Chanda Kochhar's release procedural, won't affect facts of the case, say lawyers

Chanda and Deepak Kochhar (Image: PTI)

The Bombay High Court granting bail to former ICICI Bank chief Chanda Kochhar and her husband, Deepak Kochhar, in the Rs 3,250-crore Videocon fraud loan case is only procedural and will not affect the facts of the case, senior lawyers told Moneycontrol on January 9.

"The release of Kochars in ICICI Bank-Videocon fraud case is just procedural. It would not affect the facts or circumstances of the case. The honourable court is yet to adjudicate the matter on merits," said Anushkaa Arora, Principal & Founder, ABA Law Office, a Delh-based legal firm.

The court in the morning ordered the release of Kochhars on a plea challenging their arrest and claiming it to be illegal. "Arrest not in accordance with the law," the court said. It also asked the couple to surrender their passports to the CBI.

While Chanda has been lodged in Mumbai's Byculla district jail (women's jail), Deepak was at Arthur Road jail.

“The direction of the Bombay High Court is correct and is based on the strict interpretation of provisions of law. The arrest was held to be ‘illegal and arbitrary’ as it was not in accordance with the law laid down in CrPC,” said Utsav Trivedi, Partner, TAS Law.

The high court has granted bail but the Kochhars are under strict directions to render their support to the investigating agencies, Trivedi said.

The court’s observation that the arrest was not legal is entirely premised on Section 41 A (3) of the CrPC, which clearly states that the arrest is not required to be made if the person complies with the notice issued under Section 41 A, Trivedi said.

“The high court has granted interim relief to the Kochhars and released them with the direction that they will cooperate with the investigating agency as and when required,” Trivedi said.

Abhinay Sharma, Managing Partner, ASL Partners, too, said the arrests were not in accordance with the law since the CBI didn't take sanction before making arrest.

The arrest was not in compliance with Section 41 A of CrPC, which mandates sending notice for an appearance before the concerned police officer,  he said. The arrest memo didn't show the presence of a lady officer to arrest Chanda Kocchar, which is a must, Sharma said.

It’s an important verdict and would go a long way in protection of personal liberties and checking arbitrariness on the part of the police, Bharat Chugh, a former judge and a Supreme Court advocate, said.

It appears there were grave illegalities in terms of the timing of the arrest (right before the Kochhars’ son’s wedding and the fact that the arrest took place years after the investigation was launched), and the manner in which they went about it (without the presence of a lady officer), he said.

“In a case like this, no purpose is usually served by arresting the accused and custodial interrogation... This verdict further reaffirms the general principle about bail being the rule and jail the exception," Chugh said.

What next?

Sharma said even if the CBI moves the Supreme Court, it is unlikely that the court will this matter since the Bombay High Court has rejected almost all claims of the CBI.

“Appeal to the Supreme Court is possible on very limited grounds,” said Sharma.

Kochhars have to submit a bail amount of Rs 1 lakh each and surrender passports to CBI, Sharma said.

Case file

The CBI has booked the Kochhars and Videocon Group founder Venugopal Dhoot, along with companies like Nupower Renewables, Supreme Energy, Videocon International Electronics and Videocon Industries, for criminal conspiracy and under various provisions of the Prevention of Corruption Act.

In a quid pro quo deal, Dhoot invested crores in Nupower months after his Videocon Group got Rs 3,250-crore loan from ICICI Bank in 2012, the CBI said in a statement after filing the FIR in 2019. This amounted to criminal conspiracy and cheating, the probe agency said. Over a period of time, Dhoot transferred control of the company to Deepak Kochhar through multiple transactions.

In May 2018, ICICI Bank initiated an inquiry against Chanda Kochhar. She soon went on leave and then applied for an early retirement, which was accepted.

The bank then said it had treated her separation as "Termination for Cause" and had also sought approval from the Reserve Bank of India (RBI) for ending her appointment as was mandatory under the provisions of the RBI Act.

On November 10, 2022, the Bombay High Court said Chanda Kochhar's termination as the CEO was prima facie a “valid termination” and dismissed her interim application seeking post-retirement benefits.

In its chargesheet filed in January 2019, the CBI said ICICI Bank, under Kochhar, sanctioned loans to Videocon in violation of the credit policies of the bank. These loans later turned into non-performing assets (NPAs), resulting in wrongful loss to the bank and wrongful gain to the borrower and the accused.

The CBI also sought a probe into the role of the senior officers of the sanctioning committee which cleared the loans to Videocon. It said that the credit limit for the Videocon group companies was approved after Kochhar took over as the CEO in May 2009.

The fall of a star banker 

The ICICI Bank-Videocon case is one of the most high-profile cases of corruption in the Indian banking industry. It also marked the downfall of Chanda Kochhar, who started as a junior officer in the bank and rose through the ranks to head the company.

Investigators found that between June 2009 and October 2011, ICICI Bank sanctioned six high-value loans to Videocon group companies. The agency accused Kochhar for cheating the bank by abusing her official position as the CEO by sanctioning these loans. Later, the probe revealed that this was part of a quid pro quo deal between Kochhars and Videocon's Dhoot.