Alleged laundered money never came to Yes Bank co-founder Rana Kapoor Court in bail order in loan case

Mumbai, Apr 12 (PTI) A special Mumbai court, while granting bail to Yes Bank co-promoter Rana Kapoor in a money laundering case, held that the alleged “laundered" amount never came to him” and there was nothing to show he received kickbacks.
The Prevention of Money Laundering Act (PMLA) court also noted that even though economics offences are “different in nature” an accused in such cases cannot be kept in prison without trial.
Special PMLA court judge M G Deshpande granted bail to Kapoor on April 1 in the money laundering case linked to alleged diversion of Rs 200-crore bank loan, while a detailed order was made available on Wednesday.
However, the banker could not walk out of jail as he is an accused in several other cases too, including one related to alleged fraud at the private lender he co-founded in 2004.
Kapoor, 63, has been lodged in a Mumbai jail since March 2020 after he was arrested by the Enforcement Directorate (ED) in connection with alleged financial irregularities and purported kickbacks paid to him and his family members in return for certain dubious loans provided by Yes Bank to a number of high-profile borrowers.
The case in which he has been granted bail pertains to a Rs 200 crore loan granted to a company called Mack Star Marketing Pvt Ltd by Yes Bank. The role of Kapoor, who once served as managing director and CEO of the bank, in sanctioning this loan is under the scanner.
Mack star is a joint venture promoted by Ocean Deity Investments Holdings Ltd (ODIL), registered under Mauritius law, and a private firm owned by Rakesh and Sarang Wadhawan, promoters of Housing Development and Infrastructure Ltd. (HDIL).
The ED had claimed that through Mackstar, the Wadhawans had obtained six loans worth Rs 200 crore from Yes Bank and this amount was used to clear other liabilities and credit facilities in violation of norms.
In the bail plea, filed through advocates Vijay and Rahul Agarwal, Kapoor sought relief under relevant provisions of the CrPC, the PMLA as well as on medical grounds.
The ED had opposed the bail plea, saying the banker was actively involved in the offence of money laundering.
The central probe agency also contended that the offence alleged against him was “serious” in nature. Therefore, considering “the gravity and magnitude” of the alleged offence, bail cannot be granted to him.
The court after hearing both sides, noted that a normal loan proposal always goes through detailed scrutiny and scanning as per norms of the bank and is sanctioned only after meeting the mandatory requirements.
Whenever a loan amount is huge, different departments of the bank “are in-charge and responsible” for its sanction, said the judge.
In the instant case, unless clearances from each and every department and their heads are made, “such huge loans of Rs 200.3 crore from Yes Bank would not have been sanctioned”, the court noted.
The bail granted to co-accused has never been challenged by the probe agency till date, “allowing it to attain finality”, it observed.
The applicant (Kapoor) stands on the same footing. Alleged laundered money had never come to him...nor there is anything to show he received any kickback for the same, the court said.
When all other accused in the case, including the main accused Wadhawans, have been released, Kapoor “is entitled to be released (on bail) as a matter of parity”, as the progress of trial is in dark", it added.
The court noted that the ED stand clearly indicates the Wadhawans are the main accused and had been guilty of an offence under the PMLA yet they were not arrested in the present case.
The Wadhawans, too, are in judicial custody in multiple cases being probed by the ED and the Central Bureau of Investigation (CBI).
The special judge said the ED may mould the discretion given under the PMLA “as per their wish, but the court has bounden duty and is under legal obligation to not allow undue incarceration of any undertrial prisoner”.
The court further noted it is evident that the applicant (Kapoor) had undergone undue incarceration for 73 per cent of the minimum punishment of three years provided under section 4 of the PMLA.
“Economic offences are different in nature and have to be looked at from the perspective of its gravity and magnitude. That does not mean that an undertrial prisoner should be kept without trial and should be dragged to undergo a minimum sentence without trial,” the special judge observed.
Undue incarceration of the applicant for 2 years, 2 months and 3 days (in the loan fraud case) without trial is the price he has paid for the alleged gravity, magnitude and different nature of the economic offences against him, the court said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)