The Supreme Court of Wednesday cancelled the bail of Kapil Wadhawan in the Rs 34,615-crore DHFL bank fraud case. According to Bar & Bench, Justice Bela M Trivedi pronounced the order. In its order, the apex court siad that, “We have no hesitation that the chargesheet having been filed and cognisance being taken in due time, respondents could not have claimed statutory bail as a right. HC and lower court greatly erred. Trial court to hear afresh on regular bail. Appeals allowed accordingly.”
Two years ago, Kapil and Dheeraj Wadhawan – the ex-promoters of Dewan Housing Finance Limited (DHFL), were arrested in July 2022. The Wadhawan brothers were accused of defrauding nearly 20 banks to the tune of Rs 34,615 crore. In terms of the scale of the scam, it is considered as India’s biggest banking fraud.
The DHFL bank fraud was uncovered while CBI was probing YEs Bank’s Rana Kapoor. In 2020, the investigation agency had booked the Yes Bank’s founder and Kapil Wadhawan under the relevant clauses of the Prevention of Money Laundering Act, 2002. The duo was accused of cheating and criminal conspiracy.
In the Yes Bank-DHFL fraud case, properties valued at Rs 1,412 Crore belonging to the Wadhawans were seized by the Enforcement Directorate (ED). Subsequently, Kapil Wadhawan and Dheeraj Wadhawan were apprehended and are currently in judicial custody.
The troubles for DHFL began in January 2019, triggered by a Cobrapost sting operation alleging financial misconduct and the diversion of funds to affiliated entities. This led to credit rating agencies downgrading DHFL’s financial instruments in June 2019. As a consequence, DHFL initiated defaulting on repayments starting in July 2019.
Deposit-related cases were filed against DHFL, including one by IAS officer Ashok Khemka on behalf of his wife in the Chandigarh High Court. Another case was initiated by Edelweiss AMC in the Bombay High Court.
In July 2022, the CBI filed charges against former DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan, along with 13 others, following a complaint lodged by the Union Bank of India (UBI).
The UBI, leading a consortium of 17 lenders, asserted that it provided credit facilities amounting to Rs 42,871 crore to DHFL from 2010 to 2018. Currently, Rs 34,615 crore of the total remains outstanding, with the loan being classified as a Non-Performing Asset (NPA) in 2019 and identified as fraud in 2020.
According to the CBI First Information Report (FIR), the fraudulent activity began to unfold between April and June 2018 when Yes Bank invested Rs 3,700 crore in short-term debentures issued by DHFL.