Yes Bank fraud case: HC grants bail to Kapil and Dheeraj Wadhawan

The Bombay high court (HC) on Thursday granted bail to Kapil Wadhawan and Dheeraj Wadhawan of Dewan Housing Finance Limited (DHFL) in connection with the Yes Bank fraud, saying the enforcement directorate (ED) filed a charge sheet against them a day after the stipulated period of 60 days for doing so.

The Wadhawan brothers will not be able to come out of the prison immediately as the Central Bureau of Investigation (CBI) is investigating them in the same case. ED is separately probing other pending cases against them.

ED initiated proceedings against the Wadhawans on the basis of a case registered by CBI on March 7 against Yes Bank promoter Rana Kapoor, and his family members. They have been booked for conspiracy, cheating and also under provisions of the Prevention of Corruption Act, 1988.

Yes Bank is alleged to have invested ₹3,700 crore in short term non-convertible debenture of DHFL between April and June 2018. Kapoor allegedly received ₹600 crore as kickbacks from DHFL in terms of loan advanced to two firms, DOIT Urban Ventures (India) Private Limited and Morgan Credits Private Limited. While Kapoor’s three daughters hold 100℅ stakes in DOIT, Morgan Credits is controlled by his wife.

The Wadhawan brothers moved HC after a special court rejected their default bail plea on July 14. The special court rejected their claim that they were entitled to default bail, as ED did not file a charge sheet within 60 days – as prescribed by section 167(2) of the Code Of Criminal Procedure, 1973 – by July 13.

The agency filed the charge sheet on July 13, which the special court accepted to be within the period prescribed, after excluding the date of their first remand.

However, HC judge Justice Bharati Dangre held that the exclusion was legally impermissible and granted bail to the Wadhawan brothers in lieu of ₹1 lakh bond each, and on the condition that they will surrender their passports to the investigators. The court observed that an accused cannot be kept in custody even for a day after they have the right to default bail.

Justice Dangre said there is a period prescribed for filing of the charge sheet. The right to default bail is for the accused if an investigating agency fails to file the charge sheet within the period prescribed by Section 167(2).

Additional solicitor general Anil Singh urged the court to stay the bail order at least for two weeks. He said what the high court has ruled was a pure question of law and since different courts have taken different views of the point of default bail, ED would like to test the view held by the high court before the Supreme Court.

Justice Dangre refused to accept the request. The judge said the settled legal position is that the right of default bail is indefeasible and once it accrues, the accused cannot be kept in custody thereafter even for a day.

The Apex court has recently held that no court can extend this period and therefore after the custody period of 60 days was over, the Wadhawan brothers are required to be set free immediately, the judge said.

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