[YES Bank scam] Huge loss of public fund should be viewed seriously: Bombay High Court refuses to grant bail to YES Bank founder Rana Kapoor

The Bombay High Court recently declined to grant Yes Bank Managing Director and CEO Rana Kapoor bail in the Yes Bank scam case, observing that the huge loss of public funds, allegedly on account of the criminal activities of his companies, is required to be viewed seriously (Rana Kapoor v. Enforcement Directorate),.Kapoor was arrested on March 8, 2020 in connection with a money laundering case registered by the Enforcement Directorate (ED)..While rejecting Kapoor's bail plea on January 25, Justice Prakash Naik observed,."The offence is of serious nature. There is voluminous evidence showing involvement of the applicant (Kapoor) in the crime. In the light of nature of evidence, no case for grant of bail is made out. It is settled law that while granting bail the Court has to keeping in mind the nature of accusations, evidence in support thereof. Huge loss of public fund is required to be viewed seriously … It cannot be disputed that money lying with YES Bank is public money.... In the facts of the case, considering the magnitude of the offence, I am not inclined to grant bail in the present case. On the basis of evidence on record no case for grant of bail is made out.".Considering the findings of the ED that there was a huge economic scam brewing for many years in YES Bank during Kapoor’s tenure, the Court opined that, “Effective and honest governance of banks/financial institutions is critical to proper functioning of the banking sector and the economy as a whole”..Kapoor is accused of entering into criminal conspiracies with Kapil Wadhawan, Director of Dewan Housing Finance Corporation Ltd (DHFL) for a substantial undue benefit to him and his family members through the companies held by them..In 2018, Yes Bank allegedly invested Rs. 3,700 crores in short term debentures of DHFL. It also sanctioned a loan of Rs. 750 crores to RKW Developers, which is part of DHFL..During this time, Wadhawan is stated to have paid kickbacks of Rs. 600 crores to Kapoor by extending a loan to DOIT Urban Ventures (India) Pvt. Ltd. which is wholly owned by RAB Enterprises. Kapoor’s wife was the director of RAB and their daughters were 100% shareholders..The ED’s contention was that the loan of Rs. 600 crores was sanctioned by DHFL on the basis of a mortgage of sub-standard property, having meagre value..The Court was told that during investigation, over 100 companies owned by Kapoor and his family were noted. Many of these comanies were not operative and were used to siphon off illegally obtained money of the proceeds of the crime by Kapoor, the ED submitted. .Senior Advocate Harish Salve, appearing for Kapoor, submitted that the amount of Rs. 600 crores was not a kickback but a genuine bonafide loan. He added that the entire investigation is over, while urging for the grant of bail. The Court recorded his submission that:.“Statements of several witnesses were recorded. Properties have been attached. Provisional attachment orders were already issued by the Enforcement Directorate attaching immovable and movable properties worth Rs.600 Crores belonging to applicant and his family members. This secures the interest of ED in the present case and thus, further incarceration of the applicant is unwarranted.".After hearing both sides at length, the Court took a serious view of the allegation that Kapoor had deliberately used, projected and claimed proceeds of crime as untainted by laundering the same for personal gain..The Judge noted: ."The applicant being MD/CEO of YES Bank has allegedly misused his position to gain undue financial gain to him and his family members... He was controlling authority and the decision maker. He is prime accused who with the help of Associates devised the mode of fraud, conspiring with other accused to cheat the bank in the manner explained in complaint. The proceeds of crime has been siphoned off and laundered for concealment layering through acquisition of properties.".The averments in the bail plea also concerned the health condition of Kapoor. His plea listed out the several chronic ailments and medical conditions. Salve further informed to the Court that Kapoor's health condition has been rapidly deteriorating in jail. .On a perusal of the medical documents enclosed with bail application however, the Court discovered that they pertained to the period prior to his arrest. The Court further noted that he was repeatedly examined during custody and that the reports filed following such examinations did not support Kapoor's claims..All the same, the Court directed the jail authority to provide appropriate medical treatment to Kapoor. .[Read bail rejection order here]

[YES Bank scam] Huge loss of public fund should be viewed seriously: Bombay High Court refuses to grant bail to YES Bank founder Rana Kapoor

Neha Joshi

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