Supreme Court Grants Bail to DHFL Promoters

New Delhi: In a significant reaffirmation of constitutional safeguards, the Supreme Court on Wednesday granted bail to Dewan Housing Finance Limited (DHFL) promoters Kapil and Dheeraj Wadhawan, holding that incarceration extending beyond five years without the start of trial violates the fundamental right to personal liberty.

The ruling places sharp focus on the growing tension between complex economic crime prosecutions and the constitutional mandate of a speedy trial.

Five Years in Custody, Trial Still Absent

The case against the Wadhawan brothers is among the largest financial fraud investigations in India. The Central Bureau of Investigation (CBI) has alleged that DHFL availed loans worth over ₹57,000 crore from a consortium of banks, of which nearly ₹35,000 crore was allegedly siphoned off through interconnected shell entities.

Despite the scale of allegations, the Supreme Court noted that the brothers have remained in custody since April 2020, while the trial has not yet commenced. The first chargesheet was filed more than two years after their arrest, followed by multiple supplementary filings that expanded the case to 110 accused individuals and entities.

The record before the Court runs into nearly four lakh pages, supported by hundreds of witnesses and massive digital evidence. The Bench observed that even with daily hearings, completing the trial would realistically take several more years.

Constitutional Limits on Pre-Trial Detention

A Bench comprising Justices J.K. Maheshwari and Vijay Bishnoi underscored that seriousness of allegations alone cannot justify indefinite incarceration. Reiterating that “bail is the rule and jail the exception,” the Court held that prolonged pre-trial detention effectively amounts to punishment without conviction.

The judges emphasised that when investigative agencies are unable to ensure a timely trial, continued custody becomes unconstitutional under Article 21. The presumption of innocence, the Court said, remains intact even in large-scale economic offences.

Such cases, the Bench observed, often involve extensive documentation, layered transactions and financial trails that eventually require scrutiny similar to that undertaken in auditing services in india, but investigative complexity cannot override personal liberty.

Interpreting the New Criminal Procedure Law

The judgment also examined Section 479 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which allows undertrials to seek release after serving half of the maximum prescribed sentence.

The Court clarified that this provision was designed to reduce prison overcrowding, not to legitimise extended pre-trial incarceration. Any interpretation that dilutes constitutional protections, it held, would defeat the law’s purpose.

Relying on earlier precedent, including Union of India v. K.A. Najeeb, the Bench reaffirmed that statutory limitations cannot eclipse constitutional guarantees when trial delays become unreasonable.

Arguments and Final Conditions

Counsel for the Wadhawans argued that the case was largely document-driven and that continued detention served no investigative purpose. They also pointed out that DHFL had already undergone insolvency proceedings, with assets sold under a court-approved resolution plan.

The prosecution opposed bail citing the magnitude of the alleged fraud, but the Court noted that investigation was complete, co-accused had secured bail in related matters, and the brothers had already complied with multiple judicial conditions in parallel cases.

The Supreme Court ordered their release on strict terms, including substantial bail bonds, surrender of passports, regular police reporting, and restrictions on foreign travel.