Yes Bank-DHFL Loan Fraud Case: Bombay High Court Rejects Second Bail Plea By Rana Kapoor

Justice PD Naik reasoned that Kapoor is facing serious allegation of laundering public money, and refused bail on ground of long incarceration.

“The allegations against applicant is that applicant is involved in laundering of public money. He has allegedly hatched conspiracy with owners of DHFL for siphoning huge amount. Though the applicant is in custody for three years, the involvement of public money shows that charge is serious. There is apprehension of tampering evidence. Hence, on the ground that applicant is in custody from 8th March 2020, bail cannot be granted”, the court held.

According to the prosecution, Kapoor, using his position as Yes Bank CEO, conspired with Dheeraj Wadhwan and Kapil Wadhwan, promoters of DHFL and extended undue financial benefit to DHFL and received kickbacks.

In 2018, Kapoor allegedly invested Rs. 3700 Crores through Yes Bank Limited in short term non-convertible debentures of Dewan Housing Finance Corporation Ltd (DHFL). Yes Bank also allegedly sanctioned a loan of Rs. 750 Crores to RKW Developers, a DHFL group company for the Bandra Reclamation Project. The prosecution alleged that Kapil Wadhwan siphoned the entire money as RKW developers transferred all of it to DHFL without investing in Bandra Reclamation Project.

According to the prosecution, Kapoor received kick-backs of Rs. 600 Crores from Kapil Wadhwan in the garb of a loan to Doit Urban Ventures, a company wholly owned by Kapoor’s daughters and subsidiary of Rab Enterprises, a company owned by Kapoor’s wife Bindu. The loan was allegedly sanctioned with sub-standard property having meagre value as collateral.

Prosecution also alleged that Kapoor siphoned huge amount of these proceeds of crime abroad through his family own/controlled companies. A supplementary complaint filed in 2020 alleged that more than 100 companies owned by Kapoor and his family members were used for siphoning illegally obtained money.

The High Court in 2021 rejected his bail application.

Senior Advocate Abad Ponda for Kapoor submitted that he has been in prison for longer than the minimum sentence of three years for money laundering under the Act, which was not the case back in 2021. Further, no charges are framed against him and trial is unlikely to commence in the near future.

Advocate Hiten Venegavkar for the ED submitted that the bail was rejected in 2021 on merits, and there is no constructive change in circumstance since then. Further, prosecution is ready to proceed with trial.

Though the Supreme Court and Bombay High Court have granted bail on the ground of long incarceration, gravity of accusations cannot be brushed aside, the court said.

The court further noted that Kapoor is involved in seven other similar cases. Allegedly, Rs. 378 Crores out of proceeds of crime of Rs. 600 Crores have been invested overseas. Thus, the court held that Kapoor is not entitled to bail considering his alleged role and magnitude of the crime.

“Applicant and his family members have incorporated or have beneficial interest in various companies. These factors cannot be ignored considering the role of applicant in the crime, the Magnitude and seriousness of crime, the applicant is not entitled for bail”, the court held.

Case no. – Criminal Bail Application No. 586 of 2023

Case Title – Rana Kapoor v. Directorate of Enforcement and Anr

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