In CRL.M.C. 6544/2022-DEL HC- Delhi HC upholds Order granting bail to Kapil & Dheeraj Wadhawan in DHFL loan scam case, says piecemeal charge-sheet has been filed by CBI
Justice Dinesh Kumar Sharma [30-05-2023]

Read Order: CENTRAL BUREAU OF INVESTIGTATION Vs. KAPIL WADHAWAN & ANR 

Tulip Kanth

New Delhi, May 31, 2023:  While observing that the chargesheet filed by the CBI was an incomplete/piecemeal charge sheet and terming the same as a final report under section 173 (2) Cr.P.C. merely to ruse the statutory and fundamental right of default bail to the accused would negate the provision u/s 167 CrPC & Article 21 of the Constitution, the Delhi High Court has upheld the order of the Special Judge whereby the Wadhawan brothers were granted bail in DHFL loan scam matter.

“The holistic and literal reading of Section 167, also makes it clear that the magistrate/Court cannot remand a person beyond 60 days or 90 days, for whatever reasons, if the investigation is not completed”, the Single-Judge Bench of Justice Dinesh Kumar Sharma affirmed.

It was alleged that M/s Dewan Housing Finance Corporation Ltd. (DHFL), Kapil Wadhawan, the then Chairman & MD of DHFL, Dheeraj Wadhawan, Director of DHFL, and few other entities and persons including public servants, entered into a criminal conspiracy thereby cheating and inducing a consortium of 17 banks led by Union Bank of India (UBI) to sanction huge loans aggregating to approx Rs 42,000 Crores.

The respondents accused siphoned off, and misappropriated a significant portion of the funds by falsifying the books of account of DHFL and deliberately and dishonestly defaulted on repayment of the legitimate dues, thereby causing a wrongful loss of approx Rs 34,000 Crore to the consortium lenders during the periods January, 2010 to December, 2019.

An FIR was registered u/s 120B, 409, 420, 477A of IPC, 13(2) r/w 13(1)(d) of PC Act, 1988 (as amended in 2018) by the Petitioner CBI, against fourteen persons/entities including DHFL , its Chairman cum MD namely Kapil Wadhawan- first respondent and its director at the relevant time namely Dheeraj Wadhawan-second respondent and certain others. Respondents Kapil Wadhawan and Dheeraj Wadhawan were formally arrested by the Petitioner-CBI.

Respondents Kapil Wadhawan and Dheeraj Wadhawan filed an application u/s 167 (2) Cr. PC before the Court of Special Judge, CBI and they were granted statutory bail u/s 167 (2) Cr.P.C with the observation that the chargesheet filed although within stipulated time was incomplete and hence Respondents were entitled to mandatory bail as per law. CBI had approached the High Court primarily challenging the said order on the ground that the right to claim default bail u/s 167(2) could be invoked only if the chargesheet is not filed within the stipulated time. 

The Bench referred to Section 167 Cr. PC which provides that if a person is arrested and detained in the custody and investigation cannot be completed within 24 hours and there are grounds for believing that the accusation or information is well founded, then investigation agency shall produce such persons before the Court and Court can authorize the detention of the accused in the custody as such the Magistrate deems fit, for a term not exceeding 15 days in the whole. 

“It is a settled proposition  that in the first 15 days, the Court can remand such accused to judicial or police custody”, the Bench opined while also adding that under Section 167 (2) the magistrate has no power to authorize detention beyond the period of 60 days or 90 days, depending upon the facts of the case, if the investigation is not completed. Thus, it was clarified that as per Cr. P.C., it’s completion of investigation and not filing of the charge sheet.

“Thus, the conjoint reading of Section 57 Cr. PC, Section 167 Cr. PC and Section 309 Cr.P.C. makes it amply clear that immediately upon arrest of an accused, the police has to produce the accused before the Court within 24 hours and thereafter, during the investigation, the Court can remand the accused for 60 days / 90 days as the case may be depending upon the nature of the case. During the inquiry/trial the accused can be remanded to Judicial custody under section 309 Cr.P.C”,the Bench observed.

It was made very clear by the Bench that merely because in the charge sheet if the investigating agency has stated they want to conduct further investigation, the charge sheet cannot be termed as a preliminary charge sheet. The police has a right to conduct further investigation. However, at the same time, the investigating agency under the garb of further investigation cannot be allowed to file the police report without completion of investigation, only to defeat the right of statutory bail.

“The investigating agency in its anxiety of keeping the accused persons in custody may take a plea that the investigation is  complete. However, the best judge in this regard should be the trial Court, the Bench held while further adding, “If the investigation is not completed then merely because the report has been filed, the right of statutory bail cannot be defeated. Certainly it depends upon the facts of each case and no fixed formula can be laid down in this regard.”

The Court mentioned that the ASJ had passed a detailed and reasoned order holding that the charge sheet so filed was incomplete. Without finding any ground to interfere with or alter this opinion, the Bench said, “It is a settled proposition that it is the jurisdiction of the Magistrate/learned Special Judge alone to decide whether the material placed by the prosecution along with the report (charge sheet) was having sufficient evidence or not. Since the learned Special Judge has recorded a reasoned and conscious view that the charge sheet so filed on the face of it was incomplete, therefore this Court finds it difficult to interfere with the same.”

Thus, observing that merely, filing of the chargesheet, whether incomplete or piecemeal cannot defeat the basic purpose of Section 167 (2) Cr. P.C., the Bench dismissed the petition.