Patra Chawl Case: Bombay High Court Questions ED For Challenging Sanjay Raut's Bail Without Arresting Main Accused

The Bombay High Court on Saturday questioned the Directorate of Enforcement for not arresting the prime accused in the Patra Chawl Case but seeking to cancel MP Sanjay Raut's bail.

"You are not going to arrest the main accused? They are in judicial custody, not police custody...You want to keep the accused as an undertrial prisoner... and you are not arresting the main accused?", Justice N. R. Borkar asked.

The court was hearing ED’s application seeking cancellation of bail granted to Sanjay Raut and aide Pravin Raut. ED has also sought that the High Court expunge adverse remarks made by the trial court against it in the bail order.

Additional Solicitor General Anil Singh responded that main two accused not being arrested cannot be a ground to grant bail to Sanjay Raut and Pravin Raut.

The ASG informed the court that the main accused, i.e., Rakesh and Sarang Wadhawan, promoters of HDIL, are in judicial custody in another case, but weren't arrested in the money laundering case.

The ASG explained that their statements were taken while in judicial custody. Hence, there was no need to arrest them.

Senior Advocate Abad Ponda for Pravin Raut clarified that the chargesheet has been filed against the two main accused and they are on bond. Hence, there's no scope of arresting them, he contended.

The ASG argued that the trial court didn’t consider the relevant material for bail in a money laundering case and rather gave its finding on the basis of the predicate offence of fraud.

He further submitted that the ED’s application is in nature of an appeal. It is not the ED’s case that bail conditions have been breached, he said. Rather, the ED is seeking cancellation because the bail order is perverse and bail shouldn’t have been granted in the first place.

“…the bail ought not have been granted…When your lordship is considering cancellation of bail, I am not saying conditions of bail have been breached. I am saying there was perversity in the order granting bail”, he argued.

The ASG relied extensively on Vijay Choudhary v. Union of India in which the Apex Court upheld the stringent conditions for bail provided in Section 45 of the Prevention of Money Laundering Act.

He argued that the twin conditions, i.e., reasonable ground to believe that accused is not guilty and accused is not likely to commit offence, for bail under PMLA have not been satisfied before granting bail in the present case.

The court adjourned the hearing to March, 02, 2023 at 2:30 PM.

The Case

Guru Ashish Construction Pvt. Ltd. (GACPL), in a tri-parte agreement with Maharashtra Housing and Area Development Authority (MHADA) undertook to develop 672 flats for tenants of Patra Chawl, develop flats for MHADA, and sell the remaining area to private developers.

According to the ED, Pravin Raut, one of the directors of GACPL, misled MHADA and sold the floor space index (FSI) to nine private developers, collecting Rs 901.79 crore. It failed to construct either the rehab portion for the 672 displaced tenants or the MHADA's portion.

ED has further alleged that Pravin Raut received nearly Rs 100 crore from HDIL and "diverted" it to the family of Sanjay Raut.

Raut was arrested on July 31, 2022 and accused of committing offences under section 3 read with section 2(1)(u) of PMLA. Special Judge MG Deshpande granted bail and called his arrest by ED "illegal," and "for no reason at all." The trial court also commented on ED's selective arrests of people at extraordinary speed and conducting of trials at a snail's pace.

Case no. – APPLN/340/2022

Case Title – Union of India v. Sanjay Raut and Anr.