The Delhi High Court has appointed a special CBI Court to accelerate the trial of what is described as India’s largest bank fraud. This significant development involves the Central Bureau of Investigation (CBI) charging Dheeraj Wadhawan and Kapil Wadhawan, the promoters of Dewan Housing Finance Ltd (DHFL), along with several other individuals, in connection with a purported loan fraud amounting to Rs 34,614 crore.
The Dewan Housing Finance Corporation (DHFL), a prominent housing finance company in India, has been embroiled in a massive financial scandal worth over Rs 34,000 crore (approximately $4.3 billion). The scam involved accusations of loan fraud, money laundering, and a web of fake borrowers and shell companies.
DHFL is a prominent Non-Banking Financial Company (NBFC) that provided housing loans in India. The Wadhawan brothers commanded important roles on DHFL’s board, with Kapil being the Chairman and Managing Director, while Dheeraj was the non-executive Director of the company. A consortium of 17 Indian banks had loaned money to DHFL. DHFL had borrowed Rs 42,000 crore, with over Rs 34,000 crore outstanding.
Banks reported that DHFL got involved in fraudulent activities. Loan amount was transferred to shell companies and other companies related to the promoters. The CBI investigation alleges the creation of lakhs of fake borrowers using real customer data. These fake accounts were not only used to borrow over Rs 14,000 crore but were also allegedly leveraged against the Pradhan Mantri Awas Yojana (PMAY).
Details of the High Court Order
The orders from the Delhi High Court, which designate a special CBI Judge to handle the DHFL case exclusively, were received on August 1. The court’s decision follows a request from a special CBI Court in April this year. The request emphasized the need for a dedicated court due to the extensive documentation, numerous accused individuals, and hundreds of witnesses involved in the case.
Case Complexity and Documentation
Special CBI Judge Ashwani Kumar Sarpal, in an order issued on April 27, highlighted the complexity of the case. The CBI has submitted over 330,000 pages of documents, stored in 26 trunks. The judge noted that there are 108 accused persons/entities involved, each represented by different counsels. The CBI’s investigation also remains open concerning money transfers to foreign countries, with approximately 100,000 additional pages of unrelied documents expected to be submitted. The case involves 736 witnesses.
Need for Expedited Trial
Judge Sarpal underscored the necessity of expediting the trial due to the case’s complexity. He stated that the trial could not proceed efficiently in a standard court handling other matters. The judge recommended that a special court be designated to manage the case on a daily basis. Given the number of witnesses, documents, and accused, even a daily trial might not conclude within two to three years.
Transfer of Cases
On August 2, the special CBI Judge issued an order transferring other cases from his court. He confirmed that, as of August 1, the High Court has designated his court to exclusively manage the case of CBI vs Kapil Wadhawan & Others. Additionally, he instructed the Sessions Judge, Rouse Avenue, to transfer the remaining cases to different courts.
