Special Court's Remarks In Sanjay Raut Bail Order Unreasoned, Demonstrate Lack Of Application Of Mind: ED To Bombay High Court

In an amended appeal before the HC, the ED further claimed that calling Raut's arrest a 'witch hunt' "would not only be contrary to the record but also would send a wrong message regarding the integrity and proficiency of the Enforcement Directorate." It sought for all adverse remarks against the agency to be expunged.

"Court has taken into account irrelevant material of substantial nature, while ignoring the relevant material on record, Moreover, the findings of the Hon'ble Special Court are unreasoned and demonstrate lack of application of judicial mind. It is also evident that the grant of bail is based on assumptions and presumptions which are untenable in law and fact. Thus, it can be seen that the order under challenge suffers from serious infirmities causing grave and irreparable prejudice to the cause of justice."

Raut was arrested on July 31, 2022 and accused of committing offences under section 3 read with section 2(1)(u) of the Prevention of Money Laundering Act in the Patra Chawl Scam. He was granted bail on November 9, in which special judge MG Deshpande called his arrest by ED "illegal," and "for no reason at all." The court also commented on ED's selective arrests of people at extraordinary speed and conducting of trials at a snail's pace.

The ED has sought for the HC to set aside the bail granted to him as well as expunge all adverse remarks against itself.

In response to the court's observation of adopting a pick and choose policy for arrests, ED said that "it is a prerogative and discretion of the investigating agency."

Regarding the court's remarks about there being no predicate offence to register a PMLA Case and hence no alleged laundering, the ED said that the respective court had already taken cognisance of the predicate offence. And the special court had "overreached" itself as it was impermissible for the court to nullify the predicate offence.

"It is submitted that this entire enquiry conducted and observations made by the Hon'ble Special Judge are beyond his jurisdiction whilst considering an application for bail in respect of the offence of money laundering."

The ED claimed that Pravin Raut, a co-accused in the case who was granted bail along with Sanjay Raut was the director of the company that allegedly committed the scheduled offence and the money from defrauding poor slum dwellers had gone from HDIL to Raut. Several such aspects have been ignored in the bail order the agency has said.

The Special Court had also faulted the ED for failing to arrest prime accused HDIL promoters Rakesh and Sarang Wadhawan and faulted MHADA for becoming the complainant in the case at a belated stage in 2018 when the alleged fraud was committed in 2007-2011.

"The entire finding on the conduct of MHADA is not only misconceived and unjustified but made behind the back of and without even noticing (issuing a notice to) MHADA," the ED claimed adding, that according to the SC ruling in Vijay Chaudhary the court clarified that the date on which the tainted monies are acquired was significant not the date on which the predicate offence was committed.

The ED claimed that the HC's observations in a pending civil litigation connected to the same redevelopment project wasn't germane to the present case. HC's observations merely show that consent was taken from the residents of Patra Chawl for redevelopment and the tenements were demolished which in fact lends credence to accusation that the intention was always to cheat and monetize the flat by selling them at market value.

As for the non-arrest of the Wadhwans, ED said the duo was already arrested by the CBI and they had already recorded their statements. The agency emphasized that there was "no concept of negative equality" under the Constitution.

The special court's observations faulting the manner in which ED conducts its cases and bail applications "are unwarranted and would tend to have a chilling effect on the morale of the Enforcement Directorate as an investigating agency. Hence, these observations deserve to be expunged from the impugned order."

"The Hon'ble Special Court has overreached itself by proceeding to give a finding on the veracity and the validity of the predicate offence," ED claimed.

The ED exclaimed that Raut's arrest could not be called illegal since he hadn't challenged his remand applications. Special Judge MG Deshpande who now claims the arrest was "illegal" had not only remanded Raut's in ED's custody but also taken cognisance of the agency's charge sheet, ED has said.

To demonstrate Sanjay Raut's involvement in the Pratra Chawl scam since the inception, ED claimed he was present in meetings wherein the then Union Agricultural Minster and the then Chief Minister along with other government officials took policy decisions regarding redevelopment of Patra Chawl.

The Special court had questioned why all the government and MHADA officials participating in the said meetings were not accused along with Sanjay and Pravin Raut.

"It is submitted that these observations are not only misconceived but also are not germane to the scope of the present proceedings and certainly would not justify enlarging the present Applicants on bail," the ED said.

According to the ED, the Special Court placed undue emphasis on the alleged forgery committed by prime witnesses in the case, Swapna Patkar.

"These observations have no bearing on the statements made by her and recorded by the Investigating agency under the provisions of PMLA which indicate the infusion of cash amounts by or at the instance of the Applicant Sanjay Raut which are acquired from the proceeds of crime arising out of the Patra Chawl fraud," the ED said.