HC rejects pre-arrest bail pleas of Wadhawan brothers

The Bombay high court (HC) on Tuesday rejected two separate anticipatory bail pleas filed by Dheeraj and Kapil Wadhawan of the Dewan Housing Finance Limited (DHFL)

The Bombay high court (HC) on Tuesday rejected two separate anticipatory bail pleas filed by Dheeraj and Kapil Wadhawan of the Dewan Housing Finance Limited (DHFL) group, in the proceedings initiated against them by the enforcement directorate (ED) in connection with the Yes Bank scam and the alleged diversion of funds from two trusts in Uttar Pradesh.

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A single-judge bench of justice Bharati Dangre said given the serious allegations of money laundering, with a conspiracy entered into by Wadhawans with several others, particularly Yes Bank promoter Rana Kapoor and his family members, call for their custodial interrogation.

ED had initiated proceedings against the Wadhawans based on an first information report (FIR) registered by the Central Bureau of Investigation (CBI) on March 7, 2020 against Kapoor for conspiracy, cheating and under relevant provisions of the Prevention of Corruption Act.

It is alleged that between April and June 2018, Yes Bank invested Rs 3,700 crore in short-term, non-convertible debentures of DHFL and Kapoor received Rs 600 crore as kickbacks from DHFL, in the form of loan advanced to two firms, DOIT Urban Ventures (India) Private Limited and Morgan Credits Private Limited. While Kapoor’s daughters hold 100℅ stake in DOIT, Morgan Credits is controlled by his wife.

The Wadhawans, however, maintained that these transactions were entered into regular course of business. They sought pre-arrest bail, claiming that there was no fraudulent misrepresentation and no wrongful loss was caused to the bank in the transactions.

Additional solicitor general Anil Singh, appearing for the ED, opposed the pleas and stated that the debentures were not yet redeemed by DHFL and Yes Bank had not received its amount back. He added that DHFL has extended a loan of Rs 600 crore to the firms controlled by Kapoor’s family by showing grossly overvalued properties as mortgages.

Justice Dangre accepted ED’s arguments. The judge said that only the applicants can throw light on the nature of the transactions and the alleged conspiracy can be cracked only by interrogating them.

The applicants will have to be confronted with various

incriminating documents regarding the loans sanctioned by Yes Bank and further loans sanctioned by the DHFL in favour of Kapoor to unearth the multi-crore conspiracy, added the judge.

Justice Dangre also rejected anticipatory bail pleas of the Wadhawans in connection with diversion of funds from two trusts in Uttar Pradesh - Uttar Pradesh State Power Sector Employees Trust and Uttar Pradesh Power Corporation Contributory Provident Fund Trust. Both trusts have received part of their funds invested in DHFL, but are yet to receive about Rs 2,268 crore.

The judge said ED was justified in seeking custodial interrogation of the accused, as the crime involved complicated financial linkages and involvement of several individuals and group of companies. Widespread business activities of the applicants call for deep search into the money trail, added the bench.