Mumbai Court grants bail to Rana Kapoor in ₹200 crore money laundering case since trial yet to begin after 2 years

A Mumbai court earlier this month granted bail to Yes Bank founder Rana Kapoor in a ₹200 crore money laundering case allegedly involving Mack Star Market Pvt Ltd and HDIL promoter Rakesh Wadhawan after noting that trial against Kapoor was yet to start even after over 2 years and 2 months. 

In his 53-page order, special judge MG Deshpande also took into account the fact that Kapoor was the only accused in the present case who was continuing to languish as an undertrial in judicial custody.

“All other accused persons in this case (some of them having similar roles), have been released on bail. This long period of undue incarceration of 2 years, 2 months and 3 days was ignored making capital of alleged gravity, magnitude and seriousness of the offence. There is no likelihood in future that trial will begin and conclude as early as possible,” the Court said while granting bail.

Kapoor will, however, continue to remain in jail since he is in judicial custody in three other cases. 

The judge further observed that Kapoor would in another 9 months cross the minimum punishment of 3 years under the Prevention of Money Laundering Act (PMLA).

He added that just because Kapoor was embroiled in an economic offence did not mean he has to suffer undue incarceration.

“Economic Offences are different in nature and have to be looked from the perspective of its gravity and magnitude, that does not mean that undertrial prisoner should be kept without trial and should be dragged to undergo minimum sentence without trial. Kapoor has already undergone 73% of sentence of minimum punishment in jail, while the trial had not even proceeded by a millimeter,” the judge commented.

He opined that true purport of any provision under PMLA when the object of PMLA is ‘confiscation’ and not ‘an undue incarceration'.

The case against Kapoor allegedly began in September 2020, when the Central Bureau of Investigation (CBI) registered an FIR under the Prevention of Corruption Act. Basis this offence, the Enforcement Directorate registered a case in October 2020. 

Wadhawan directors were in operational control of Mack Star and its bank accounts and availed six loans of ₹200 crores from Yes Bank from 2011 to 2016 without allegedly informing the investors. 

This loan amount was allegedly circulated within the bank with HDIL and Mack Star accounts to discharge liability owed by HDIL to Yes Bank.

Kapoor was arrested on January 27, 2021 while he was already in custody in another case.

Opposing his bail plea, ED argued that further investigation was ongoing not only in the ED case, but also in the CBI case. The judge noted that CBI had not filed any chargesheet against Kapoor in the case.

He held that keeping Kapoor in custody simply because CBI investigation was pending without any chargesheet on record was impermissible. 

“Already 3 years have been lapsed, CBI has not filed chargesheet. Is it lawfully permissible to allow CBI to consume 7 years for filing report and till then suspend the right of undertrial prisoner? This is serious. ED cannot make capital that applicant's bail application was pending and therefore, trial could not begin. If the same continues, the trial will never begin and the conclusion will be only a dream,” the order said. 

The judge also held that the present case was the best example on how ED was not applying to get both trials committed to the special PMLA court, and thus move in the direction of the trial.

“After repeated directions to ED for the compliance under S.44(1)(c), whatever hurry pretended by the ED is only for the trial of cases wherein all accused have been bailed out long ago. All that was not a bonafide response given to the court in respect of undertrial prisoners, who have been languishing in jail since long,” the judge said.

On parity, the Court observed that other accused persons including the bank officials played an equal and similar role to that of Kapoor and contributed to the alleged conspiracy,

Despite that, they had been granted bail either by special court or Bombay High Court; yet Kapoor continued to remain incarcerated.

“Total loan amount was not a small amount. No bank would sanction and disburse the same to any one only because their MD/CEO alone directs the same. So many co­-accused had participated the process of sanctioning alleged loans. They had right of veto to endorse that the loans being granted are illegal, fraudulent, etc. but none of them did anything as such and continued processing and forwarding those loans. Surprisingly all of them are now free at the mercy of ED,” the judge held.

Kapoor was in judicial custody in another case and ED filed an application seeking Kapoor’s custody in the present case, even though Kapoor was not named in the CBI FIR or ED case, the judge recorded in the order.

“Without any subjective satisfaction of the ED officer, his formal arrest was effected by the earlier judge dragging the applicant in the clutch of stringent twin conditions under Sec.45(1) of the Prevention of Money Laundering Act (PMLA)”, the judge said.

Advocates Vijay Aggarwal, Rahul Agarwal, Yash Agrawal and Jasmin Purani appeared for Kapoor.

Special Public Prosecutor Sunil Gonsalves appeared for ED.

[Read Order]