Deviation From “Bail Is The Rule, Jail Is An Exception” Principle Constitutionally Circumspect; Supreme Court Grants Bail To Wadhawan Brothers In DHFL Fraud Case
Kiran Raj
The Supreme Court Division Bench of Justice J K Maheshwari and Justice Vijay Bishnoi granted bail to Kapil Wadhawan, former Chairman and Managing Director of Dewan Housing Finance Limited, and his brother Dheeraj Wadhawan, a former DHFL director, in a CBI prosecution alleging large-scale diversion of funds linked to loans and credit facilities obtained from a consortium of banks. The Court noted that charges are yet to be framed and that, given the volume of material and number of witnesses, the trial is unlikely to conclude within two to three years even if heard day to day. It directed their release on bail on personal bonds with sureties, required monthly reporting to the local police station, mandated surrender of passports and prior permission for foreign travel, and warned against influencing witnesses.
The appeals arose from orders of the High Court of Delhi dated 04.08.2025 and 16.09.2025 rejecting applications for regular bail filed by Kapil Wadhawan and Dheeraj Wadhawan. The appellants were arrayed as accused Nos. 1 and 2 in an FIR registered by the Central Bureau of Investigation on 20.06.2022 for offences under Sections 120-B read with Sections 409, 420 and 477-A of the Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.
The prosecution case alleged misuse and diversion of loan and credit facilities amounting to Rs. 57,252 crores availed by a non-banking financial company, with allegations of siphoning of funds through multiple entities. A chargesheet was filed on 15.10.2022 proposing examination of 215 witnesses, followed by a supplementary chargesheet arraying 110 accused and proposing 736 witnesses.
The appellants had been in custody since April 2020 and were granted bail in all other connected cases arising from the same transaction. The present appeals sought regular bail on grounds including prolonged incarceration, voluminous documentary evidence, pendency of framing of charges, and delay in trial.
The Court observed: “There is no gainsaying that under Indian law “bail is the rule and jail is an exception” is etched in the ethos of criminal jurisprudence. This rule stems from the fact that criminal law presumes a person to be innocent unless proven otherwise. Meaning that generally an under-trial prisoner ought not be placed behind bars indefinitely unless there is clear threat to society, influencing witnesses/inquiry or he is a flight risk etc. This rule also ensures that process is also not made punishment, wherein a person is jailed for very many years pending trial. Bail under the Code is a qualified right of an accused before conviction, wherein the accused is not guaranteed bail, rather it puts onus on the prosecution to establish as to why the under-trial prisoner should not be enlarged on bail. Any deviation in the above proposition is constitutionally circumspect
The Bench observed that “the right to speedy trial is an inseparable facet of Article 21 of the Constitution” and “recorded that where delay in investigation or trial is such that incarceration becomes unduly prolonged, the constitutional guarantee of fairness is irreparably compromised”. It “stated that “it would be impossible to lay down any invariable rule or evolve a straitjacket formula for grant of bail based on a specified period of detention” but observed that “unduly long deprivation of liberty pending trial strikes at the heart of Article 21”.
Referring to precedent, the Court recorded that “once it is obvious that a timely trial would not be possible and the accused has suffered incarceration for a significant period of time, courts would ordinarily be obligated to enlarge them on bail”. It observed that “pre-trial incarceration cannot be allowed to degenerate into punishment without adjudication” and stated that “courts are constitutionally obliged to intervene where long custody becomes disproportionate, arbitrary, or excessive”.
The Court recorded that “the appellants have remained in custody for several years, that charges have not yet been framed, and that the prosecution proposes to examine 736 witnesses with documentary material running into more than four lakh pages”. It observed that “even if the case is taken up for hearing on a day-to-day basis, the trial cannot be concluded within two to three years”.
On economic offences, the Court stated that “while the seriousness of the charge is a relevant consideration, it is not the sole determinant for denial of bail”. It observed that “all economic offences cannot be treated alike and that neither the statute nor the jurisprudence supports automatic denial of bail in every economic offence”.
The Bench further observed that “stringent statutory provisions governing bail are premised on the expectation of expeditious trials” and recorded that “inordinate delay in the conclusion of trial and prolonged pre-trial incarceration cannot go together”. It stated that “provisions prescribing higher thresholds for bail cannot be used as tools to incarcerate an undertrial for an unreasonably long period without conclusion of trial”.
The Court directed that “the appellants shall be released on bail on individually furnishing a personal bond of Rs. 10,00,000/- with two sureties of the like amount to the satisfaction of the trial Court. The appellants shall disclose their place of residence and contact number to the concerned jurisdictional trial Court as well as the police station where they would stay, within one week of their release, and shall mark their presence in the jurisdictional police station once a month and after framing of charges, before the trial Court on the dates as specified”.
“The appellants shall not leave the territorial jurisdiction of the country without the prior permission of the High Court and shall surrender their passports with the concerned trial Court within two days of their release”.
“Any attempt by the appellants to influence or threaten the witnesses, whether directly or indirectly, shall result in cancellation of the bail on application by the prosecution. The appellants shall remain present before the trial Court on dates so fixed until exempted and that no unnecessary adjournment shall be sought by them” and recorded that “the learned trial Court is at liberty to impose any other conditions, if needed”. It also clarified that “any violation of these conditions, unless due to an exceptional or unforeseeable ground, shall be treated as a valid condition for cancellation of bail”.
Advocates Representing the Parties
For the Petitioners: Mr. Rohan Batra, AOR Mr. Mukul rohatgi, Sr. Adv. Mr. Balbir singh, Sr. Adv. Mr. Arvind Nayar, Sr. Adv. Mr. Ashish Verma, Adv. Mr. Jai Anant Dehadrai, Adv. Mr. Prakhar Parekh, Adv. Ms. Debopriyo Moulik, Adv. Ms. Iti Agarwal, Adv.Mr. Samir Malik, AOR Mr. Lzafeer Ahmad B. F., AOR Ms. Chitra Rentala, Adv. 26 Mr. Parikshit Arvindan, Adv. Mr. Krish Parashar, Adv.
For the Respondents: Mr. Suryaprakash V Raju, ASG. Mr. Mukesh Kumar Maroria, AOR Mr. Annam Venkatesh, Adv. Mr. Zoheb Hossain, Adv. Mr. Hitarth Raja, Adv. Mr. Kartik Sabharwal, Adv. Mr. Ayansh shukla, Adv.26. Mr. Shaurya Sarin, Adv. Mr. Harsh Paul Singh, Adv. Mr. O. P. Gaggar, AOR Mr. Sachindra Karn, Adv.
Case Title: Kapil Wadhawan v. Central Bureau of Investigation; Dheeraj Wadhawan v. Central Bureau of Investigation
Neutral Citation: 2025 INSC 1440
Criminal Appeal Nos. arising out of SLP (Crl.) Nos. 16953 and 17057 of 2025
Bench: Justice J. K. Maheshwari, Justice Vijay Bishnoi
