Wadhawan brothers are ‘public servants’: Court
Dewan Housing Finance Ltd (DHFL) was discharging public duty by taking deposits, giving loans and helping the government in various schemes by delivering houses to the public, while also being under the control of statutory authorities such as Reserve Bank of India (RBI) and National Housing Bank, which makes its former CMD Kapil Wadhawan and ex-director Dheeraj Wadhawan “public servants”, a Delhi court has ruled.
The special court, which deals with corruption cases, however, said that the provision of Section 17A of the Prevention of Corruption Act (which makes it mandatory for the Central Bureau of Investigation to seek prior permission to investigate a public servant) won’t apply on the Wadhawans as their act was “criminal in nature” and “not in the discharge of their public duties”.
Special judge PC Act at Rouse Avenue Courts, Ashwani Kumar Sarpal was hearing a bail plea by the Wadhawan brothers, who were named in a charge sheeted by CBI for cheating a consortium of 17 banks led by Union Bank of India of ₹34,615 crore – touted as the biggest bank loan fraud case in the country. Eighteen individuals including the brothers, DHFL’S former CEO Harshil Mehta and 15 other individuals and 57 companies, through which funds were diverted, were named in a 55,000page charge sheet filed in the second week of October.
Their lawyer, Vijay Aggarwal, had sought relief on the ground that the accused were not public
servants, and so the PC Act will not be applicable in the case and that there was no compulsory approval taken by CBI to probe the irregularities. Dismissing his arguments, the judge noted: “DHFL was not only getting various benefits and facilities in the shape of refinancing, less rate of interest etc from NHB from time to time but its activities were coming under direct control of statutory bodies i.e. NHB as well as RBI who were its supervisory authorities and DHFL was under obligations to comply with their directions.”
“DHFL was in fact helping the government in implementation of various schemes for providing housing to public at large. Hence, it is held that DHFL was discharging public duty and thus, its chairman, officials, directors become public servant under Clause (viii) of Section 2 of the PC act.”
The court further underlined that DHFL comes under the Banking Regulations Act as it was authorised to accept deposits from the public as well as lend money to people for housing loans, so it was doing banking business. “If DHFL has to be treated as a banking company under Banking Regulations Act, then its Chairman, MD, directors etc automatically become public servant due to deeming provisions of Section 46A of the act,” the judge said in the order, seen by HT.
On Aggarwal’s argument that CBI ought to have taken approval under Section 17A before investigating Wadhawans, the judge remarked that the allegations of misappropriation of funds, fraud, use of money for purpose other than it was lent for, forgery and falsification of accounts done to get personal benefits certainly did not come under the purview and scope of any public servant in any manner. “In my view, the protection under this provision (17A) is applicable only to that public servant who discharges his function with due diligence, fairly, in unbiased manner, without any motive to take personal advantage and best of his ability and not to those officials who indulge in corruption and commit criminal misconduct,” the judge said, while adding that 17A protects honest public servants only so that they can perform their duties without any fear and in a correct manner.
When contacted, Aggarwal said on Sunday: “It is against the basic spirit of the statement of objects and reasons of the Prevention of Corruption Act. The scope of the Act cannot be enlarged. In fact, every person that way is doing some public duty so every person is not a public servant. We shall be challenging this order in high court very shortly.”
“How can it be known that whether the Act was in discharge of duty or not without investigation. Section 17A applies before registering an FIR (first information report) and Section 19 is at the stage of taking cognisance after investigation. So, law relating to Section 19 has been misapplied in Section 17A,” Aggarwal added.