DHFL Case: SC Dismisses ED Appeal Says Grant Of Default Bail Duration To Include Remand Period

Dismissing an appeal of the Enforcement Directorate, the Supreme Court today ruled that the 60/90-day duration for the grant of default bail in a criminal case will include the remand period.

A bench of Justices KM Joseph, Hrishikesh Roy, and BV Nagarathna rejected the appeal filed by the ED challenging the Bombay High Court order granting bail to former DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan in a Yes Bank money laundering case being probed by the agency.

The bench stated that “The remand period will be calculated from the date; magistrate remands the accused. An accused becomes entitled to default bail if the charge sheet is not filed by the 61st or 91st day of the remand period.”

The three-judge bench answered the larger issue referred to it by a two-judge bench in 2021. It directed the pending petitions pertaining to the case to be placed before a two-judge bench.
Previously, The Supreme court on February 9, reserved its verdict on the appeal of ED.

On February 23, 2021, the top court referred to a larger bench the legal question that whether the day on which an accused is remanded to custody should be included while calculating the 60-day period for the grant of default bail.

The legal issue arose during the hearing of an ED’s appeal against a Bombay High Court order granting bail to the former promoters of the Dewan Housing Finance Limited (DHFL).

In September 2020, the top court stayed a Bombay High Court order granting bail to the promoters.

Therefore, the court issued notice to the accused on the ED’s plea against the High Court order of bail.

The Bombay High Court on August 20, 2020, granted bail to the Wadhawan brothers stating that mandatory default bail is the sequel to the non-filing of the charge sheet. The HC then granted them bail as it held that the ED failed to file its charge sheet in the case within the stipulated 60-day period. The central probe agency then filed a special leave petition before the apex court.

The federal probe agency stated that it was not in violation of the procedure and had filed a part of the charge sheet through e-mail, a day before the 60-day period ended.
The charge sheet was filed in physical form by the ED on July 13, 2020.

As per Section 167(2) of the Code of Criminal Procedure, an accused can be detained for a maximum of 90 days for a crime punishable with death, life imprisonment, or a sentence of over 10 years. If the investigation relates to any other offense, the accused can be detained for 60 days.

If the investigative agencies don’t complete their investigation within these time limits, the arrested person is entitled to ‘default bail’.

However, The Wadhawans were not released on bail as they are in CBI custody at present.

They were arrested by the ED on May 14, 2020, under the provisions of the Prevention of Money Laundering Act (PMLA).

The ED slapped PMLA charges against the two in this case after studying a CBI FIR filed in March in connection with alleged suspicious loans granted by Yes Bank and the “quid pro quo” between its co-promoter Rana Kapoor and the Wadhawans.

According to the CBI & ED, Yes Bank invested around Rs 3,700 crore in short-term non-convertible debentures of DHFL between April and June 2018.