Money laundering case: HC declines pre-arrest bail to Wadhawans

The Bombay High Court on Tuesday refused to grant pre-arrest bail to DHFL promoters Dheeraj Wadhawan and Kapil Wadhawan in a money laundering case of Yes Bank being probed by the Enforcement Directorate (ED), noting their custodial interrogation was required to unearth the conspiracy and modus operandi in the multi-crore scam.

The Wadhawans are presently in jail after being earlier arrested by the CBI in a separate case related to the Yes Bank scam.

They had moved the HC last week seeking anticipatory bail in the money laundering case and another case pertaining to alleged irregularities in the investment of employees' provident fund of Uttar Pradesh Power Corporation Ltd (UPPCL).

Justice Bharati Dangre on Tuesday rejected the pleas of the Wadhawan brothers for pre-arrest bail in both the cases and noted that prima facie investigation clearly divulge involvement and implication of the accused.

The court also noted that the applicants are not co-operating with the process of law and that the ED had issued several summonses to both Kapil and Dheeraj Wadhawan seeking their presence for questioning in the cases.

The court, in its order, said although the Wadhawans responded to the summonses and notices issued to them by the ED, they evaded investigation by not appearing before the agency.

The response to the summonses speaks of apathetic and an indifferent approach. The lackadaisical approach of the applicants can be well noted in their response to the prosecuting agency, the court said.

"It appears that the close knitted family had taken a decision together and as per their version, for removal of the stress of the earlier arrest, had decided to relax at their home in Mahabaleshwar (a hill station) in spite of all the seriousness of the accusation hovering over them, Justice Dangre said.

The court further said that only the Wadhawans can throw light on the nature of transaction and the alleged conspiracy can be cracked only by interrogating them regarding the rolling of funds in the sister companies.

The applicants have to be confronted with various incriminating documents with respect to the loans sanctioned in its favour by Yes Bank and further loans sanction by DHFL in favour of Rana Kapoor (co-founder of Yes Bank) so as to unearth the multi-crore conspiracy, the order said.

Wadhawans' counsels Prasad Dhakepalkar and Amit Desai last week argued that no case has been made out for money laundering and the transactions in question were made in normal course of business.

Desai had further argued that there was no case for any arrest or an arrest warrant at this stage for his clients in the midst of COVID-19 lockdown in a matter of financial nature which is being investigated for the last six months.

The Wadhawans have claimed they have been made "scapegoat of political quandary" in the state.

The court, however, refused to accept the excuse of the COVID-19 pandemic and said this shall not deter the ED from investigating a serious offence of money laundering which has shaken the economy of this country.

"The pandemic cannot be cited as an excuse to thwart an urgent investigation into a serious offence and to unearth the serious criminal conspiracy in which the ED apprehends the applicants have a major role to play.

"The growing pandemic of COVID-19 cannot be made a smokescreen to evade custodial interrogation, the court said.

ED counsels Anil Singh and Hiten Venegavkar opposed the pleas and argued that the duo is facing serious charges of money laundering which involves any process of or activity relating to the proceeds of crime, including concealment and possession of an untainted property.

Accepting this argument, Justice Dangre said, A serious economic offence cannot wait the pandemic to recede and the projection of the applicants as not being healthy would not absolve them from being subjected to interrogation."

With regard to the case pertaining to provident funds worth Rs 4,200 crore which were deposited with Dewan Housing Finance Corporation Ltd (DHFL) as fixed deposits in alleged collusion with some officials of UPPCL, Singh argued that the Wadhawans' custodial interrogation was required.

The court noted that DHFL had received a huge amount of illegal investment and proceeds generated from the illegal act of UPPCL.

The role played by the applicants (Dheeraj and Kapil Wadhawan) as those in charge of the company (DHFL) cannot be under cloud and follow up of the money trail is to be established. This warrants investigations which can only be carried out by having custody of the applicants, the court said.

Dheeraj and Kapil Wadhawan were arrested last month by the Central Bureau of Investigation (CBI) in connection with the Yes Bank scam.

According to the CBI FIR, the scam started taking shape between April and June 2018 when Yes Bank invested Rs 3,700 crore in short-term debentures of the scam-hit DHFL.

In return, the Wadhawans allegedly "paid kickbacks of Rs 600 crore" to former Yes Bank CEO Rana Kapoor and his family members in the form of loans to DoIT Urban Ventures (India) Pvt Ltd held by the wife and daughters of Kapoor, the CBI has claimed.