HC again refuses arrest of Yudh Chand Bains, questions Vigilance approach in KCCB loan fraud probe
Shimla, May 16
In a significant judicial setback to the Himachal Pradesh government and the State Vigilance and Anti-Corruption Bureau (SV&ACB), the Himachal Pradesh High Court has once again refused to permit the custodial interrogation and arrest of businessman Yudh Chand Bains and his son Harish Chand in the alleged Kangra Central Cooperative Bank (KCCB) loan fraud case, while making sharp observations on the conduct of the investigating agency.
Justice Rakesh Kainthla, in a detailed 47-page judgment delivered on May 13, held that the prosecution had failed to justify why custodial interrogation of the borrowers was necessary when several members of the Board of Directors and officials allegedly involved in sanctioning and relaxing loan conditions had either not been interrogated or were merely served notices.
The court was hearing anticipatory bail petitions filed by businessman Yudh Chand Bains, his son Harish Chand, former KCCB General Manager Satvir Minhas and retired Deputy General Manager Ashok Kumar Puri in connection with FIR No. 2 of 2025 registered by SV&ACB Una under IPC and Prevention of Corruption Act provisions.
The FIR alleged that huge loans were sanctioned to projects linked to Bains, including Hotel Himalaya Snow Village and Hotel Lake Palace, allegedly in violation of RBI and NABARD guidelines. The prosecution further claimed forged utilisation certificates were used and loan funds worth around Rs 20 crore were diverted to various accounts.
However, while examining the investigation records and case diaries, the High Court noted that the prosecution itself admitted that the Board of Directors had relaxed several mandatory loan conditions and violated NABARD norms before disbursing the loans.
In one of the strongest observations in the order, the court remarked:
“This conduct of the police shows the gravity of the so-called ‘economic offence involving the large-scale financial fraud’.”
The judgment further observed:
“There is something more in this case than meets the eye, and the police are only bent upon arresting the petitioner, Yudh Chand Bains and his son.”
The High Court specifically noted that several directors who sanctioned or relaxed the loan conditions had either been released merely after serving notices under Section 41A CrPC/Section 35 BNSS or had not even been interrogated.
The court held that this weakened the prosecution’s argument that the matter was such a grave economic offence requiring immediate custodial interrogation of the borrowers and certain officials.
Justice Kainthla also rejected the State’s submission that whenever police seek custodial interrogation, courts are bound to grant it. Calling such an argument legally untenable, the court observed:
“The custodial interrogation is not the magic words that would shut the jurisdiction of the Court to examine the necessity of the interrogation.”
The judgment added that accepting such a submission would “reduce the Courts to rubber stamps and confer unbridled power upon the police.”
The court further noted that investigators had already collected bank statements and interrogated persons to whom the money was allegedly transferred, and therefore mere recovery of money could not justify arrest.
Quoting Supreme Court precedents, the High Court reiterated:
“A criminal court, exercising jurisdiction to grant bail/anticipatory bail, is not expected to act as a recovery agent to realise the dues of the complainant.”
The court also strongly defended the constitutional protection against self-incrimination and held that refusal to confess before police cannot be termed non-cooperation with investigation. Referring to recent Supreme Court rulings, the court observed that participation in investigation “does not entail making self-incriminating statements.”
Importantly, the High Court also questioned the manner in which the case diaries were maintained by the investigating agency, observing that the diaries were “not even paginated” and prima facie did not comply with statutory requirements under Section 192 of BNSS.
Also read HC grants bail to Congress Leader Yudh Chand Bains in Rs 20 Cr KCC Loan case
The matter had earlier reached the Supreme Court after the High Court initially granted relief to the accused. The apex court had set aside the earlier order and directed fresh consideration on merits, following which the High Court reheard the matter and again granted protection from arrest.
About the Author
The HimachalScape Bureau comprises seasoned journalists from Himachal Pradesh with over 25 years of experience in leading media conglomerates such as The Times of India and United News of India. Known for their in-depth regional insights, the team brings credible, research-driven, and balanced reportage on Himachal’s socio-political and developmental landscape.
