC.

Background:

2. The present FIR/RC No. 2242022A0001 was registered by the CBI, New Delhi on 20.06.2022 under Sections 120B read with 409, 420, and 477A of the IPC and Section 13 (2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. The case was registered against DHFL, its promoters Kapil Wadhawan (the applicant), Dheeraj Wadhawan, and others for entering into a criminal conspiracy to cheat a consortium of 17 banks led by Union Bank of India. They induced the banks to sanction loans aggregating to Rs.57,242.05 crores and subsequently siphoned off and misappropriated large portions of the funds. Books of accounts of DHFL were allegedly falsified to conceal the fraud. The consortium suffered a wrongful loss of Rs.34,926.77 crores during the period from January 2010 to December 2019.

3. Upon completion of the investigation, the CBI filed a charge sheet under Section 173 CrPC on 15.10.2022 against 18 individuals, including the present applicant, and 57 companies/entities. The offences invoked included Sections 120B read with 206, 409, 411, 420, 424, 465, 468, and 477A IPC, along with Section 13 (2) read with 13(1)(d) of the PC Act, 1988. The investigation revealed that the applicant and Dheeraj Wadhawan, in conspiracy with others, diverted DHFL’s loan proceeds to the tune of Rs.34,926.77 crores. This was done through acts of forgery, cheating, criminal breach of trust, and falsification of accounts. The diversion involved 87 shell companies operated in the names of employees, friends, and associates of the Wadhawan brothers.

4. It was discovered that these shell companies received funds without proper documentation, while on paper, the same funds were shown as disbursed to 2,60,315 fictitious retail borrowers. A fictitious branch termed ‘Bandra branch-001’ was virtually created in DHFL’s system to execute these transactions. Manipulation of DHFL’s software “Fox Pro” was done to create fake customers and dummy loan data. The transactions were manually fed into DHFL’s Synergy system under this fake branch to fabricate accounting entries. Thus, fictitious retail loan accounts were used to mask the diversion of funds to shell companies.

5. Separate books of account, known as the “Bandra Book,” were maintained for these fraudulent transactions, misleading the consortium banks and the National Housing Bank. Loans were also given to various developers without following lending norms or taking adequate security, many of whom were connected to the promoters of  RBI and National Housing Board guidelines were grossly violated. On 26.11.2022, the Ld. Special Judge took cognizance and summoned all 75 accused persons/entities named in the charge sheet. The applicant was taken into custody on 19.07.2022.Though the applicant was granted default bail on 03.12.2022 and the same was upheld by the High Court on 30.05.2023, the Supreme Court later set aside both orders on 24.01.2024.

Role of the applicant:

6. The petitioner, as promoter and CMD of DHFL, is alleged to be the principal architect of a massive financial fraud involving diversion and misappropriation of approximately Rs.34,926.77 crores from a consortium of 17 banks. He is accused of creating and operating 87 shell companies in the names of associates, employees, and relatives to siphon funds, falsely recorded as