Yes Bank-DHFL case: Court refuses to take cognisance of CBI's chargesheet against Goenka, Balwa

In separate orders, the court also directed the Central Bureau of Investigation to cancel the Lookout Circulars (LOC) issued against Goenka and Balwa.

The court said once it has refused to take cognisance of the chargesheet there is "no purpose in keeping the LOCs alive" against the accused persons.

The CBI recently filed its fourth supplementary chargesheet in the case before the special court. In the chargesheet, the agency had named Goenka, Balwa and twelve others as accused in the multi-crore loan for kickbacks scam.

According to the CBI, Goenka and Balwa took loans from DHFL but diverted the funds instead of using them for their intended purpose.

Special Judge AC Daga on March 13 refused to take cognisance of the chargesheet against the two businessmen and stock market operator Sanjay Dangi.

In its detailed order, which was made available on Saturday, the court said the prosecution has levelled charges of cheating and misappropriation against Goenka and Balwa.

However, they were not named in the first information report (FIR) or the earlier supplementary chargesheets, the court said. Their names appeared for the first time as accused only in the fourth supplementary chargesheet, it said.

The court, while refusing to take cognisance of the chargesheet against these three persons, noted that it was a settled position of law that in order to attract the penal provisions of cheating and conspiracy, there has to be a prima-facie case made out for the prosecution to show that the intention of cheating was there since inception.

In this matter, nothing on record shows that at the time of taking the loan from DHFL the accused had the intention to cheat, the special judge said.

Hence, no case is made out attracting the penal provisions as claimed by the prosecution, it said.

The court further said the allegation of cheating levelled against Dangi has no basis.

The court said special public prosecutor A N Chimalkar has submitted that while the loan amount has been repaid Yes Bank was still at loss as it had not received the same.

The court said the accused persons had taken loan from DHFL and not from Yes Bank directly.

"It is important to note that there is no whisper in the entire chargesheet about the repayment of the loan. It was for the Investigating Officer to disclose exact position of the outstanding loan, if any, as on the date of the filing of the 4th supplementary chargesheet before this court. He has not done it deliberately for the reasons best known to him," the court said.

In this matter, there is nothing on record to show that at the time of taking loan from DHFL, the accused were intending to cheat the company, it added.

"It is also important to note that prior to filing of 4th supplementary chargesheet, the loan account was settled and nothing is outstanding. This itself goes to show that accused persons were not intending to cheat DHFL by taking loan from it," the court said.

Hence, no case is made out attracting the penal provisions as claimed by the prosecution against the three accused, the order said.

As per CBI, between April and June 2018, Yes Bank invested Rs 4,727 crore in non-convertible debentures and Masala Bonds of Dewan Housing Finance Limited (DHFL) and sanctioned a Rs 750-crore term loan to a group company of the realtor.

In return, Yes Bank's then-managing director and chief executive officer Rana Kapoor allegedly received kickbacks of Rs 600 crore from DHFL.

Kapoor and DHFL promoters Kapil Wadhawan and his brother Dheeraj Wadhawan are among the other accused in the case.

The court, however, held that a case of cheating and forgery under the Indian Penal Code and Prevention of Corruption Act was made out against the other persons named in the supplementary chargesheet – Farid Sama, who is absconding, and Rahul Shah, Ramesh Shah and the firms linked to the duo.