The Delhi High Court has rejected the bail plea of Kapil Wadhawan, the former promoter and chairman of Dewan Housing Finance Corporation Limited (DHFL), in a major bank fraud case involving an alleged misappropriation of funds amounting to ₹34,926 crore. The court, in its detailed ruling, emphasized the gravity of the economic offense, describing it as a systemic fraud that has significantly impacted the country's financial structure.
Wadhawan was arrested in July 2022 by the Central Bureau of Investigation (CBI) in connection with a large-scale conspiracy to defraud a consortium of 17 banks. The investigation revealed that the fraud was carried out by creating a fictitious branch in DHFL’s internal system, referred to as “Bandra Branch‑001.” Through this branch, the accused allegedly disbursed housing loans to more than 2.6 lakh fictitious borrowers. The fraudulent transactions were routed through 87 shell companies, which were operated in the names of friends, relatives, and employees of DHFL. These companies were used to siphon off funds for personal gain.
The court noted that the scale and planning of the fraud made it a threat not only to individual financial institutions but also to the country’s economic stability. It was observed that economic offenses of such magnitude corrode the trust in the banking system and have long-lasting implications on public institutions. The judge highlighted that the right to personal liberty under Article 21 of the Constitution must be balanced against the wider public interest in prosecuting large-scale financial crimes.
Further, the court took note of Wadhawan’s conduct during the investigation and judicial custody. It was submitted by the prosecution that even while in custody, Wadhawan had attempted to influence transactions and manage his assets through proxies, raising concerns about his ability to tamper with evidence and intimidate witnesses. Many of the witnesses in the case were said to be former employees and close associates of Wadhawan, making the threat of interference even more credible.
The High Court also rejected the argument that the passage of time since Wadhawan’s arrest warranted his release. It clarified that although he had been granted default bail in December 2022, that order was later set aside by the Supreme Court in January 2024. Therefore, his custody since then remained legally valid. Moreover, the court pointed out that the trial in the case was still at a preliminary stage, with a massive list of over 700 witnesses and large volumes of digital evidence yet to be examined.
The contention that a substantial recovery had already been made through the insolvency resolution process was also dismissed. The court clarified that civil recoveries under insolvency proceedings cannot replace criminal prosecution in such grave offenses. The judge stated that financial restitution does not negate the necessity of holding the accused criminally accountable, especially when the alleged actions involve premeditated manipulation of financial systems.
Taking all these factors into account, the court concluded that releasing Kapil Wadhawan on bail at this stage would seriously jeopardize the investigation and prosecution of a case that affects public confidence in the financial and judicial systems. It held that the seriousness of the offense, the scale of the alleged fraud, the potential for tampering with evidence, and the early stage of the trial process necessitated the continued detention of the accused.
Accordingly, the Delhi High Court dismissed the bail petition of Kapil Wadhawan, affirming that economic offenses of this scale demand a higher standard of judicial scrutiny, especially when public trust in financial institutions and the rule of law is at stake.
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