The crisis surrounding the Wadhawan brothers, former promoters of the scam-hit Dewan Housing Finance Corporation Ltd (DHFL), deepened this week with twin judicial blows. The Mumbai bench of national company law tribunal (NCLT) has declared Kapil Wadhawan bankrupt, while the Supreme Court refused to extend the surrender deadline for his brother, Dheeraj Wadhawan, in the country’s largest bank loan fraud case.
NCLT, acting on a petition filed by Union Bank of India, held that Kapil Wadhawan had failed to provide a repayment plan, despite repeated opportunities. The tribunal observed that attempts by resolution professionals to obtain such a plan yielded no response, leading lenders to unanimously seek closure of the insolvency process and move for bankruptcy proceedings.
In its order dated 14 August 2025, the bench comprising judicial member Lakshmi Gurung and technical member Hariharan N Iyer directed Kapil Wadhawan to submit his statement of financial position to bankruptcy trustee Sanjay Kumar Mishra within seven days. Mr Mishra, nominated by Union Bank of India and appointed by the tribunal, will oversee the administration and distribution of Kapil Wadhawan’s estate.
Union Bank, along with amalgamated entities Andhra Bank and Corporation Bank, had extended credit facilities to DHFL through consortium arrangements dating back to 2010. Following defaults, the lender invoked Kapil Wadhawan’s personal guarantee executed in June 2019, seeking recovery of more than Rs39,500 crore. After non-payment, Union Bank filed for insolvency under Section 95 of the Insolvency and Bankruptcy Code (IBC) in December 2020. While the petition was admitted in April this year, Kapil Wadhawan’s challenge before the appellate tribunal was dismissed. A connected appeal remains pending before the Supreme Court.
A bench of justice Sanjay Kumar and justice Satish Chandra Sharma refused to extend this deadline, despite submissions from senior advocate Kapil Sibal, who argued that Dheeraj Wadhawan required urgent surgical intervention. The court remarked that necessary medical care could be provided in custody and directed central bureau of investigation (CBI) and jail authorities to ensure that he is taken to AIIMS, New Delhi, every Saturday for check-ups until doctors deem otherwise.
CBI has alleged that DHFL, under the Wadhawans’ leadership, conspired with others to cheat a consortium of 17 banks led by Union Bank of India. Loans worth Rs42,871 crore were sanctioned, of which over Rs34,000 crore were allegedly siphoned off through falsified accounts and diversion of funds. The Wadhawan brothers were arrested in July 2022 in connection with the case.
The developments mark a significant turn in the DHFL saga which has been at the centre of one of India’s largest financial scandals. With Kapil Wadhawan now declared bankrupt and Dheeraj Wadhawan ordered to surrender, legal scrutiny of the brothers’ role in the collapse of DHFL and the massive losses borne by lenders has tightened further.
Last week, market regulator Securities and Exchange Board of India (SEBI) slapped Rs120 crore penalty and barred from markets for up to five years six former top executives, including four members of the Wadhawan family of DHFL. The action follows a detailed probe that uncovered large-scale fund diversion, falsification of accounts and deliberate misrepresentation of the company’s financial position.
The order, issued by SEBI’s whole-time member (WTM) Ananth Narayan G, names Kapil Wadhawan, DHFL’s former chairman and managing director (CMD) and Dheeraj Wadhawan, the company’s former director, as the key architects of the scheme. Both face five-year market bans and fines of Rs27 crore each. Rakesh Wadhawan, former non-executive chairman and Sarang Wadhawan, former non-executive director, have been banned for four years and fined Rs20.75 crore each.
Harshil Mehta, ex-joint managing director and chief executive officer (CEO), has been fined Rs11.75 crore, while former chief financial officer (CFO) Santosh Sharma faces a Rs12.75 crore penalty. Both are barred for three years. During their bans, none of them can trade in securities, access the market, or hold directorships or key managerial roles in listed or fund-raising public companies.
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