Kiran Raj

The High Court of Delhi, Division Bench comprising Justice Navin Chawla and Justice Shalinder Kaur, has dismissed the bail application filed by Naval Kishore Kapoor. The appeal, filed under Section 21(4) of the National Investigation Agency Act, 2008, was directed against the order of the Special Court (NIA), Patiala House, New Delhi, which had denied him bail. The appellant was accused of being part of a larger conspiracy involving terror financing in Jammu and Kashmir. The prosecution alleged that Kapoor was instrumental in the movement of funds meant for separatist and terrorist activities.

The case originated from an investigation initiated by the National Investigation Agency (NIA) following an order from the Ministry of Home Affairs dated 30.05.2017. The order directed the NIA to register a case and conduct an investigation based on credible information that Hafiz Muhammad Saeed, along with other separatist leaders, was involved in raising and distributing funds for terror activities. The funds were allegedly transferred through hawala channels and other illegal means to disrupt peace in Jammu and Kashmir through violent protests, stone pelting, and other anti-national activities.

Also Read: Scope of Appeal Limited to Delay Condonation; Merits of Case Cannot Be Addressed: Supreme Court

The NIA registered case no. RC-10/2017/NIA/DLI under Sections 120B, 121, and 121A of the IPC and Sections 13, 16, 17, 18, 20, 38, 39, and 40 of the Unlawful Activities (Prevention) Act, 1967 [UA(P) Act]. The investigation revealed that numerous traders and intermediaries were engaged in transferring funds from offshore locations to India through illegitimate channels.

Naval Kishore Kapoor was arrested on 26.07.2018 following an extensive inquiry. The prosecution alleged that Kapoor played a crucial role in the financial transactions linked to terror financing. Specifically, he was accused of facilitating the transfer of Rs. 2,24,87,639 through NZ International FZC, Dubai, a company in which he was a partner along with Zahoor Ahmad Shah Watali. Watali, a known financial conduit, was allegedly involved in the disbursal of these funds to Hurriyat leaders and militant groups operating in Jammu and Kashmir.

It was further alleged that Kapoor engaged in an agreement with Trison Farms and Constructions Pvt. Ltd., a firm controlled by Watali, to lease land under a fraudulent pretext. The agreement, the prosecution contended, served as a cover for the transfer of funds used to sponsor terrorist activities. According to the NIA, Kapoor transferred Rs. 5.57 crores to Watali in 22 separate instalments between 2013 and 2016, despite the land in question not being registered under the said company.

Kapoor’s defense, led by Mr. Lakshay Dhamija, argued that the transactions were legitimate business dealings and that the prosecution failed to establish any direct link between Kapoor and the alleged terror funding activities. The defense contended that Kapoor’s prolonged incarceration, his advanced age of 71 years, and his medical conditions, including hypertension and diabetes, necessitated his release on humanitarian grounds. Furthermore, the defense stated the slow pace of the trial, pointing out that only 21 out of 242 witnesses had been examined, making the possibility of timely completion of trial remote.

In response, the prosecution, led by Senior Advocate Sidharth Luthra, asserted that the accused was actively engaged in the facilitation of illicit fund transfers and failed to provide a credible explanation for the source of the remitted funds. The prosecution maintained that the trial was being conducted expeditiously and that the stringent provisions of Section 43D(5) of the UA(P) Act prohibited the grant of bail in cases where a prima facie case had been established.

The court examined the applicability of Section 43D(5) of the UA(P) Act, which sets stringent conditions for the grant of bail in cases involving terrorist activities. The bench referred to the Supreme Court’s judgement in NIA vs. Zahoor Ahmad Shah Watali (2019), which stated that at the bail stage, the court must refrain from conducting a detailed examination of the evidence but must ascertain whether the allegations have a reasonable basis.

The court observed that the evidence on record suggested Kapoor’s financial dealings with Zahoor Ahmad Shah Watali were not part of routine commercial transactions. The court noted:

“The financial transactions between the appellant and the co-accused suggest a structured arrangement aimed at facilitating the movement of funds under the guise of business dealings.”

The court further stated:

“The agreement entered into for the lease of land does not align with legitimate commercial practices, especially given that the land in question was neither in the name of the said company nor had any commercial use approvals.”

The prosecution provided documentation indicating that NZ International FZC, the Dubai-based firm in which Kapoor was a partner, had been used to channel foreign remittances. The court noted that:

“The flow of funds from offshore accounts to entities with no significant business operations raises concerns about the true intent behind these transactions.”

With respect to the delay in trial, the court acknowledged that while the number of witnesses was substantial, the prosecution had examined 21 witnesses and was continuing the process at a steady pace. The court stated:

“The right to a speedy trial must be balanced against the nature of allegations and the broader implications of the offenses involved.”

The court also considered Kapoor’s medical condition but concluded that there was no immediate threat to his health that could not be managed within the prison system.

Also Read: "Kerala High Court: ‘When Evidence is Strong, Absence of Weapon Analysis or Assailant’s Name in Medical Report is Not Fatal’"

After reviewing the evidence and legal arguments, the court dismissed the appeal and upheld the Special Court’s order denying bail. The court held that:

“Given the seriousness of the allegations, the nature of financial transactions, and the restrictions imposed under the statutory framework, the appellant does not merit the grant of bail at this stage.”

Advocates Representing the Parties

• For the Appellant: Mr. Lakshay Dhamija, Mr. Mohit Gupta, and Mr. Sagar Rawat

• For the Respondent (NIA): Mr. Sidharth Luthra (Senior Advocate) with Mr. Akshai Malik (SPP), Mr. Ayush Agarwal, Mr. Karl P. Rustomkhan, Mr. Udbhav Sinha, Mr. Siddhant Gupta, and Mr. Khawar Salim

Case title: Naval Kishore Kapoor vs. National Investigation Agency

Neutral Citation:2025: DHC:1604-DB

Case Number: CRL. A. 02/2020

Bench: Justice Navin Chawla, Justice Shalinder Kaur

[Read/Download order]