# Kapil Wadhwan (In Jail) v. State of U.P

- **Citation:** (2023) 5 ILRA 1274
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-04-28
- **Case number:** Crl. Misc. Bail Application No. 3504 of 2023
- **Bench:** Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/kapil-wadhwan-in-jail-v-state-of-u-p-50169
- **Pages:** 19

## Headnote

A. Criminal Law - Criminal Procedure
Code,1973 - Section 439 - Indian Penal
Code,1860-Sections 120-B ,409, 420, 467,
468, 471 - Section 7-A, 8 & 13 (2) r/w
Section 13 (1) (d) of Prevention of
Corruption
Act,
1988-
the
applicant
entered in a criminal conspiracy with
other
co-accused
persons
and
in
furtherance
of
the
said
criminal
conspiracy, the surplus funds of UPPCL
trust were got invested in fixed deposits
of DHFL in contravention of investment
guidelines dated 02.03.2015 issued by the
Ministry of Finance, Government of India-
the accused persons had dishonestly and
fraudulently obtained higher ratings from
rating agencies on the basis of false and
bogus audited balance sheets and bogus
financial statements-the applicant and coaccused in criminal conspiracy with other
co-accused persons diverted funds from
the bank accounts of DHFL to bank
accounts of other companies by way of
sanctioning
bogus
project
loans
and
further diverted the said funds to their
own companies and used the said fundsprima facie appears that the deposit of
amounts in fixed deposits with DHFL
would create a relationship of creditor and
debtor between the Trust and DHFL and it
would not amount to entrustment, so as
to attract the offence of breach of trust-So
far and the offences under 420, 467, 468
and 471 I.P.C. are concerned, it is not
alleged that the aforesaid acts were
committed by the applicant himself and it
is alleged that he conspired and got it
done through certain officials of DHFL,
and those officials have already been
granted bail- Charge-sheet and as many
5 All. Kapil Wadhwan Vs. State of U.P.
1275
as 5 supplementary charge-sheets have
already been filed in the matter and the
trial Court has already taken cognizance
of the case-The charge-sheet mentions
the names of as many as 57 witnesses of
the case and the trial is yet to commence
and it would certainly take a very long
time
to
conclude
and
keeping
the
applicant incarcerated without his guilt
having been established would not be
proper, unless his case falls within any
exception disentitling him to be enlarged
on bail-the applicant is entitled to be
released on bail pending conclusion of the
trial.(Para 1 to 62)

B. The law is well settled that when
moneys are deposited in a bank, the
relationship that is constituted between
the banker and the customer is one of
debtor and creditor and not trustee and
beneficiary. The banker is entitled to use
the monies without being called upon to
account for such user, his only liability
being to return the amount in accordance
with the terms agreed between him and
the customer. (Para 49)

The application is allowed. (E-6)

List of Cases cited:

## Text

_Characters 0–39,948 of 62,343. This is a partial read: ask again with offset=39948 for what follows._

1274 INDIAN LAW REPORTS ALLAHABAD SERIES
of any offence by Special Court shall have
precedence over the trial of any other case
against the accused in any other Court (not
being a Special Court) and shall be
concluded in preference to the trial of such
other case and accordingly the trial of such
other case shall remain in abeyance."

20. The trial in the offence under the
Gangsters Act has not been conducted prior
to trial for substantive offence as trials of
substantive offence and Gangsters Act could
not be conducted in the same Court for the
reason that the trial of substantive offence was
transferred by the Supreme Court to New
Delhi, but trial of the offence under the
Gangsters Act was not transferred and,
therefore, Section 12 of the Gangsters Act
would have no applicability in the present
case. Further, accused-petitioner never took
this plea during the trial of substantive offence
by Special Court at New Delhi. I, therefore
find no force in the submission of the learned
Senior Advocate for the accused-petitioner
that the proceedings under the Gangsters Act
would get vitiated on this ground. If an
accused is found to be the member of the gang
and he or any of the members of the gang is or
has been committing offene under Chapter
XVI or Chapter XVII or Chapter XXII of the
IPC, he is likely to be punished under the
Gangsters Act.

21. In view of the above discussions, I
do not find any merit in the present petition
and,
therefore,
the
same
is
hereby
dismissed.
----------
(2023) 5 ILRA 1274
APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 28.04.2023

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.
Crl. Misc. Bail Application No. 3504 of 2023

Kapil Wadhwan ...Applicant (In Jail)
Versus
State of U.P. ...Opposite Party

Counsel for the Applicant:
Sri Pranjal Krishna

Counsel for the Opposite Party:
Sri Anurag Kumar Singh

A. Criminal Law - Criminal Procedure
Code,1973 - Section 439 - Indian Penal
Code,1860-Sections 120-B ,409, 420, 467,
468, 471 - Section 7-A, 8 & 13 (2) r/w
Section 13 (1) (d) of Prevention of
Corruption
Act,
1988-
the
applicant
entered in a criminal conspiracy with
other
co-accused
persons
and
in
furtherance
of
the
said
criminal
conspiracy, the surplus funds of UPPCL
trust were got invested in fixed deposits
of DHFL in contravention of investment
guidelines dated 02.03.2015 issued by the
Ministry of Finance, Government of India-
the accused persons had dishonestly and
fraudulently obtained higher ratings from
rating agencies on the basis of false and
bogus audited balance sheets and bogus
financial statements-the applicant and coaccused in criminal conspiracy with other
co-accused persons diverted funds from
the bank accounts of DHFL to bank
accounts of other companies by way of
sanctioning
bogus
project
loans
and
further diverted the said funds to their
own companies and used the said fundsprima facie appears that the deposit of
amounts in fixed deposits with DHFL
would create a relationship of creditor and
debtor between the Trust and DHFL and it
would not amount to entrustment, so as
to attract the offence of breach of trust-So
far and the offences under 420, 467, 468
and 471 I.P.C. are concerned, it is not
alleged that the aforesaid acts were
committed by the applicant himself and it
is alleged that he conspired and got it
done through certain officials of DHFL,
and those officials have already been
granted bail- Charge-sheet and as many
5 All. Kapil Wadhwan Vs. State of U.P.
1275
as 5 supplementary charge-sheets have
already been filed in the matter and the
trial Court has already taken cognizance
of the case-The charge-sheet mentions
the names of as many as 57 witnesses of
the case and the trial is yet to commence
and it would certainly take a very long
time
to
conclude
and
keeping
the
applicant incarcerated without his guilt
having been established would not be
proper, unless his case falls within any
exception disentitling him to be enlarged
on bail-the applicant is entitled to be
released on bail pending conclusion of the
trial.(Para 1 to 62)

B. The law is well settled that when
moneys are deposited in a bank, the
relationship that is constituted between
the banker and the customer is one of
debtor and creditor and not trustee and
beneficiary. The banker is entitled to use
the monies without being called upon to
account for such user, his only liability
being to return the amount in accordance
with the terms agreed between him and
the customer. (Para 49)

The application is allowed. (E-6)

List of Cases cited:

1. Shanti Prasad Jain Vs Dir. of Enforcement,
FERA(1963) 2 SCR 297

2. Anumati Vs PNB, (2004) 8 SCC 498

3. Baliya Vs St. of M.P. (2012) 9 SCC 696

4. Sanjay Chandra Vs CBI (2012) 1 SCC 40

5. Satender Kumar Antil Vs CBI (2022) 10 SCC
51

6. Mahesh Kumar & ors. Vs CBI SCC OnLine Del
3903

7. Praveen Kumar Agarwal Vs CBI (2022) SCC
OnLine Del 1768

8. Y.S. Jagan Mohan Reddy Vs CBI (2013) 7
SCC 439

9. St. of Bih. Vs Amit Kumar (2017) 13 SCC 751

10. Rohit Tandon Vs Dir. of Enforcement(2018)
11 SCC 46

11. Mahipal Vs Rajesh Kumar (2020) 2 SCC 118

12. Shivnarayan Laxminarayan Joshi Vs St. of
Mah.(1980) 2 SCC 465.

13. Sanjay Chandra Vs CBI (2012) 1 SCC 40

14. Y.S. Jagan Mohan Reddy Vs CBI (2013) 7
SCC 439

15. Dataram Singh Vs St. of U.P. (2018) 3 SCC
22

16. P. Chidambaram Vs Dir. of Enforcement
(2020) 13 SCC 791

17. Satender Kumar Antil Vs CBI (2022) SCC
OnLine SC 825

18. Peeyush Kumar Jain Vs U.O.I. (2022) 121
ACC 448 = (2023) 1 All LJ 10

19. Shivnarayan Laxminarayan Joshi Vs St. of
Mah. (1980) 2 SCC 465

(Delivered by Hon'ble Subhash Vidyarthi, J.)

1.

Heard
Sri
Gopal
Swaroop
Chaturvedi, Sri. Satish Chandra Misra and
Sri Nandit Kumar Srivastava Senior
Advocates
assisted
by
Ms.
Soumya
Chaturvedi,
Sri
Pranjal
Krishna,
Sri
Samarth Agarwal, Smt. Pooja Kothari and
Ms. Urvi Purve, Advocates, the learned
Counsel for the applicant and Sri Anurag
Kumar
Singh
Advocate,
the
learned
counsel representing the Central Bureau of
Investigation (C.B.I.).

 2. The instant application has been
filed seeking release of the applicant on
bail in Criminal Case No. 370 of 2020,
arising
out
of
Case
Crime
No.
RC0062020A0005, registered with Police
1276 INDIAN LAW REPORTS ALLAHABAD SERIES
Station CBI/ACB, Lucknow, under Section
120-B read with Sections 409, 420, 467,
468, 471 I.P.C. and Section 7-A, 8 and
Section 13 (2) read with Section 13 (1) (d)
of Prevention of Corruption Act, 1988,
pending in the Court of Additional District
Judge/Special Judge, Anti Corruption,
C.B.I. (West), Lucknow.

3. On 02.11.2019, a First Information
Report bearing Case Crime No. 540 of
2019 for commission of offences under
Sections 409, 420, 467, 468 and 471 IPC
was lodged in Police Station Hazaratganj,
Lucknow by Sri. I. M. Kaushal, Secretary
of Uttar Pradesh Power Corporation
Contributory Provident Fund Trust against
(1) Praveen Kumar Gupta, the then
Secretary of the Trust and (ii) Sudhanshu
Dwivedi, the then Director Finance, stating
that on 09.05.2013, the Board of Trustees
of the Trust had decided that the amount of
General Provident Fund will be invested in
Fixed Deposit Schemes of Nationalized
Banks for 1 to 3 years. On 21.04.2014, a
decision was taken by the Board of
Trustees to consider other options, which
are secured like investments made in the
bank and which give higher assured interest
and the Director Finance was authorized to
take the services of a Financial Consultant,
if necessary. Till October 2016, the amount
of Provident fund was invested in fixed
deposit schemes of Nationalized Banks. In
December 2016, on a proposal made by
Praveen Kumar Gupta, Secretary of the
trust, which was approved by Sudhanshu
Dwivedi, the then Director Finance and A.
P. Mishra, the then Managing Director,
amounts of General Provident Fund and
Contributory Provident Fund were started
being invested in Fixed Deposit Schemes
of PNB Housing. In March 2017, the
aforesaid named accused persons Praveen
Kumar Gupta and Sudhanshu Dwivedi
started investing the amounts of GPF and
CPF in DHFL in violation of the procedure
laid down by the Notification dated
02.03.2015 issued by the Ministry of
Finance, Government of India, as per
which a maximum of 50% of nongovernment Provident fund can be invested
in Scheduled Commercial Banks.

4. The F.I.R. further states that in a
meeting of the Board of Trustees held on
24.03.2017, it was agreed to consider the
investment proposals as per Government
Notification dated 02.03.2015 in securities
other than deposits of Nationalized Banks,
in AAA rated companies giving higher
security
and
high
interest
rates.
In
contravention of the clear guidelines of the
government of India contained in the
notification dated 02.03.2015 prohibiting
investment of amounts of the employees
Provident Fund in institutions other than
Scheduled Commercial Banks, Secretary of
the Trust Praveen Kumar Gupta invested
₹2,631.90 Crores in DHFL, after obtaining
approval from Director Finance Sudhanshu
Dwivedi, knowing fully well that DHFL is
not a scheduled commercial Bank and it is an
unsecured private institution. Out of the
aforesaid amount, ₹ 1185.50 Crores had been
received back by the trust and ₹ 1445.70
Crores were yet to be received. Similarly, an
amount of ₹ 1491.50 Crores was invested in
DHFL from the Contributory Provident Fund
amount, out of which ₹ 669.30 Crores had
been repaid and ₹ 822.20 Crores were
pending. Thus a total of ₹ 2267.90 Crores
principal amount was to be received from
DHFL. The FIR alleged that the named
accused persons Praveen Kumar Gupta and
Sudhanshu Dwivedi had committed the
offence of criminal breach of trust.

5. After registration of the case, the
investigation
was
transferred
to
the
5 All. Kapil Wadhwan Vs. State of U.P.
1277
Economic Offences Wing (EOW) of Uttar
Pradesh Police on the same day, i.e.,
02.11.2019. The EOW filed a charge-sheet
on 01.02.2020 against Praveen Kumar
Gupta, Sudhanshu Dwivedi and Ayodhya
Prasad Misra, the then Managing Director
of UPPCL. Thereafter the EOW filed the
First
supplementary
charge-sheet
on
11.02.2020 against Abhinav Gupta, son of
Naveen Kumar Gupta and his friend Ashish
Chaudhary. The second supplementary
charge-sheet was filed by EOW on
02.03.2020 against seven other persons.
The third supplementary charge-sheet was
filed by EOW on 05.03.2020 against four
more persons.

6. The matter was subsequently
transferred to CBI and on 05.03.2020 the
CBI registered a fresh First Information
Report
No. RC 00620208A0005
for
commission of offences under Sections
409, 420, 467, 468 and 471 IPC. Thereafter
CBI conducted investigation in furtherance
of the aforesaid FIR and it filed the fourth
supplementary charge-sheet on 29.12.2020
against another accused person.

7. The applicant was not named in the
FIR lodged by the informant and in the
charge-sheet or the three supplementary
charge-sheets filed by the EOW. He was
also not named in the FIR lodged by the
CBI and in the fourth supplementary
charge-sheet submitted by the CBI.

8. The Trial Court took cognizance of
the offences against all the charge-sheeted
accused persons.

9. On 22.08.2022, the CBI submitted
another charge-sheet against (i) Kapil
Wadhawan (the applicant), (ii) Dheeraj
Wadhawan and (iii) M/s Dewan Housing
Finance Ltd. (DHFL) alleging commission
of offences under Sections 120 B read with
420, 409, 467, 468, 471 IPC and Section 7A, 8 & 13 (2) read with 13 (1) (d) of
Prevention Of Corruption Act, 1988 and
substantive offences thereof. The chargesheet states the huge amounts of General
Provident Fund and Contributory Provident
Fund were transferred in the bank accounts
of DHFL for the creation of fixed deposits
illegally and the applicant Kapil Wadhawan
was the Chairman and Managing Director
of DHFL and the co-accused Dheeraj
Wadhawan was a Director of the Company
during the relevant period and both of them
entered in a criminal conspiracy with coaccused persons Praveen Kumar Gupta,
Amit Prakash, Mahesh Gupta, and Alok
Garg in and around March 2017 and in
furtherance of the said criminal conspiracy,
the applicant and Dheeraj Wadhawan
dishonestly and fraudulently obtained the
investments of surplus funds of UPPCL
trust in fixed deposits of DHFL in
contravention of investment guidelines
dated 02.03.2015 issued by the Ministry of
Finance, Government of India 02.03.2015.

10. The charge-sheet further states
that the accused persons dishonestly and
fraudulently obtained higher ratings from
rating agencies on the basis of false and
bogus audited balance sheets and bogus
financial
statements
and
thereby
dishonestly
and
fraudulently
obtained
investments to the tune of ₹ 4,122 Crores of
UPPCL funds in fixed deposits of DHFL
during March 2017 to December 2018, out
of which surplus funds to the tune of ₹
2267.9 Crores were misappropriated by the
applicant
and
co-accused
Dheeraj
Wadhawan in criminal conspiracy with
other co-accused persons and they diverted
the said funds from the bank accounts of
DHFL to bank accounts of other companies
by way of sanctioning bogus project loans
1278 INDIAN LAW REPORTS ALLAHABAD SERIES
and further diverted the said funds to their
own companies and used the said funds.

11. The applicant was arrested in
another case by CBI as well as ED and he
was remanded to judicial custody and was
lodged in Taloja jail since May 2020. The
Enforcement
Directorate
registered
ECIR/MBZO-I/02/2020 dated 03.02.2020
(arising out of the present case) and filed a
complaint. Bearing Special Case No. 1389
of 2021 in the Special Court PMLA,
Mumbai, naming the applicant also as an
accused, whereas till that time, the
applicant was not made an accused in the
present case. The applicant as released on
furnishing a bond under Section 188
Cr.P.C. by order dated 14.02.2022 While
the applicant was already in judicial
custody in another case, on 24.05.2020, the
applicant was taken from Taloja Jail and he
was produced before the Special Judge,
CBI, Lucknow on 26.05.2020, from where
he was initially remanded to the custody of
CBI for 14 days and thereafter he was sent
to judicial custody and since then the
applicant is languishing in jail in the
present case.

12. Sri Gopal Swaroop Chaturvedi
Senior Advocate has submitted that even as
per the prosecution case, ₹ 4,122 Crores
were invested in fixed deposit schemes of
DHFL during the period March 2017 to
December 2018 and the company repaid ₹
1,854.8 Crores. Repayments were being
made regularly in quarterly installments
without any break and without any
complaint. On 30.09.2019, the High Court
of Bombay passed an interim order in
Commercial Suit (L) number 134 of 2019
titled
Reliance
Nippon
Life
Asset
Management Ltd versus Dewan Housing
Finance Corporation Ltd and two others
restraining DHFL from making further
payments to any unsecured creditor and
secured creditor, except in cases where
payments were made on pro rata basis to all
secured creditors including the plaintiff
including out of its current and future
receivables, in preference to the payments
owed to the plaintiff, without the sanction
of the court. It was after passing of the
aforesaid order by the Bombay High Court,
that DHFL became incapacitated from
making due payments to the trust. The
aforesaid interim order was made absolute
by means of an order dated 10.10.2019.
DHFL had informed about the aforesaid
order by sending a letter dated 08.11.2019
to the trust.

13. On 18.11.2019, the Trust filed an
intervention application in the aforesaid
suit before the Bombay High Court stating
that
pursuant
to
the
orders
dated
30.09.2019 and 10.10.2019 passed by the
High Court, DHFL has refused to release
the amounts due to the trust and the order
passed by the High Court had caused grave
injustice to the employees of UPPCL and it
would continue to do so if not varied. It
was stated in the application that since
March 2017, ₹2631,20,00,000/- in the form
of 319 fixed deposits, out of which 158
fixed deposit worth ₹1185,50,00,000/- had
been measured and paid and 41 fixed
deposits
worth
₹352,00,00,000/-
had
matured and were outstanding. Until
30.09.2019, as and when of fixed deposit
matured all the interest payable under
became due, the maturity amount/interest was
paid by DHFL. After passing of the interim
order, DHFL did not pay any amount to the
trust and the trust and it is stated that the only
thing to impeding the release of the amounts
to the trust was the order passed by the High
Court. The trust requested the High Court to
pass an order directing DHFL to release the
amounts due to it.
5 All. Kapil Wadhwan Vs. State of U.P.
1279

14. Based on the aforesaid factual
situation, the first submission of Sri Gopal
Swaroop Chaturvedi is that there is no
dispute that DHFL continued to make
payments to the trust till passing of the
interim order by the Bombay High Court
restraining it from making the payments
and the repayment could not be made
thereafter only because of the order passed
by the Bombay High Court. The dispute
started only when DHFL could not make
payments to the trust in compliance of the
order passed by the Bombay High Court.
He has submitted that since the payments
were stopped in compliance of the order
passed by the Bombay High Court, the
non-payment of amount would not be an
offence, as provided by section 78 I.P.C.,
which reads as follows: -

"78. Act done pursuant to the
judgment or order of Court.--Nothing
which is done in pursuance of, or which is
warranted by the judgment or order of, a
Court of Justice, if done whilst such
judgment or order remains in force, is an
offence, notwithstanding the Court may
have had no jurisdiction to pass such
judgment or order, provided the person
doing the act in good faith believes that the
Court had such jurisdiction."

15. Sri. Chaturvedi has next submitted
that the offence of criminal breach of trust
is not made out by the allegations leveled
by the prosecution itself, as it is an
admitted case that the amounts had been
invested by the trust in fixed deposits with
DHFL and such a deposit does not amount
to ''entrustment' of the amount. In support
of the aforesaid submission Sri. Chaturvedi
has relied upon decisions of the Hon'ble
Supreme Court in the case of Shanti
Prasad Jain v. Director of Enforcement,
FERA, (1963) 2 SCR 297 and Anumati v.
Punjab National Bank, (2004) 8 SCC
498.

16. Sri. Chaturvedi has submitted that
as the relationship between DHFL and the
Trust is one of debtor and creditor and not
trustee and beneficiary, there is no occasion
for commission of the offence as defined in
Section 405 IPC and punishable in Section
409 I.P.C.

17. Sri. Chaturvedi has further
submitted that the offence of cheating is
also not made out, as the Trust itself had
made investments in fixed deposits with
DHFL. He has further submitted that it was
not for the first time that the Trust had
made such investments. Prior to making
investments with DHFL, the Trust had
made similar deposits with LIC Housing
Finance Ltd. and PNB Housing in the year
2016. The Trust had willingly made the
investments in fixed deposits in DHFL for
obtaining better returns and the investments
were not obtained by deceiving any person
by fraudulently or dishonestly inducing him
to make the investments. He has submitted
that there is no allegation that the applicant
has made any false document or has forged
the same and, therefore, no case is made
out for punishment of the applicant under
Sections 467 or 468.

18. Sri. Chaturvedi has submitted that
Sections 405 and 415 IPC operate in two
different fields and both cannot be applied
together. For attracting an offence of
Criminal Breach of trust, entrustment of the
property is necessary, which means that the
person complaining had himself entrusted
the
property
willingly,
whereas
for
attracting an offence of cheating, it is
necessary that the offender had fraudulently
or dishonestly induced the victim to deliver
the property to him.
1280 INDIAN LAW REPORTS ALLAHABAD SERIES

19. Sri. Chaturvedi has further
submitted that there is no evidence to prima
facie establish the allegation of Criminal
Conspiracy. He has placed reliance on a
decision of the Hon'ble Supreme Court in
Baliya v. State of M.P., (2012) 9 SCC 696,
in which the Hon'ble Supreme Court held
that: -

"17. The offence of criminal
conspiracy has its foundation in an
agreement to commit an offence or to
achieve a lawful object through unlawful
means. Such a conspiracy would rarely be
hatched in the open and, therefore, direct
evidence to establish the same may not be
always forthcoming. Proof or otherwise of
such conspiracy is a matter of inference
and the court in drawing such an inference
must consider whether the basic facts i.e.
circumstances from which the inference is
to be drawn have been proved beyond all
reasonable doubt, and thereafter, whether
from
such
proved
and
established
circumstances no other conclusion except
that the accused had agreed to commit an
offence can be drawn. Naturally, in
evaluating the proved circumstances for the
purposes of drawing any inference adverse
to the accused, the benefit of any doubt that
may creep in must go to the accused."

20. Sri. Chaturvedi has submitted that
there was no meeting of mind of the
applicant with that of any other accused
person as there is no material to even prima
facie establish that the applicant played any
role in the decision making process of
UPPCL whereby it was decided to make
investments in PNB HFL, LIC HFL and
DHFL and in payment of brokerage to the
brokers.

21. Sri. S. C. Misra, Senior Advocate
has also advanced submissions on behalf of
the applicant and he has submitted that the
charge-sheet states that one of the coaccused persons Lalit Goel Chartered
Accountant had entered into a criminal
conspiracy with Alok Garg, Associate Vice
President, Distribution, (Accounts and
Operations), SMC Global Securities Ltd
and also with Mahesh Kumar Gupta, Senior
Vice President, Distribution, SMC Global
Securities Ltd and in pursuance to the said
criminal conspiracy, investments were
made for the first time in PNB Housing
Finance Ltd in December 2016 through
broker SMC Global Securities Ltd. Lalit
Goel had referred UPPCL to M/s SMC
Global Securities Ltd. for investments in
PNB HFL, DHFL and LIC HFL. The
investments in PNB HFL were made in the
year 2016, wherein the applicant had no
role to play. In the initial FIR lodged by the
Secretary of the trust, the only allegation
was that the two named co-accused
persons, who were officers of UPPCL, had
made investments in violation of the
Government guidelines and there was no
allegation against the applicant. The
allegation against the applicant was made
for the first time in the 5th additional
charge-sheet
alleging
that
he
had
wrongfully obtained
investments.
The
investments made in DHFL were not the
first of its kind and similar investments
were made in PNB HFL in the year 2016
and also in LIC HFL.

22. Sri. Misra has submitted that the
applicant was not an accused till filing of
the 4th additional charge-sheet in the case
and nobody had any grievance against
DHFL or against the applicant. During the
year 2017-18, the total Treasury flow into
DHFL was over ₹ 34,000 Crores and in the
year 2018-19, it was over ₹ 38,000 Crores.
The
investments
made
by
UPPCL
constituted a very small fraction of the total
5 All. Kapil Wadhwan Vs. State of U.P.
1281
investment
received
by
DHFL.
The
applicant was the Chairman and Managing
Director of DHFL, which had more than
15,000 employees and the Fixed Deposit
Department was managed by one Pradeep
Bhadouria, who used to report to the Joint
Managing Director Sri. Harshil Mehta.
UPPCL has made investments in DHFL
through SMC Brokers and even on earlier
occasions, similar investments were made
by UPPCL in PNB Housing Finance and
LIC Housing Finance, which are also nonbanking financial institutions.

23. Sri. Misra has further submitted
that when DHFL became incapacitated to
make repayments because of the interim
order passed by the Bombay High Court,
the RBI superseded its Board of Directors
on
20.11.2019
and
appointed
an
Administrator of the company, after which
the applicant did not have any say in the
affairs of the company. RBI filed
Company Petition No. 4 to 58 of 2019
before
the
National
Company
Law
Tribunal, Mumbai to initiate corporate
insolvency resolution process for DHFL
under the Insolvency And Bankruptcy
Code 2016 and in furtherance of the
aforesaid
process,
Piramal
Housing
Finance Capital Ltd. has taken over the
management and control of DHFL under
an order dated 07.06.2021 passed by the
National
Company
Law
Tribunal
Mumbai.
Piramal
Housing
Finance
Capital Ltd was a business rival of DHFL
and it was only after that it took control
of DHFL, that two employees of the
Company, namely Pradeep Bhadauria and
Govindan
Srinivasan
have
made
a
reference to an alleged conversation
between the applicant and co-accused
Praveen Kumar Gupta, the then Secretary
of the Trust. However, none of the
officials of the Trust have stated anything
regarding involvement of the applicant in
commission of the offences.

24. Sri. Misra has further submitted
that except for the applicant and his
brother - Co-accused Dheeraj Wadhawan,
all the other co-accused persons have
been granted bail in the present case and,
therefore, the applicant is also entitled to
be released on bail on the ground of
parity.

25. Sri. Misra has placed reliance of
the judgments of the Hon'ble High Court
in Sanjay Chandra v. CBI, (2012) 1
SCC 40, Satender Kumar Antil v. CBI,
(2022) 10 SCC 51, Mahesh Kumar &
Ors
Versus
Central
Bureau
of
Investigation, SCC OnLine Del 3903 and
Praveen Kumar Agarwal versus CBI,
2022 SCC OnLine Del 1768.

26. Sri. Nandit Kumar Srivastava
Senior
Advocate
has
also
advanced
submissions in support of the applications
and he has submitted that the applicant was
sent to Delhi, which shows that the custody
of the applicant is not required in
connection with the present case and, for
this reason also, the applicant is entitled to
be enlarged on bail in the present case.

27. Per contra, Sri Anurag Kumar
Singh Advocate has submitted on behalf of
the respondent - CBI that the conspiracy in
the present case was hatched in two parts
the first being at the office of UPPCL,
where a decision was taken to invest the
amount of Provident fund in companies
other than Nationalised Banks and the
second part being performed by the
applicant
and
co-accused
Dheeraj
Wadhawan by obtaining AAA rating by
CARE (Credit Analysis and Research
Ratings) and BWR (Brick Works Ratings)
1282 INDIAN LAW REPORTS ALLAHABAD SERIES
on the strength of bogus documents
showing loans to the tune of ₹ 15,000 crore
given to 2.5 lakh fictitious persons, which
amount actually was the non-performing
asset of DHFL and the fictitious loans were
shown in the books of account to hide the
NPA for obtaining AAA rating.

28. Sri. Singh has further submitted
that DHFL had made a proposal to UPPCL
for paying 8.05% interest on the deposits.
Forged
minutes
of
meeting
dated
24.03.2017 of the Trustees of UPPCL
Contributory Provident Fund Trust were
prepared wherein it was recorded that the
Board of Trustees had agreed to consider
the investment proposals as per government
notification
dated
02.03.2015
in
the
securities with higher security and higher
interest rate other than term deposits of
Nationalised
Banks
and
AAA
rated
companies and it was further resolved that
further investments in securities will be
decided by Secretary (Trust) on case to
case basis with the consent/approval of
Director (Finance), UPPCL and the trustee.
In furtherance of the aforesaid forged
resolution the Secretary / Director engaged
brokers. Abhinav Gupta, the then Secretary
of the Trust, was in regular touch with
Amit Prakash, Regional Manager of DHFL
through emails. Brokerage was paid to
several non-existent broker firms and the
amount paid as brokerage was withdrawn
from the banks in cash. The call detail
records of Abhinav Gupta and Amit
Prakash establish their connection.

29. Sri. Singh has further submitted
that it has come to light in investigation
that huge amounts were transferred from
the accounts of DHFL as unsecured loans
to various other companies, which are sister
concerns of DHFL and are controlled by
the applicant and co-accused Dheeraj
Wadhawan.
The
loans
were
granted
without carrying out any paper work.

30. Sri. Singh has taken the Court
through the statements of some employees
of DHFL recorded during investigation,
who have stated that it was common
practice of the group to make their
employees as the authorized signatories in
the bank accounts and Directors in other
companies. He has also submitted that false
entries used to be made in the accounts of
the company for showing its false financial
condition of the company and it obtained
AAA credit rating on the basis of false
documents and false accounts.

31. Sri. Singh has further submitted
that the applicant is involved in and is in
custody in connection with two other cases
(i) FIR No. RC2102020E0004 dated
07.03.2020 lodged by CBI under Sections
120 B, 409, 420 and 477 A IPC and Section
13 (2) read with 13 (1) (d) of the
Prevention
of
Corruption
Act
and
substantive offences thereof and (ii) FIR
No RC2242022A0001 dated 20.06.2022
lodged by CBI under Sections 120 B read
with Section 420 IPC and Sections 7, 12
and 13 (2) read with 13 (1) (d) of the
Prevention
of
Corruption
Act.
The
applicant is involved in several other cases,
which have not been disclosed in the
affidavit filed in support of the bail
application.

32. Sri. Anurag Kumar Singh has
relied upon Y.S. Jagan Mohan Reddy v.
CBI, (2013) 7 SCC 439, State of Bihar v.
Amit Kumar, (2017) 13 SCC 751, Rohit
Tandon v. Directorate of Enforcement,
(2018) 11 SCC 46, Mahipal v. Rajesh
Kumar,
(2020)
2
SCC
118
and
Shivnarayan Laxminarayan Joshi v.
State of Maharashtra, (1980) 2 SCC 465.
5 All. Kapil Wadhwan Vs. State of U.P.
1283

33. The applicant's criminal history
has been explained by filing the second
supplementary affidavit, as per which he is
involved in a total of nine cases apart from
the present case and he has been granted
bail in the following eight cases: -

(i) In ECIR / MBZO-I/08/2019
registered by the Enforcement Directorate
under Sections 3 and 4 of PMLA, the
applicant has been granted bail by means of
an order dated 21.02.2020 passed by the
Additional Sessions Judge, City Sessions
Court/Special Court, C.R.No. 16, Mumbai,
and by means of the aforesaid order, the
applicant has been directed to surrender his
passport before the Investigating Officer.

(ii) In ECIR / MBZO-I/03/2020
registered by the Enforcement Directorate
in
connection
with
FIR
No.
RC2192020E0004 under Sections 3 and 4
of PMLA, the applicant has been granted
default bail by means of an order dated
20.08.2020 passed by the Bombay High
Court, and this order has been affirmed by
the Hon'ble Supreme Court by means of the
judgment and order dated 27.03.2023
passed in Criminal Appeal Nos. 701-702 of
2020.

(iii) FIR No. RC2242022A0001
dated 22.06.2022 registered by CBI Delhi
under Sections 120 B, 409, 420, 477A IPC
and Sections 13 (2) and 13 (1) (d) of
Prevention of Corruption Act, in which the
applicant has been granted default bail be
means of an order dated 03.12.2022 passed
by the Sessions Court.

(iv) FIR No. 66 of 2017
registered by the EOW Delhi, under
Sections 420, 406, 409 and 120 B IPC, in
which the applicant has been granted bail
by means of an order dated 13.05.2022
passed by the Sessions Court.

(v) FIR No. 9 of 2020 registered
by EOW Chennai, under Sections 120 B,
420, 409 IPC and Section 5 of the Tamil
Nadu Protection of Interest Depositors
Act, in which the applicant has been
granted bail by means of an order dated
12.10.2020 passed by the Sessions Court.

(vi) In ECIR / MBZO-I/02/2020
registered by the Enforcement Directorate
under Sections 3 and 4 of PMLA, in
connection
with
FIR
No.
RC
0062020A0005/2020 (erstwhile CR No.
540
of
2019
registered
by
EOW
Lucknow), in which the applicant was
summoned and was released on bond
under Section 88 Cr.P.C. by means of an
order dated 14.02.2022 passed by the
Special Court.

(vii)
In
ECIR
/
MBZOI/05/2019
registered
by
the
Enforcement Directorate I connection
with FIR No. RC2192020E0004 under
Sections
3
and
4 of
PMLA,
in
connection with FIR No. RCBSM
2019E0002 dated 04.01.2019 registered
by CBI Mumbai, in which the applicant
was summoned and was released on
bond under Section 88 Cr.P.C. by
means of an order dated 15.02.2022
passed by the Special Court.

(viii) CR No. 84 of 2021 dated
25.03.2021 registered by EOW, Mumbai
under Sections 465, 467, 468, 471, 406,
409, 420 and 120 B IPC, in which the
applicant
was
summoned
and
was
released on bond under Section 88
Cr.P.C. by means of an order dated
2.04.2022 passed by the Special Court.
1284 INDIAN LAW REPORTS ALLAHABAD SERIES

34. Apart from the present case, the
applicant is yet to be released on bail in
FIR No. RC 209 2020 E 0004 dated
07.03.2020 registered by CBI Delhi under
Sections 120 B, 409 ad 420 IPC.

35. I have considered the facts and
circumstances of the case and the elaborate
submissions advanced on behalf of the
learned Counsel for the respective parties.

36. Since the allegation is of
commission of economic offences, it would
be appropriate to have a look at the law
regarding grant of bail in such offences
before proceeding to deal with the
submissions. I will first mention the caselaws cited by the learned Counsel for the
respondent in this regard.

37. In Sanjay Chandra v. CBI,
(2012) 1 SCC 40, the Hon'ble Supreme
Court held that: -

"21.
In
bail
applications,
generally, it has been laid down from the
earliest times that the object of bail is to
secure the appearance of the accused
person at his trial by reasonable amount of
bail. The object of bail is neither punitive
nor preventative. Deprivation of liberty
must be considered a punishment, unless it
is required to ensure that an accused
person will stand his trial when called
upon. The courts owe more than verbal
respect to the principle that punishment
begins after conviction, and that every man
is deemed to be innocent until duly tried
and duly found guilty.

22. From the earliest times, it was
appreciated that detention in custody
pending completion of trial could be a
cause of great hardship. From time to time,
necessity demands that some unconvicted
persons should be held in custody pending
trial to secure their attendance at the trial
but in such cases, "necessity" is the
operative test. In this country, it would be
quite contrary to the concept of personal
liberty enshrined in the Constitution that
any person should be punished in respect of
any matter, upon which, he has not been
convicted or that in any circumstances, he
should be deprived of his liberty upon only
the belief that he will tamper with the
witnesses if left at liberty, save in the most
extraordinary circumstances.

Apart from the question of
prevention being the object of refusal of
bail, one must not lose sight of the fact that
any imprisonment before conviction has a
substantial punitive content and it would be
improper for any court to refuse bail as a
mark of disapproval of former conduct
whether the accused has been convicted for
it or not or to refuse bail to an unconvicted
person for the purpose of giving him a taste
of imprisonment as a lesson.

* * *

39. Coming back to the facts of
the present case, both the courts have
refused the request for grant of bail on two
grounds: the primary ground is that the
offence alleged against the accused persons
is very serious involving deep-rooted
planning in which, huge financial loss is
caused to the State exchequer; the
secondary ground is that of the possibility
of the accused persons tampering with the
witnesses. In the present case, the charge is
that of cheating and dishonestly inducing
delivery of property and forgery for the
purpose of cheating using as genuine a
forged document. The punishment for the
offence is imprisonment for a term which
may extend to seven years. It is, no doubt,
5 All. Kapil Wadhwan Vs. State of U.P.
1285
true that the nature of the charge may be
relevant, but at the same time, the
punishment to which the party may be
liable, if convicted, also bears upon the
issue. Therefore, in determining whether to
grant bail, both the seriousness of the
charge and the severity of the punishment
should be taken into consideration.

40. The grant or refusal to grant
bail lies within the discretion of the court.
The grant or denial is regulated, to a large
extent, by the facts and circumstances of
each particular case. But at the same time,
right to bail is not to be denied merely
because of the sentiments of the community
against the accused. The primary purposes
of bail in a criminal case are to relieve the
accused of imprisonment, to relieve the
State of the burden of keeping him, pending
the trial, and at the same time, to keep the
accused constructively in the custody of the
court, whether before or after conviction,
to assure that he will submit to the
jurisdiction of the court and be in
attendance thereon whenever his presence
is required.

* * *

42. When the undertrial prisoners
are detained in jail custody to an indefinite
period, Article 21 of the Constitution is
violated.
Every
person,
detained
or
arrested, is entitled to speedy trial, the
question is: whether the same is possible in
the present case.

* * *

46. We are conscious of the fact
that the accused are charged with economic
offences of huge magnitude. We are also
conscious of the fact that the offences
alleged, if proved, may jeopardise the
economy of the country. At the same time,
we cannot lose sight of the fact that the
investigating agency has already completed
investigation and the charge-sheet is
already filed before the Special Judge, CBI,
New Delhi. Therefore, their presence in the
custody may not be necessary for further
investigation. We are of the view that the
appellants are entitled to the grant of bail
pending trial on stringent conditions in
order to ally the apprehension expressed by
CBI."

38. In Y.S. Jagan Mohan Reddy v.
CBI, (2013) 7 SCC 439 relied upon by the
learned Counsel for the respondent - CBI,
the Hon'ble Supreme Court held that: -

"34. Economic offences constitute
a class apart and need to be visited with a
different approach in the matter of bail.
The economic offences having deep-rooted
conspiracies and involving huge loss of
public funds need to be viewed seriously
and considered as grave offences affecting
the economy of the country as a whole and
thereby posing serious threat to the
financial health of the country.

35. While granting bail, the court
has to keep in mind the nature of accusations,
the nature of evidence in support thereof, the
severity of the punishment which conviction
will entail, the character of the accused,
circumstances which are peculiar to the
accused, reasonable possibility of securing
the presence of the accused at the trial,
reasonable apprehension of the witnesses
being tampered with, the larger interests of
the
public.State
and
other
similar
considerations.

39. In State of Bihar v. Amit
Kumar, (2017) 13 SCC 751, the Hon'ble
Supreme Court was pleased to hold that: -
1286 INDIAN LAW REPORTS ALLAHABAD SERIES

"It is well settled that socioeconomic offences constitute a class apart
and need to be visited with a different
approach in the matter of bail.