SCsets aside order granting default bail to ex-DHFL promoters Kapil & Dheeraj Wadhawan in Rs 34,000 bank fraud case, says accused can’t claim right to default bail due to pendency of further investigation against other accused or on ground of incomplete chargesheet
Justices Bela M. Trivedi & Pankaj Mithal [24-01-2024]

Read Order: CENTRAL BUREAU OF INVESTIGATION v. KAPIL WADHAWAN & ANR [SC-CRIMINAL APPEAL NO. 391 OF 2024]

Tulip Kanth

New Delhi, January 25, 2024: While allowing CBI’s appeal challenging the orders of the lower Courts granting bail to Wadhawan brothers in Rs 34,000 DHFL-bank fraud case, the Supreme Court has observed that the respondents could not have claimed the statutory right of default bail under Section 167(2) CrPC on the ground that the investigation qua other accused was pending.

The appellant-CBI had approached the Division Bench of Justice Bela M. Trivedi and Justice Pankaj Mithal to challenge the impugned order passed by the High Court of Delhi upholding the order granting default bail to respondent nos. 1 and 2.

The factual background of this case was an FIR came to be registered on the basis of the complaint lodged by Sh. Vipin Kumar Shukla, DGM, Union Bank of India, for the offences punishable under Section 120-B r/w Section 409, 420 and 477A of IPC and Section 13(2) r/w Section 13(1)(d) of PC Act, 1988 against Dewan Housing Finance Corporation Ltd. (DHFL) and 12 other accused persons/companies. It was alleged in the said FIR that Sh. Kapil Wadhawan, the then Chairman and Managing Director, DHFL, along with 12 other accused persons entered into a criminal conspiracy to cheat the consortium of 17 banks led by Union Bank of India, and in pursuance to the said criminal conspiracy, the said accused persons/entities induced the consortium banks to sanction huge loans aggregating to Rs 42,000 crores approx. and thereafter they siphoned off and misappropriated a significant portion of the said funds by falsifying the books of account of DHFL. It was submitted that they deliberately and dishonestly defaulted on repayment of the legitimate dues of the said consortium banks, and thereby caused a wrongful loss of Rs34,000 crores to the consortium lenders during the period January, 2010 to December, 2019.

The respondent no. 1- Kapil Wadhawan and respondent no. 2- Dheeraj Wadhawan came to be arrested by the appellant-CBI in connection with the said FIR and were remanded to judicial custody on 30.07.2022.After carrying out the investigation, a chargesheet came to be filed by the CBI against 75 persons/entities including the respondent nos. 1 and 2.

Respondent nos. 1 and 2 filed an application under Section 167(2) seeking statutory bail. The Special Court vide the order dated 03.12.2022 holding that the investigation was incomplete and the chargesheet filed was in piecemeal, further held that the respondent nos. 1 and 2 (A-1 and A-2) were entitled to the statutory bail under Section 167(2).

It was the case of the appellant that a report under Section 173 Cr.P.C. filed by the CBI was complete containing all the details as required by law. The statutory bail under Section 167(2) had been granted by the courts below after the Special Court took the cognizance of the alleged offences against the respondents, which was against the statutory scheme of the Code.

The main question that fell for consideration was whether the respondents were entitled to the benefit of the statutory right conferred under the proviso to sub section 2 of Section 167, on the ground that the investigation qua some of the accused named in the FIR was pending, though the report under sub-section (2) of Section 173 (Chargesheet) against respondents along with the other accused was filed within the prescribed time limit, even though the cognizance of the offence was taken by the special court before the consideration of the application of the respondents seeking default bail under Section 167 (2).

The bone of contention raised by the Senior Counsels for the Respondents was that the appellant – CBI having kept the investigation open qua other respondents, the ingredients of Section 173 could not be said to have been complied with and therefore the report/ chargesheet under Section 173 could not be said to be a complete chargesheet.

The Bench referred to K. Veeraswami vs. Union of India and Others  [LQ/SC/1991/332]where the Supreme Court has aptly explained the scope of Section 173(2). It was opined that the statutory requirement of the report under Section 173 (2) would be complied with if the various details prescribed therein are included in the report. The report under Section 173 is an intimation to the court that upon investigation into the cognizable offence, the investigating officer has been able to procure sufficient evidence for the court to inquire into the offence and the necessary information is being sent to the court. The report is complete if it is accompanied with all the documents and statements of witnesses as required by Section 175 (5). The Bench further opined that as settled in the afore-stated case, it is not necessary that all the details of the offence must be stated.

Moreover, the Bench observed that the benefit of proviso appended to sub-section (2) of Section 167 of the Code would be available to the offender only when a chargesheet is not filed and the investigation is kept pending against him. Once however, a chargesheet is filed, the said right ceases. It was noted that the right of the investigating officer to pray for further investigation in terms of sub-section (8) of Section 173 is not taken away only because a chargesheet is filed under sub-section (2) thereof against the accused.

“Though ordinarily all documents relied upon by the prosecution should accompany the chargesheet, nonetheless for some reasons, if all the documents are not filed along with the chargesheet, that reason by itself would not invalidate or vitiate the chargesheet”, the Bench said.

Once from the material produced along with the chargesheet, the court is satisfied about the commission of an offence and takes cognizance of the offence allegedly committed by the accused, it is immaterial whether the further investigation in terms of Section 173(8) is pending or not.

“The pendency of the further investigation qua the other accused or for production of some documents not available at the time of filing of chargesheet would neither vitiate the chargesheet, nor would it entitle the accused to claim right to get default bail on the ground that the chargesheet was an incomplete chargesheet or that the chargesheet was not filed in terms of Section 173(2) of Cr.P.C”, the Bench remarked.

Further, placing reliance upon Dinesh Dalmia vs. CBI [LQ/SC/2007/1141],the Bench stated, “…we have no hesitation in holding that the chargesheet having been filed against the respondents-accused within the prescribed time limit and the cognizance having been taken by the Special Court of the offences allegedly committed by them, the respondents could not have claimed the statutory right of default bail under Section 167(2) on the ground that the investigation qua other accused was pending. Both, the Special Court as well as the High Court having committed serious error of law in disregarding the legal position enunciated and settled by this Court, the impugned orders deserve to be set aside and are accordingly set aside.”

Thus, the Bench directed that the respondents-accused shall be taken into custody in this case, if released on default bail pursuant to the impugned orders. However, it was clarified that observations made in this judgment would not influence the Special Court or High Court while deciding the other proceedings, if any pending before them, on merits.