New Delhi: Over 3.3 lakh documents in over two dozen trunks, and over a 100 accused — the case of alleged misappropriation of funds to the tune of Rs 34,615 crore by Dewan Housing Finance Limited (DHFL) in connivance with public servants, among others, is set to be heard by a special CBI court designated specifically to hear this case.
In an order passed on 2 August, Special CBI judge Ashwani Kumar Sarpal of the Rouse Avenue Court noted that as per directions of the Delhi High Court, received on 1 August, his court has been designated to “exclusively deal” with the DHFL case. He also said that “remaining cases are to be transferred to different courts” by the Principal District and Sessions Judge cum Special Judge (Prevention of Corruption Act) CBI, Rouse Avenue Court.
It was special CBI judge Sarpal who had requested the Delhi HC “to designate one special court for doing this matter only”, in an order passed in April this year.
The CBI FIR dated 20 June, 2022, seen by ThePrint, alleged that the then Chairman and Managing Director of DHFL, Kapil Wadhawan, and his brother and DHFL Director Dheeraj Wadhawan, among others, entered into a “criminal conspiracy” to cheat a consortium of 17 banks led by the Union Bank of India.
The 17 banks in the consortium were Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Federal Bank, HDFC Bank, IDBI Bank, Indian Bank, Indian Overseas Bank, Karnataka Bank, Punjab & Sind Bank, Punjab National Bank, South Indian Bank, State Bank of India, UCO Bank and Union Bank of India.
The FIR alleged that the accused induced the consortium banks to sanction huge loans totalling Rs 42,871 crore but siphoned off and misappropriated a significant portion of the funds by falsifying the books of DHFL. It claimed that the accused then dishonestly defaulted on repayment of the legitimate dues of the consortium banks, causing them a wrongful loss of Rs 34,615 crore to the consortium lenders.
The CBI has filed two chargesheets in the case. Lawyers involved with the case confirmed to ThePrint that the trial court is currently dealing with applications filed under Section 207 of the Code of Criminal Procedure, which mandates supply of police reports and other documents to the accused.
After filing of the chargesheet, the accused often file applications demanding certain documents on the basis of the chargesheet. After these applications are decided by the trial court, it will begin hearing arguments on the charges to be framed against the accused.
‘Need to expedite trial’
Over the past two years, the trial court in this case has passed at least 531 orders, over different applications and hearings in the case.
Pointing out that this case is described as the “biggest bank fraud case of India” in his April order, judge Sarpal had explained that the case has a total of 108 accused, including people and entities, and that the investigation in the case is still going on by the CBI in respect of the money transferred to foreign countries.
The judge had also pointed to the hefty documents and the number of witnesses cited in the case, to highlight the need for an exclusive court to deal with the matter.
He pointed out that the number of documents relied upon in the case ran into 3,31,000 cases kept in 26 different trunks, and another 1 lakh pages of unrelied documents may be deposited by the CBI with the court. A total of 736 witnesses have been cited by the CBI to prove its case.
“Thus, there is a need to expedite the trial which cannot take place in normal court dealing with other matters also,” the court observed, adding that there was a necessity for a special designated court to deal with the case exclusively and take up the matter on a day-to-day basis.
Judge Sarpal had said that in view of the number of witnesses, documents and number of accused persons in the case, the trial “may not be concluded even within 2-3 years”, even if the case is taken up on a day-to-day basis.
“Accordingly, Hon’ble High Court be informed about above information with request to designate one special court for doing this matter only,” he had then observed.
Over 3 lakh pages, in 26 trunks
The FIR in the case was lodged on the basis of a written complaint by Vipin Kumar Shukla, deputy general manager and branch head of Union Bank of India’s Industrial Finance Branch in Nariman Point, Mumbai.
As per court documents, it has been alleged that the offences were committed from January 2010 to December 2019.
CBI’s main chargesheet in the case was filed against 18 individuals and 56 entities, while mentioning that further investigation was continuing against different persons, companies, banks and National Housing Bank officials. Along with the main chargesheet, 1,188 documents consisting of roughly 61,000 pages kept in six trunks were also submitted in the court, as per the trial court’s 27 April order.
The same order also said that CBI has seized about 50 digital evidence including pen drives, CDs, and hard disks, and has mentioned 215 witnesses to prove the allegations.
The trial court had taken cognizance of the first chargesheet in the case on 26 November, 2022, and 74 accused named in that chargesheet were summoned. Out of 74 accused, 18 are individuals and the rest are different companies — most of which haven’t shut down in the Registrar of Companies’ records, but virtually do not exist.
This chargesheet alleged that the main culprit in the case is DHFL, its chairman cum MD, directors and a few officials. However, DHFL was not chargesheeted in the case because it has insolvency proceedings going on against it and any such entity enjoys immunity from prosecution under the Insolvency and Bankruptcy Code 2016.
Shell companies, ‘Bandra books’
As per court orders, it has been alleged that the Wadhawan brothers, in conspiracy with others, sanctioned and disbursed loans to various persons and entities from DHFL’s accounts, and misappropriated those funds by falsifying the books of accounts.
Audit reports allegedly found that DHFL had given loans of over Rs 11,765 crore to approximately 87 Shell Companies. These loans, orders noted, were allegedly given to 2,60,315 fictitious persons without any documentation, security or even loan applications. Shell companies were allegedly formed on paper by Wadhawan Brothers in the names of their employees, associates, relatives and friends for diversion of the funds out of DHFL account.
It has been alleged that the accused undertook these fake transactions through a fictitious portfolio which was given the code name ‘Bandra books’. The disbursement of the amounts to the shell companies was done through a fictitious branch known as ‘Bandra branch-001’ — which did not exist and was only created virtually with the code name.
The amount was disbursed for construction of buildings but the money was allegedly used for investment in shares and debentures, besides purchasing securities from the companies which were linked to the promoters of DHFL itself. The diverted funds were also misused for personal expenses including purchase of jewelry, paintings, credit card payments, foreign trip payments and chartered planes.