Delhi High Court: The present application was filed by the applicant (‘Kapil Wadhawan’) under Section 485 of Bharatiya Nagarik Suraksha Sanhita, 2023 (‘BNSS’) read with Section 439 of Criminal Procedure Code, 1973 (‘CrPC’), seeking regular bail in FIR registered under Sections 120-B read with 409, 420, 477-A, 411, 424, 465 and 468 of Penal Code, 1860, Sections 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. A Single Judge Bench of Ravinder Dudeja J., stated that economic offences of such magnitude not only destroy public confidence in the financial system but also eat away the economic foundation of society. They require a firm judicial response guided by the rule of law and public interest.
Thus, considering the nature and seriousness of the allegations, gravity of the offence, Kapil Wadhawan ’s central role in the conspiracy, potential adverse impact of his release on the trial, and huge magnitude of the funds being siphoned off, the Court found no merit in the present application and accordingly, dismissed it.
Background:
The Central Bureau of Investigation (‘CBI’), New Delhi registered a FIR on 20-06-2022 against DHFL, its promoters including Kapil Wadhawan, and others for allegedly entering into a criminal conspiracy to cheat a consortium of 17 banks led by Union Bank of India. The accused induced the banks to sanction loans totalling Rs 57,242.05 crores and siphoned off around Rs 34,926.77 crores between January 2010 and December 2019 through forgery, cheating, criminal breach of trust, and falsification of accounts.
DHFL’s loan management software “Fox Pro” and Synergy system were manipulated to create fake customers and dummy loan entries. A separate book of accounts, known as the “Bandra Book” was maintained to conceal these fraudulent transactions, misleading the consortium banks and the National Housing Bank.
Loans were also irregularly disbursed to developers linked to the promoters, violating RBI and NHB guidelines. A charge sheet under Section 173 CrPC was filed against 18 individuals including Kapil Wadhawan and 57 entities. Though Kapil Wadhawan was granted default bail on 3-12-2022, which wasupheld by the High Court, the Supreme Court set aside both orders and Kapil Wadhawan had been in custody since 19-7-2022.
Kapil Wadhawan, as promoter and CMD of DHFL, was alleged to be the principal architect of a massive financial fraud. He was accused of misusing DHFL funds for personal and group benefit, including artificially inflating DHFL’s stock price, diverting Rs 7,748.75 crores sanctioned for Slum Rehabilitation projects, and routing large sums through sham transactions to settle liabilities and fund Wadhawan Group companies. He allegedly converted unsecured debts into secured loans using complex layering, laundered proceeds of crime through high-value paintings while in custody and continued to conceal the illicit origins of assets.
Case Analysis and Decision:
The Court observed that the material placed on record prima facie indicated that Kapil Wadhawan , as CMD of DHFL, was at the helm of a conspiracy that resulted in the diversion and misappropriation of approximately Rs 34,926.77 crores from a consortium of 17 banks which strongly indicate a premeditated, systemic fraud, involving methodical falsification of accounts, creation of fictitious borrowers, software manipulation, and maintaining a separate “Bandra Book”.
The Court observed that such economic offences, if proven, subvert the integrity of financial institutions, were public wrongs, and corrode the economic fabric of the nation. It observed that it was well settled that economic offences, particularly those involving large-scale financial fraud, constitute a distinct class of crime which are to be viewed with utmost seriousness. While personal liberty under Article 21 of Constitution is sacrosanct, it must be balanced against the collective harm caused by white-collar crimes.
The Court noted that the Supreme Court had consistently held that economic offences require a different approach when considering bail, especially where the offence involves deep-rooted conspiracy, fraudulent documentation, and abuse of fiduciary positions. In such circumstances, the presumption of innocence cannot be divorced from the practical necessity of ensuring that the rule of law is upheld.
The Court found the delay in trial argument unpersuasive, noting that the delay was also due to repeated inspection requests and interim applications by Kapil Wadhawan. Further, over 700 witnesses, voluminous digital data, made it clear that the trial would necessarily be protracted. A Special Court had been constituted for day-to-day trial of the case, curtailing future delay.
The Court further observed that the contention of Kapil Wadhawan that he had been granted bail in other related cases did not establish any right to parity in the instant matter. Parity is not a matter of arithmetical equality but is dependent on the facts, role, and circumstances of each case. His central role distinguishes him from co-accused, whose bail was granted on different factual matrices. Further, his position as the architect of the entire fraudulent scheme precludes him from claiming parity with those whose involvement was tangential or derivative.
Kapil Wadhawan ’s submissions that a substantial portion of the claims had been recovered through the Insolvency and Bankruptcy Code, 2016 resolution process or that certain loans were found to be genuine, cannot dilute the seriousness of the allegations. Allegations of share price manipulation, transfer of high-value paintings, and proxy transactions during custody further strengthen apprehensions of interference with justice. The Court noted that Kapil Wadhawan failed the triple test laid down in P. Chidambaram v. Enforcement Directorate, (2020) 13 SCC 791, concerning flight risk, tampering with evidence, and influencing witnesses.
Further, his conduct in custody, allegations regarding manipulation of valuable assets and transactions carried out during judicial custody, multiple investigations and cases across jurisdictions involving serious financial offences, undermined the argument that he posed no risk if enlarged on bail. His evasion of ED summons during COVID-19 further supported the view that he may flee justice or influence witnesses, many of whom are former DHFL employees or associates.
The court opined that if released on bail, Kapil Wadhawan may tamper with the evidence or worse flee from justice. Many of the witnesses in this case were stated to be either ex-employees or associates of DHFL and as such there was a high risk and possibility that he might try to influence the witnesses.
The Court considering the nature and seriousness of the allegations, the gravity of the offence, Kapil Wadhawan’s central role in the conspiracy, the potential adverse impact of his release on the trial, and the huge magnitude of the funds siphoned off, found no merit in the present application and dismissed it. The Court also noted that economic offences of such magnitude not only destroy public confidence in the financial system but also eat away the economic foundation of society. They require a firm judicial response guided by the rule of law and public interest.
[Kapil Wadhwan v. CBI, 2025 SCC OnLine Del 5174, decided on 4-8-2025]
Advocates who appeared in this case:
For the Petitioner: N. Hariharan, Senior Advocate, Arvind Nayar, Senior Advocate with Ashish Verma, Prakhar Parekh, Debopriyo Moulik, Vijay Kari Singh, Iti Agarwal, Rohan Dakshini, Tanvi Mate, Raghav Dharmadhikari, Punya Rekha, Vasundharan, Aman Akhtar, Sana Singh, Vinayak Gautam, Praveen Jaiswal and Vasundhara Raj Tyagi, Advocates.
For the Respondents: Anupam S. Sharma, SPP with Prakash Airan and Syamantak Modgil, Advocates Alok Kumar Singh, Addl. SP, Inspector Rahul Reddy
