The Supreme Court has reserved its verdict on the bail applications filed by Kapil Wadhawan, former Chairman and Managing Director of Dewan Housing Finance Limited (DHFL), and his brother Dheeraj Wadhawan, former Director of DHFL, in connection with the alleged Rs. 34,000 crore bank fraud case registered by the Central Bureau of Investigation (CBI) on a complaint by Union Bank of India.

The case pertains to an alleged scam in which a consortium of 17 banks was purportedly defrauded of more than Rs. 34,000 crores by DHFL. The Wadhawan brothers were initially arrested in April 2020 by the CBI in a Yes Bank-related case in Mumbai. Subsequently, in 2022, they were arrested again in the present case arising out of the complaint lodged by Union Bank of India.

The matter was heard by a Bench comprising Justices J.K. Maheshwari and Vijay Bishnoi. Senior Advocates Mukul Rohatgi and Balbir Singh represented Kapil and Dheeraj Wadhawan respectively, while Additional Solicitor General (ASG) S.V. Raju appeared on behalf of the CBI.

Advancing arguments for Kapil Wadhawan, Senior Advocate Mukul Rohatgi submitted that the petitioner has remained in custody for over five years and that the trial involves around 625 witnesses. He highlighted that out of nearly 110 accused persons, only two remain in judicial custody, with the rest having been granted bail. Rohatgi further contended that the delay in commencement of trial was attributable to the CBI, which allegedly took more than a year to comply with a court order permitting inspection of relied-upon documents.

It was also argued that, according to the RBI-appointed Administrator, the actual exposure of banks was approximately Rs. 27,000 crores and not Rs. 34,000 crores as claimed by the prosecution. On behalf of Dheeraj Wadhawan, Senior Advocate Balbir Singh pressed for bail primarily on medical grounds.

Opposing the bail pleas, ASG S.V. Raju emphasized the seriousness of the allegations and the massive financial magnitude of the alleged fraud. He also raised objections regarding the conduct of the accused. With respect to Dheeraj Wadhawan’s plea, the ASG alleged that despite arrangements being made by jail authorities for hospital treatment, the accused had declined to be taken.

During the hearing, Justice Maheshwari raised pointed queries regarding the accountability of bank officials and the role of the National Housing Bank (NHB), a statutory regulatory body, in permitting such large-scale loan transactions. Upon being informed that NHB officials were not named as accused, Justice Maheshwari remarked, “Why not? We have to look into where the fault lies.” In response, the ASG stated that if any involvement of NHB officials was found during investigation, they would be made accused.

When it was submitted that NHB had flagged certain irregularities during annual inspections but could not detect the fraud due to non-supply of documents and its limited forensic mandate, Justice Maheshwari observed that such explanations undermined the very purpose of NHB. He remarked that transactions of such magnitude could not have been carried out by a single individual without systemic failure, questioning whether regulatory apathy could be permitted.

While the ASG responded that even if regulatory lapses existed, it did not negate the commission of fraud by the accused, Justice Maheshwari clarified that the Court was not absolving anyone but stressing the need for a comprehensive and logical investigation fixing responsibility at all levels.

The Bench also generally questioned why bank officials often escape scrutiny in large bank fraud cases, noting that the present case involved a consortium of 17 banks. In reply, the ASG maintained that the fraud was not apparent on the face of documents and was carefully concealed through fictitious loans and shell companies, which came to light only after the CBI took over the investigation.

After hearing the parties at length, the Bench reserved its judgment.

By way of background, the FIR in the present case was registered in 2022 on a complaint by Union Bank of India, alleging that the Wadhawan brothers and other accused entered into a criminal conspiracy to cheat the consortium banks by inducing them to sanction loans exceeding Rs. 42,000 crores, resulting in an alleged wrongful loss of Rs. 34,615 crores.

It may be noted that Dheeraj Wadhawan was granted medical bail by the Delhi High Court in September 2024. However, in August 2025, the Supreme Court cancelled the medical bail and directed him to surrender within two weeks.

Case Title: Kapil Wadhawan v. Central Bureau of Investigation, SLP (Crl.) No. 16953 of 2025 (along with connected matters)