Bombay HC grants default bail to DHFL's Wadhawans in Yes Bank fraud case

The Bombay High Court granted default bail to DHFL promoters Kapil and Dheeraj Wadhawan in the Yes Bank money laundering case, citing prolonged detention and the right to a speedy trial

The Bombay High Court today granted default bail to Kapil and Dheeraj Wadhawan, the promoters of Dewan Housing Finance Ltd (DHFL), in connection with the Yes Bank money laundering case.  

 

Justice Milind Jadhav stated, “Applicants in present case are in custody since 4 years 9 months. There is no possibility of the trial commencing in the near future. Detaining an under-trial prisoner for such an extended period further violates his fundamental right to speedy trial flowing from Article 21 of the Constitution,” as quoted by Bar and Bench.

 

The Wadhawans’ legal counsel argued that their prolonged detention, coupled with delays in the investigation, had surpassed the threshold for default bail. It was further contended that the Enforcement Directorate (ED) had yet to complete its probe, underscoring the necessity of upholding the constitutional right to a speedy trial.  

 

The ED, however, countered that the delay was partially due to multiple interim applications filed by the Wadhawans.  

 

Justice Jadhav, while addressing the arguments, noted that the delay could not be attributed solely to the accused. He reiterated the established legal principle that “bail is the rule and refusal is the exception”, particularly in cases involving extended pre-trial detention.

 

The court also examined Section 436-A of the Code of Criminal Procedure (CrPC), clarifying that the statutory term ‘shall’ mandates release once an undertrial has served more than half of the maximum sentence. It further stated that the seriousness of the offence does not influence bail decisions under this provision.  

 

“Once the undertrial crosses one-half of the maximum sentence, the rigours of the twin conditions under Section 45(1) of the PMLA do not apply, and the applicant is entitled to be released on bail,” the court said.

 

Without delving into the case’s merits, the court concluded that the applicants were eligible for bail.  

 

Senior advocate Amit Desai, along with advocates Gopalkrishna Shenoy, Kushal Mor, Pooja Kothari, Janaki Garde, and Raghav Dharmadhikari — briefed by Rashmikant and Partners — represented the Wadhawans.  

 

On behalf of the ED, advocates Hiten Venegaonkar, Aayush Kedia, and Diksha Ramnani appeared, while advocate HJ Dedhia represented the State.  

 

The Bombay High Court had earlier granted default bail to the brothers in the ED’s August 2020 case. However, the Supreme Court later overturned that decision.  

 

According to the allegations, Kapil and Dheeraj Wadhawan, along with other accused, conspired to defraud a consortium of 17 banks led by Union Bank of India.  

 

The complaint claimed that the accused secured loans amounting to Rs 42,871.42 crore from the consortium, a significant portion of which was allegedly siphoned off through fraudulent financial records of DHFL. Furthermore, it was alleged that they willfully defaulted on repaying legitimate dues.  

 

The purported financial misconduct is said to have resulted in a wrongful loss of Rs 34,615 crore to the consortium banks between January 2010 and December 2019.  

 

[With agency inputs]