Mumbai, October 15, 2022 (Greater Bombay Sessions Court): The Additional Sessions Judge, Dr. A. A. Joglekar, presiding over Court Room No. 37 at the Sessions Court in Greater Bombay, has rejected the bail application of Rakesh Kumar Wadhawan, a key accused in the multi-crore PMC Bank scam. The order, dated October 11, 2022, dismisses Criminal Bail Application No. 736 of 2022, arising from C.R. No. 86 of 2019 registered with the Economic Offences Wing (EOW), Unit-II, Mumbai.
Wadhawan is facing serious charges under Sections 406 (criminal breach of trust), 409 (criminal breach of trust by banker, merchant or agent), 420 (cheating and dishonestly inducing delivery of property), 465 (forgery), 467 (forgery of valuable security, will, etc.), 4681 (forgery for purpose of cheating), 471 (using as genuine a forged document or electronic record),2 477(A) (falsification of accounts), 201 (causing disappearance of evidence of offence, or giving false information to screen offender),3 read with 120(B) (criminal conspiracy) of the Indian Penal Code (IPC).
The prosecution’s case, in brief, alleges that PMC Bank, a multi-state cooperative bank, had significant outstanding loans to the tune of ₹ 4335.46 crores owed by the Housing Development and Infrastructure Ltd. (HDIL) group of companies, of which Rakesh Kumar Wadhawan is a promoter. It is alleged that the bank’s managing director and other officials, including the board of directors and executives, intentionally falsified records submitted to the Reserve Bank of India (RBI) to conceal the massive loan defaults by HDIL.
Specifically, the prosecution claims that in the Advances Master Indent submitted to the RBI for the financial year ending March 31, 2018, PMC Bank replaced 44 high-value loan accounts of HDIL and its group companies with 21,049 fictitious loan accounts of comparatively lower outstanding balances. These 21,049 accounts were allegedly not even created in the bank’s core banking system but were merely entries made to deceive the RBI during their inspection. The prosecution contends that this was a deliberate act of camouflaging the actual loan status, severely impacting the interests of the bank’s depositors.
The applicant, Rakesh Kumar Wadhawan, through his counsel Ld. Adv. Mr. Harshad Nimbalkar, argued for bail primarily on medical grounds, citing his advanced age and multiple comorbidities, including heart and lung ailments and a history of angioplasty. It was also submitted that he had suffered severe COVID-19 infections twice and had undergone a dual-chamber permanent pacemaker implantation and coronary artery angiography, revealing a significant blockage in a major artery. The defense also pointed out that Wadhawan had previously received medical treatment in a surgery hospital under court orders.
Furthermore, the applicant argued that the charge-sheet itself revealed that the collateral security provided by the HDIL group for the loans, amounting to ₹ 3122.89 crores, exceeded the disbursed loan amount of ₹ 2269 crores. The defense alleged that it was a usual practice of PMC Bank to inflate loan/overdraft accounts and raised issues regarding the bank’s amalgamation with Unity Small Finance Bank Ltd., suggesting potential delays in the trial and arbitration proceedings related to the civil dispute.
Ld. Adv. Ms. Priyanka Gonbare appeared for the intervener, while Ld. SPP. Mr. Ajay Misar represented the State/Respondent, strongly opposing the bail application. The prosecution argued that this was a case of massive financial fraud with the applicant playing an active role. They highlighted the diversion and misappropriation of funds by HDIL and the huge magnitude of the amount involved. The prosecution also expressed concerns about the potential for the applicant to tamper with evidence and threaten witnesses, emphasizing that economic offenses of this scale affect the nation’s financial health.
The intervener’s counsel echoed the prosecution’s concerns, stating that Wadhawan had been denied bail on previous occasions and that adequate medical aid had already been provided as per High Court orders. They argued that there was no substantial change in circumstances warranting bail and that the applicant’s claims of efforts towards monetizing assets were “absolutely absurd.” The intervener also alleged a lack of cooperation from the applicant in the recovery of dues.
After a meticulous examination of the case records, arguments, and the various case laws cited by both sides, Additional Sessions Judge Dr. A. A. Joglekar rejected the bail application.
The court acknowledged the significant financial irregularities and the fact that funds availed by HDIL were not used for the intended purpose. While noting the defense’s argument about the value of collateral exceeding the loan amount, the court pointed to the final report, which indicated the replacement of genuine high-value loan accounts with fictitious ones in the RBI’s audit submission. The court also highlighted that the alleged collateral security was found to be under speculation.
The court stated that merely leveling allegations against the bank officials would not absolve the applicant of his role, especially considering the enormous amount involved and the apparent connivance between PMC Bank officials and HDIL, including the applicant and his son.
Addressing the maintainability of the application, the court noted that a previous bail application filed after the charge-sheet was rejected on July 9, 2020, by the predecessor in office. The court found no substantial change in circumstances since then, particularly regarding the merits of the case concerning the collateral security and alleged irregularities by bank officials.
Regarding the medical grounds, the court acknowledged the applicant’s ailments but noted that he had been receiving appropriate medical treatment and assistance while in judicial custody at Arthur Road Central Jail and Taloja Central Prison, including treatment at KEM Hospital. The court also pointed out that the Bombay High Court had already addressed his medical concerns by allowing surgery in a private hospital. Therefore, the court concluded that his medical condition, with the available medical facilities in jail and government hospitals, did not constitute a sufficient reason for granting bail.
The court emphasized the settled principle that while deciding a bail application, the court needs to see if a prima facie case exists. Citing the Supreme Court’s observations in Y. S. Jagan Mohan Reddy Vs. Central Bureau of Investigation, the court highlighted that economic offenses form a distinct category and need to be treated with a different approach in bail matters due to their potential to cause deep-rooted conspiracies and huge losses of public funds, thereby threatening the country’s financial health.
The court found that the prosecution’s theory of connivance between the applicant and bank officials was significant, despite the applicant’s attempts to shift responsibility. The lack of explanation regarding the speculative collateral securities further strengthened the prosecution’s case.
In conclusion, the court held that the applicant’s role was clearly established, disentitling him from bail. The court also noted that all the presented facts, both on merits and medical grounds, had been previously agitated without any substantial change in circumstances or law. The court also expressed apprehension that granting bail could hinder the pending recovery process and allow the applicant to tamper with prosecution evidence.
Therefore, Bail Application No. 736/2022 was rejected and disposed of accordingly. This order signifies a continued denial of bail for Rakesh Kumar Wadhawan in the ongoing PMC Bank scam investigation.