PMC Bank fraud: HC grants bail to HDIL's Rakesh Wadhawan, Sarang Wadhawan

Bombay HC grants bail to HDIL promoters Rakesh and Sarang Wadhawan in PMC Bank fraud case. Strict conditions imposed due to magnitude of scam.

MUMBAI: The Bombay high court (HC) on Friday granted bail to Housing Development and Infrastructure Limited (HDIL) promoters Rakesh Wadhawan and Sarang Wadhawan in the fraud at Punjab and Maharashtra Co-operative (PMC) Bank. The court’s decision comes as a relief to the duo who had been ensnared in the multi-crore scam.

The Bombay high court. (HT File Photo)

Rakesh and Sarang Wadhawan were granted bail in cases filed by the Enforcement Directorate (ED) and the Economic Offences Wing (EOW) of the Mumbai police. However, the court has imposed stringent conditions due to the substantial magnitude of the scam. The Wadhawans will only be released upon furnishing a PR bond of ₹5 lakh each, along with solvent sureties for the same amount.

Earlier this year, a PMLA (Prevention of Money Laundering Act) court had declined to extend Rakesh Wadhawan’s plea for medical bail, which had been granted by the Supreme Court. The Wadhawans, who were apprehended in October 2019, had approached the High Court in 2023 seeking bail after a special court had rejected their plea. They invoked section 436A of the Criminal Procedure Code, which allows for release from custody if more than half of the maximum sentence prescribed for the offence has been served.

According to the Reserve Bank of India (RBI), PMC Bank had concealed 44 problematic loan accounts amounting to ₹7,457.49 crore, primarily extended to HDIL, by manipulating its core banking system. Furthermore, the bank had created 21,049 fictitious accounts to reconcile its master data with the loan disbursals. The Enforcement Directorate had subsequently registered a case against the duo based on the EOW case.

During the hearing before a bench of justice SM Modak, the counsels representing the Wadhawans argued that they had already served over four years in jail, while the maximum punishment for PMLA offences is seven years. They also highlighted the substantial delay in the trial proceedings.

Special Public Prosecutor Hiten Vengavkar for the ED opposed the bail, emphasising the severity of the crime and attributing some delays in the trial to the accused.

Considering the submissions, the court acknowledged that the Wadhawans had served a significant portion of the potential sentence in the ED matter and that the trial is unlikely to commence in the near future. It also considered certain confidential communications while making its decision.

Regarding the EOW matters, the court cited the prolonged incarceration of the brothers as a basis for granting bail. As part of the bail conditions, they are required to surrender their passports and are prohibited from leaving Maharashtra without court permission.

Following the court’s order, Wadhawan’s counsel, Aabad Ponda, requested for cash bail for a few weeks, citing processing delays for sureties above ₹50,000. However, the court declined the request.