Delhi High Court Dismisses Stock Broker's Plea Against Order Summoning Him In ₹42,000 Crore DHFL Fraud Case

The Delhi High Court has dismissed a petition filed by stockbroker Jalaj Batra challenging an order dated April 27, 2024 of a Special Judge (PC Act) at Rouse Avenue Courts, New Delhi, summoning him as an accused in the Rs 42,000 crore DHFL loan fraud and alleged share price manipulation case.

The order involves taking cognisance of offences under the IPC and Prevention of Corruption Act, including criminal conspiracy, cheating, forgery and corruption.

A bench of Justice Manoj Jain held that the trial court's order was confined to taking cognisance and that, in view of the material in the supplementary chargesheet dated April 18, 2024 and statements of prosecution witnesses, sufficient material exists to proceed further with the case.

“As already noted above, the impugned order, merely, takes cognisance and in view of the averments made in the supplementary charge sheet and the statements of prosecution witnesses, including the ones referred to above, it is quite evident that there existed sufficient material to proceed further with the matter. Therefore, this Court does not find any reason to interfere with the impugned order.”, it observed.

The court also took note of the CBI's submission that Batra had been residing abroad, had not appeared before the trial court and that a Look Out Circular had been issued against him by another agency.

The case arises from an FIR dated June 20, 2022 lodged by Union Bank of India against Dewan Housing Finance Corporation Ltd (DHFL) and others, alleging a conspiracy to defraud a consortium of 17 banks of about Rs 42,000 crore, causing wrongful loss of around Rs 34,000 crore. The supplementary chargesheet named Batra among 34 additional accused for offences relating to criminal conspiracy, cheating and corruption.

According to the CBI, funds diverted from DHFL were routed through entities to artificially inflate its share price in order to project a sound financial position and attract investments through a proposed Qualified Institutional Placement (QIP).

While examining the material on record, the Court said it, including statements of witnesses, indicated that Batra was instrumental in trading activities aimed at manipulating DHFL's share price, which rose from around Rs 290 to Rs 690 between 2017 and 2018 before sharply falling in September 2018. It added that these allegations were consistent with and complemented the main chargesheet, forming part of the same larger conspiracy to siphon funds.

“The allegations appearing against the petitioner cannot be, thus, said to be, beyond those averred in the main charge-sheet. These are, rather, complementing and in synchronization with the main allegations and have to be read in conjunction with the main chargesheet. Therefore, it cannot be said that the prosecution has come up with any new case. The common intent, as already noticed above, was to siphon off the money and the role of the petitioner seems quite apparent and the devious tactics employed by him indicate him to be part of conspiracy.”, it said.

The Court also accepted the CBI's submission that reliance on witnesses or approvers to uncover conspiracy cannot be termed illegal, as such mechanisms are essential to expose complex financial crimes.

“It is, and rightly so, contended by CBI that to decipher conspiracy and to reach other key perpetrators, if prosecution falls back on statement of any person who is helpful in exposing conspiracy, such approach cannot be said to be biased or illegal. If such contention of petitioner is accepted, the provision regarding 'grant of pardon' and making someone approver would stand redundant, nugatory and superfluous.”

Accordingly, the court dismissed the petition, holding that no interference was warranted at the stage of cognisance.