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PMC Bank scam case: Rakesh Wadhawan's bail plea denied

Rakesh Wadhawan was arrested in October, 2019, along with Sarang Wadhwan in connection with the irregularities submitted in the Punjab and Maharashtra Co-operative (PMC) Bank case.

July 28, 2021 / 12:24 PM IST

A Mumbai Sessions Court has denied bail to Rakeshkumar Wadhawan after the former HDIL promoter sought bail on medical grounds. The bail order was rejected on July 12 after the court considered the “seriousness of the economic crime” against the plea to go home by the applicant for treatment at home. “In my view applicant is not entitled for bail on medical ground. Therefore, the application deserved to be rejected,” said the court in the order.

Rakesh Wadhawan was arrested in October 2019, along with Sarang Wadhwan in connection with the irregularities submitted in the Punjab and Maharashtra Co-operative (PMC) Bank case. The RBI superseded PMC Bank Board in September 2019 after a major fraud was unearthed in the bank.

Investigations revealed that about 70 percent of its total loan book of Rs 8,383 crore as on March 31, 2019, had been taken by HDIL. The bank had Rs 11,600 crore in deposits. The police arrested Joy Thomas, former managing director of the PMC Bank, in October. The investigators have since made a few more arrests.

While denying the bail, the Court has taken note of the argument that a public interest litigation (PIL) was filed in the High Court that said Wadhawan is doing his business from the hospital and doing normal activities in luxury life; therefore, the necessary direction be issued. Wadhawan’s lawyers had submitted two medical reports dated June 28, 2020, and June 30, 2020, in the court to argue in favour of Wadhawan’s bail.

The judge noted that the ailments mentioned and incidences mentioned in both reports are identical. However, the addition of opinion in the report dated June 30 is that “all the ailments of the applicant are chronic and need very long-term treatment”. “Except this, there are no changes in both the reports, what was the reason and compelling circumstances for forwarding subsequent report in one day gap is not mentioned. Bail is claimed only on medical ground and particularly report dated 30/06/2021 issued by CMO that, ailments are chronic and need long term treatment,” the order stated.

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Apart from the ailments of the applicant, the overall facts of the case also need to be considered for bail on medical grounds, the court noted. “As per the case of prosecution huge amount of the loan is availed by the HDIL owned by the applicant, in collusion with office bearer of the PMC Bank. PMC Bank did not report the Non-Performing Asset (NPA) account of the applicant to RBI. Some fictitious accounts were open. As bail is claimed only on medical ground, therefore, rest of the merits of the case, are not discussed here,” the court said.

On June 18, the Reserve Bank of India gave an in-principle nod to Centrum Financial Services to set up a small finance bank (SFB). This permit was given in response to Centrum's application to take over crisis-ridden PMC Bank that has been in the ICU for the last 20 months after the RBI superseded the board in September 2019 following a fraud.

The RBI’s June 18 announcement was seen as the first step towards the resolution of an issue that affects around 9 lakh PMC Bank depositors. A large number of them are still waiting for their money stuck in the bank. Some of them put in their life savings in the bank. While the RBI announcement is a relief, the resolution and refund to PMC Bank depositors may take a while as the Centrum Financial- BharatPe consortium needs to set up a  small finance bank and later amalgamate the PMC Bank with itself under RBI’s directions.
Dinesh Unnikrishnan is Deputy Editor at Moneycontrol. Dinesh heads the Banking and Finance Bureau at Moneycontrol. He also writes a weekly column, Banking Central, every Monday.
first published: Jul 28, 2021 12:24 pm
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