TMI Blog2022 (11) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... not automatically acquire such status and ultimately drag an innocent person in a miserable situation in the guise of arrest under Sec.19 and stringent twin conditions of Sec.45(1)(i)(ii) of the PML Act. THE Court has to do what is right irrespective of who is before it. iii. From the records materials and the detailed discussion made above, it is clear how Pravin Raut (A3) is arrested for a pure civil litigation, whereas Sanjay Raut(A5) for no reason. This truth is glaring. The Court is under legal obligation and duty to find out truth even at the stage of bail. The Hon'ble Supreme Court time and again laid down, Truth is the guiding star. Criminal trial is voyage of discovery of truth. The truth alone triumphs and every endeavour has to be made by the Court to discover the truth and make justice. iv. Even otherwise the twin conditions cast such an important duty on the Court to have a thorough examination and assessment at the stage of bail without making any mini trial v Even if MHADA, who is party to the every stage and every litigation, which had reached upto the Hon'ble High Court, yet astonishingly lodged FIR No.22 of 2018 for the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aspect, where the people will go for justice? xi. This Court being the Court of First Instance has great responsibility of not committing a slightest mistake which will turn into miscarriage of justice. Therefore, this Court has taken a thorough survey of the available records/materials within four corners of the limits required to resolve this question relating to the twin conditions and only thereafter, arrived at such conclusion by not transgressing the boundaries and not committing any mini trial. xii. In PMLA bail matters, orders become long and run into at least around 40 50 pages, does not mean that Court has done minitrial as argued by the Ld. A.S.G. Mr. Anil Singh. On the contrary the stringent twin conditions under Sec.45(1)(i)(ii) of the PML Act prescribe prima facie thorough examination. Even the recent order of the Hon'ble High Court in the case of Anil Vasantrao Deshmukh (supra) runs into 53 pages. The present order is a common order for two bail applications relating to voluminous record, hence bound to run in number of pages. Both accused are basically arrested illegally. Both of them are entitled to parity in view of disparity made by the ED in not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to avoid multiplicity and length of separate orders, this Court finds it necessary to decide both applications by way of this common order; but with separate discussions wherein Bail Application (Exh.8) of Pravin Raut(A3) will be discussed first and thereafter, that of Sanjay Raut(A5). 2. Applicant Pravin Madhukar Raut in application (Exh.8) is Accused No.3 in this case, prayed for grant of bail contending his innocence and false implication. ED vide say (Exh.8A) strongly opposed the application alleging his active involvement in generation, placement, layering and integration of Proceeds Of Crime (POC), amounting a serious offence of money laundering. With this basic contention, ED contended to reject the application as in money laundering offence, 'Jail is Rule and Bail is Exception'. 3. Applicant in Bail Application No.582 of 2022 Sanjay Rajaram Raut is Accused No.5 in this case, prayed for grant of bail contending his innocence and false implication. ED vide say (Exh.2) strongly opposed the application alleging that the applicant(A5) is involved in the crime right from the beginning in the process of generation, placement, layering and integration of the Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Sec.45(1)(i) (ii) of the PML Act? Yes. 2. What Order ? As per final order. REASONS ALL POINTS. 7. As noted above, first of all Bail Application (Exh.8) of Pravin Raut(A3) is being discussed and after conclusion thereof, Bail Application No.582 of 2022 will be discussed. I. BAIL APPLICATION (EXH.8) OF PRAVIN RAUT (A3). CASE OF ENFORCEMENT DIRECTORATE. 8. EOW, Mumbai lodged FIR No.22/2018 dt. 13.03.2018 on the basis of the complaint filed by Mr. Nitin Gadkari, Executive Engineer, MHADA, Mumbai against M/s. Guru Ashish Construction Pvt. Ltd. (A4), Rakesh Kumar Wadhawan (A1), Sarang Wadhawan (A2), both directors of M/s. Guru Ashish Construction Pvt. Ltd. (for short 'GACPL') alleging wrongful loss to the tune of Rs.1034 Crore to MHADA and corresponding gain to themselves and others. Crime under Ss. 409, 420, 120B IPC was registered. Offence under Ss. 420 and 120B IPC being Scheduled Offences under the Prevention of Money Laundering Act, 2002 (in short 'PML Act'), Enforcement Directorate recorded ECIR/MBZO I/80/2021 on 08.09.2021 and undertook investigation thereof. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o right to assign the rights and obligations under the said Tripartite Agreement to any third party and also confirmed that they had not done so. h. Thereafter Deed of Confirmation and Modification was executed on 09.11.2011 between the parties. On the basis thereof and a letter dt.26.07.2011 issued by then VP and CEO of MHADA, the Developer disposed off various parcels of MHADA land for construction of free sale component to various third party developers without informing MHADA or obtaining its consent and thereby received substantial amount of money for the sale. On the basis of these facts and allegations, FIR No.22 of 2018 under Ss. 420, 409 and 120B of IPC was registered. 10. ECIR AND FACTS ALLEGEDLY REVEALED IN THE PMLA INVESTIGATION. a. In the investigation conducted by ED it was revealed that Pravin Raut (A3) with Nippun Thakkar, Former Director of GACPL negotiated with the erstwhile developer Lokhandwala Developers and assigned his rights in favour of GACPL against monetary compensation for the 'Patra Chawl Redevelopment Project' also knowns as 'Goregaon Siddharth Nagar Sahakari Grihanirman Sanstha Ltd.' GACPL was acquired by Nipun Thakka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the company. In this way Pravin Raut (A3) due to his involvement in obtaining the approval for sale of FSI from MHADA laundered POC approximately Rs.1040 Crore which he generated from the said activity. d. GACPL sold FSI to various third party developers for Rs.1034 Crore and transferred the said amount to the parent company i.e. HDIL and also sister concern for their business purpose. Money trail revealed that around Rs.100 Crore Pravin Raut (A3) received in his bank account from HDIL and further transferred the same in acquiring assets. Hence, he is knowingly involved in the process of generating the proceeds of crime and transferred of Rs.95 Crore for the acquisition of assets. Illegal sale of FSI during the said period was taken place and siphoning off funds to his account has happened when he was serving as Direction of GACPL. For selling FSI with the active connivance of other accused and knowingly indulging himself in laundering of POC, brings him under Sec.3 with Sec.70(2) of the PML Act. PROCEEDS OF CRIME AS ALLEGED BY ED. 11. Gist of contention of ED is that GACPL illegally sold the FSI to third party Developers and raised Rs1039.79 Crore/Rs.1048.96 Cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said developers had offered accommodation ad measuring 325 sq. feet of Carpet Area as opposed to 365 sq. feet for each occupant. e. Lokhandwala Developers instituted Suit No.4476/1985 before the Hon'ble Bombay High Court. f. The Accused No.3 with his old acquaintance Mr. Nippun Thakkar had executed Projects in partnership with him in Nalasopara. g. Some projects of Nippun Thakkar in Mumbai were stuck in litigation and thereafter he suffered from health issues, hence he asked help of Accused No.3 acknowledging his experience in the field. h On 01.06.2000 GAPCL was incorporated with Nippun Thakkar and others. In 2000 Mr. Mansukh Sureja, Mr. Chetan Kothari and Mr. Chetan Patel introduced the redevelopment of Siddharath Nagar to GACPL. i. In 2004 2005 Mr. Nippun Thakkar approached accused No.3 for his assistance, skills and experience for Siddharath Nagar Goregaon Project. j. The role attributed to accused No.3 was that he (A3) shall introduce Mr. Thakkar to potential investors for GACPL, the applicant shall settle the dispute between the Lokhandwala Developers and the society on behalf of Mr. Thakkar and shall also handle litigation of the society on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil dispute which is not a Predicate Offence. t. The accused No.3 had very limited period in GACPL. u. At the relevant time his limited tenure in GACPL was related to obtain individual letters from the tenants and agreements relating to permanent alternate accommodation, eviction of tenants, field work and procedural correspondence with MHADA and handling various litigations. v. Accused No.3 was never in charge of sale of development rights nor has any knowledge thereof, when accused No.1 and 2 were directly connected for the same. w. Accused No.3 is not liable under Sec.70(2) of the PML Act. x. The prosecution complaint incorrectly mentions that the Development Agreement with third party developers was executed without obtaining consent from MHADA. y. Rs.99 Crore is not a part of POC, but constitutes genuine transaction, subject matter is completely a matter of separate ECIR. z. Accused No.3 passes the triple test. 14. With above and various other facts and grounds AccusedNo.3 referred various Court litigations which reached upto the Hon'ble Supreme Court and further contended that he has a limited role in GACPL as director from 2010 to 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, not entitled to bail. I carefully examined this argument. 17. Whole attack of ED and their arguments advanced by Ld. ASG Mr. Anil Singh is that, there is money laundering. In an offence of money laundering, due to seriousness thereof, JAIL IS RULE AND BAIL IS AN EXCEPTION . Hence, thorough examination of available materials as required for ascertaining a prima facie case, without any mini trial, is inevitable. Guidelines of the Hon'ble Supreme Court and the Hon'ble High Court in recent authorities reiterated that if allegations and consequences thereof are serious, 'Beyond reasonable doubt and not preponderance of probabilities' is the test even for deciding bail application. So, in order to make such prima facie assessment on the basis of available materials, it is necessary to note some basic concepts under the PML Act and thereafter factual and legal aspects can be seen. PROCEEDS OF CRIME AND IMPORTANT STAGES IN MONEYLAUNDERING OFFENCE. 18. 'Proceeds of Crime' is defined under Sec.2(1)(u) of the PML Act as follows, Proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crime, the property associated with the scheduled offence must have been derived or obtained by a person as a result of criminal activity relating to the concerned scheduled offence. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money laundering under Section 3 of the Act. 32. Be it noted that the definition clause includes any property derived or obtained indirectly as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the property which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of Explanation added in 2019 to the definition of expression proceeds of crime , it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to any property including abroad derived or obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause proceeds of crime , as it obtains as of now. It is, therefore clear that, there should be a nexus between property derived or obtained, directly or indirectly as a result of criminal activity relating to the stated scheduled offence . Even at the stage of bail on the basis of available materials, examination to prima-facie find out, was there any scheduled offence, at the relevant (contemporary) time? Was the POC derived or obtained, directly or indirectly as a result of criminal activity relating to a scheduled offence? Inquiry and examination of these two questions play very very vital role in deciding the fate of this bail application. When a criminal activity relating to POC has to be examined prima facie, certainly Scheduled Offence and its contemporary facts will have to be examined and there is no option to overlook or ignore the same. 19. It is a fact that, there was no FIR relating to any scheduled offence at the relevant ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shonest intention only and only to defraud and cheat 672 tenants as well as MHADA and induced them with such intention, executed the agreement for cheating them forever. Dishonest intention right from the inception of such inducement is also a material constituent aspect, which has to be satisfied. 21. Apart from the above, other three basic ingredients of Sec.3 of PML Act are necessary to be seen, which are Placement, Layering and Integration. (a) 'Placement' refers to the physical disposal of bulk cash proceeds derived from the illegal activity. Moving the funds from direct association with the crime. The ultimate aim of this phase is to remove the cash (POC) from the location of acquisition so as to avoid detection from the Authorities. 'Placement' represents the initial entry of funds into financial cycle. It is a physical movement of cash (POC) away from the location where it was obtained and its placement in the legitimate financial system. (b) 'Layering' refers to separation of illicit proceeds from the source by creating complex layers of financial transactions. In the course of layering, there is the first attempt at concealment or disgu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to find out whether there was any inducement and cheating at the inception when there was no such FIR till 2013 and even thereafter till 13.03.2018. MATERIALS WHETHER INDICATE EXISTENCE OF THE SCHEDULED OFFENCE? GENERATION OF POC AND MONEY LAUNDERING? Facts and Material relating of Contemporary Period. 24. Execution of Tripartite Agreement dt.10.04.2008 by the Society, GACPL and MHADA is an admitted fact. On 20.03.2007 the applicant(A3) became Director of GACPL, specifically for handling various litigations concerning Siddharth Nagar Project. Prior to it there was similar project initiated by Lokhandwala Builders and the same was trapped in battle of litigation for a very long period, hence could not attain finality. Mr. Nippun Thakkar gave 25% Sweat Equity shares to the applicant(A3). The copy of Resolution dt.31.03.2007 filed by the applicant (A3) clearly shows the inter se arrangement of the shares with clear specification thereof. Volume VI, page 166 filed by ED with prosecution complaint (PC) clearly shows that the Society and GACPL submitted a joint proposal for development. MHADA Resolution No.6280 dt.01.11.2007 indicates that it has sanctioned the Redevelop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and time consuming task for any Developer including the instant. In this way after noting the remarkable progress of development and justifying the said process, the Hon'ble High Court refused to exercise of the jurisdiction and also considering the merits dismissed all those proceedings on 10.02.2011. 27. It is therefore apparent to prima facie hold that until 10.02.2011, there was absolutely no element of cheating, intention to cheat and induce 672 occupants and MHADA nor any criminal conspiracy or breach of trust on the part of the applicant(A3) and GACPL. On the contrary the Hon'ble High Court had appreciated the development work and progress thereof. This fact is evident from the order of the Hon'ble High Court. All this prima facie indicates ab initio absence of element of cheating and criminal conspiracy. Even drawing any inference about the same after a long time of 8 years in 2018 till date is not permissible. All this prima facie further goes to show that, the said development activity vide Tripartite Agreement dt.10.04.2008, was not intended dishonestly to induce and cheat 672 tenants as well as MHADA for prima facie holding it as a 'criminal activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court. Can all these activities and the litigations cropped up as such, be termed as criminal activities relating to a Scheduled Offence, as contemplated in Sec.2(1)(u) r.w. Sec.3 of the PML Act? Prima facie there is absolutely nothing to show that there was dishonest intention of Pravin Raut(A3) from the inception and at the very beginning of the transaction, to hold him guilty for an offence under Sec.420 IPC or even Sec.120B IPC. On the contrary all such activities indicate genuineness thereof. 30. Ld. Sr. Counsel Mr. Aabad Ponda placed reliance on Pran Jyoti Bhuyan V. State of Assam, (2014 SCC OnLine Gau 18), wherein it was held that it is inbuilt in Section 415 of the IPC that there must be a dishonest intention from the very beginning of the transaction, which is a sine qua non to hold an accused guilty for commission of the said offence. When allegations are made regarding failure on the part of an accused to keep his promise in the absence of a culpable intention at the time of making the initial promise, no offence under Sec.420 of the IPC can be said to be made out. Therefore, intention and inducement at the inception of circumstances of transaction play very imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion for MHADA, Society and the Developer as approved by MHADA. During the discussion you have agreed that instead of signing the Sale Deed at this juncture, you will only take booking for free sale flats and enter into Agreement for Sale. It is further clarified that you will be permitted to sell free sale component where signature of the MHADA officers will not be required, however NOC to the Occupation Certificate for free sale component shall not be issued by MHADA unless and until proportionate share of built up area is handed over to MHADA. 33. This MHADA letter dt.26.07.2011 is prima facie the best evidence to show that, GACPL was permitted to enter into agreements for sale and also to take bookings for free sale flat in respect of free sale component with certain conditions. Stepping ahead the correspondence between MHADA dt.15.06.2011 and GACPL dt.20.06.2011 clearly indicates that MHADA and GACPL unequivocally agreed to Review the conditions of Tripartite Agreement, suggesting consequential amendments to the Tripartite Agreement. In this way it was agreed to execute a Modification Deed and the draft thereof was circulated amongst the MHADA Officers. 34. Volume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the capacity of Director of GACPL. By virtue of Clause 11 of the Modification Deed, Clause (xviii) of the Tripartite Agreement was replaced as follows, ... It is further expressly agreed and understood between the parties hereto that in case the Developer desires to sell the free sale component on its own terms and responsibility either in its entirely or in part including sale of flats/units that would be construed in the free sale building component then the Developer may do so provided however, MHADA shall not be responsible for any liability that may arise from the same and the Developer shall not exceed the FSI that is allotted to it under the Joint Development Agreement, and shall further ensure that the share of MHADA and rehabilitation component for the Tenant is not adversely affected and for that purpose the Developer may enter into arrangements/agreements/ deeds or any such kind of writing as it may deem fit where there will be no requirement of signatory either from MHADA or Society on the documents/writings that would be executed and registered in regard to free sale component of the Developer. However, it is agreed that the NOC to the Occupation Certificate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court dismissed SLP II No.10282 of 2012 on 06.07.2012. Hardly one year and five months thereafter the applicant(A3) resigned GACPL. Till then and even in the second round of every litigation, MHADA was party. Yet, never contended that the applicant(A3) was the main person who induced MHADA and 672 occupants and further cheated them, laundered money from the activity relating to the Scheduled Offence (Ss.420,120B IPC), which is the basic requirement for offence of cheating. Even otherwise it is on record that right from the beginning a battle of civil litigations was going on in respect of the said project and the Hon'ble Supreme Court shut down this first round of litigation on 06.07.2012. Record indicates that even prior to it since 1994 95 the Society and erstwhile developer Lokhandwala were litigating. Therefore, it is clear that from 2007 till 2012 there was a Court litigation and also simultaneously there was a remarkable progress in the project. Therefore, question of generating proceeds of crime during the said period till 06.07.2012 does not arise nor it can be said that the applicant had entered GACPL and the project in question, with a calculated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows, 8. The plaintiff's filed the above Suits before this Court impugning the termination notice dated 12th January, 2018. At the ad interim stage, the Senior Advocates appearing for the Plaintiffs in the above Suits submitted that MHADA cannot terminate the Agreement with GACPL since the same will cause grave harm, loss and damage to the Plaintiffs and MHADA. It was submitted on behalf of MHADA, that GACPL was not entitled in law to enter into any such Agreements with the Plaintiffs and the termination notice was valid. However, the Plaintiffs in the above Suits as well as MHADA agreed, that in view of the undertakings given by Shri Wadhawan in the Meadows Suit, HDIL, which is a holding Company of GACPL, is responsible for the misdeeds of GACPL. 41. In this way not only the Hon'ble High Court confirmed that, HDIL (A1 and A2) is responsible for the misdeeds of GACPL, but also it is MHADA who had agreed this clear situation before the Hon'ble High Court and made representation as such. Where the question arises about alleged role of the Applicant(A3) and alleged inducing, cheating and criminal conspiracy by him? Can we go behind the clear observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entionally permitted and affirmed the transactions between GACPL and third party developers for the free sale component. c. In the suit before the Hon'ble High Court, it is MHADA who affirmed that purported wrong doings alleged in the complaint were done by HDIL, Rakesh (A1) and Sarang (A2). So, MHADA is prima facie estopped and cannot be allowed to deny the same and fasten criminal liability on the Applicant(A3). When the serious question of Right to Liberty of the applicant (A3) is there, the Court cannot accept and put premium on such approbate and reprobate attitude of the MHADA. All this what MHADA has been doing is by its declaration, act or omission, intentionally caused or permitted another person including the Hon'ble High Court to believe a thing to be true and to act upon such belief, hence MHADA cannot be allowed to deny the truth of that thing. So, MHADA cannot approbate and reprobate. It cannot both affirm and dis affirm the same transaction. Discussion of all this is necessary and inevitable as it is MHADA who has lodged FIR No.22/2018 on one fine morning dt.13.03.2018 for the alleged facts which had taken place during 20072013. All such conduct o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) was in charge of handling the litigation arising out of Siddharth Nagar Project. He had to obtain individual letters from the tenants, eviction of the tenants, field work, make correspondence with MHADA and other authorities relating to project and handling various litigations. There is absolutely nothing to show that he was part of any criminal conspiracy for inducing and cheating 672 occupants as well as MHADA and generating POC from the activities relating to it, that too at the relevant time when no such FIR was lodged for those alleged contemporary activities. Even there is absolutely nothing before the Court to prima facie satisfy that, he(A3) had sold FSI relating to free sale component, generated money called as POC defined under Sec.2(1) (u) and further laundered the same as required under Sec.3 of the PML Act. 45. There was another limb of Civil litigation relating to the property under the project, wherein MHADA terminated previous agreements. Volume VI Page 301 is a letter dt.23.04.2015 relying on MHADA's Resolution dt.19.01.2014 whereby further sale of free component was stayed with direction not to issue further I.O.D. and C.C. for the free sale component. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, ED has either lost sight or purposely not referred all these litigations and circumstances of transaction with such details in the PC, for the reasons best known to them. It is material to note that, ED has made much capital regarding MHADA's termination of Tripartite Agreement, yet the subsequent proceedings they had participated before the Hon'ble High Court (which are referred above) clearly indicate that MHADA was party before the Hon'ble High Court and accepted the order dt.14.03.2018 ignoring termination dt.12.01.2018. All such references which are discussed above, are also referred in the orders passed by the Hon'ble High Court. While making prima facie examination of the case for bail, all the above referred facts prima facie conclusively indicate that, a. The execution and completion of the Tripartite Agreement. b. Dealings with Third Party Developers. c. Receipt of Funds. And everything whichever related to it, was managed by Rakesh Kumar Wadhawan (A1), Sarang Wadhawan (A2) and their HDIL. 48. In none of all such litigations a whisper was alleged by anyone including MHADA that, it was Pravin Raut(A3) who sold FSI of Free Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction and conclusive observations made by the Hon'ble High Court. Certainly all these cannot be lost of sight while deciding merits of the bail application. 51. Ld. Sr. Counsel Mr. Aabad Ponda, in order to juxtapose the above referred observations made by the Hon'ble High Court, placed his reliance on the Affidavit dt.08.02.2017 filed before the Hon'ble High Court, wherein Sarang Wadhawan (A2) has made sworn statements which are referred in paragraph 42 above. At the cost of repetition it has to be noted that MHADA was party to the said litigation before the Hon'ble High Court. Sarang Wadhawan (A2) has explicitly stated that, GACPL has entered into Development Agreements with third party developers. After that vide an order dt.24.04.2018 MHADA's contention was explicitly recorded wherein it has stated HDIL, which is a holding company of GACPL, is responsible for the misdeeds of GACPL . While making assessment of prima facie case from the point of twin conditions under Sec.45(1)(i)(ii) of the PML Act even without entering into any mini trial, prima facie all this glaringly establishes that the purported wrongdoings alleged in the Prosecution Complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to FSI sale proceeds is prima facie nothing but a false and feigned contention put forth by the ED, which basically has absolutely no link with the Applicant(A3). All this prima facie goes to show how the ED is doing approbate and reprobate. 54. In the aforesaid premises argument of Ld. Sr. Counsel Mr. Aabad Ponda prima facie justifies that, the restrictions contained in the obligations recited in the Tripartite Agreement were relatable only to the component of the project accruing to the benefit of MHADA and the tenants, which component was ascertained in the Tripartite Agreement. In this regard, the restrictions recited in Clause 9.3 of the Tripartite Agreement in the capacity of Assignment of Rights contained in the Tripartite Agreement, were relatable only to the component of the project accruing to the benefit of MHADA and the tenants, which component was ascertained as per the Tripartite Agreement. Hence, contention of ED that the transfer of FSI to third party developers was in violation of Tripartite Agreement, is unfounded and prima facie baseless. WHETHER RS.95 CRORE ARE PROCEEDS OF CRIME (POC) IN VIEW OF ED's ATTITUDE OF APPROBATE AND REPROBATE FOR THE SAME? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling to Rs.1039.79 Crore illegally collected by unauthorised sale of FSI is the Proceeds of Crime in terms of Section 2(1)(u) of PMLA,2002. The investigation is under progress to trace the proceeds of the crime. 57. It is material to note that even ED also pleaded in the Main Prosecution Complaint the specific role of Rakesh (A1), Sarang (A2) Wadhawans in paragraph 13.01 on page 42 in following words, Rakesh Wadhawan and his son Sarang Wadhwan were the Directors of Guru Ashish Construction Pvt Ltd and also the decision makers. The decision to sale the FSI was decided by them and also decided the utilisation of the proceeds of sale. They have siphoned of the subject sale proceeds to their other companies forming the part of HDIL. Thus, at the time of the contravention was committed Rakesh Wadhawan and his son Sarang Wadhawan were in charge of all of the affairs of the company and all the illegalities of unauthorised sale of FSI and siphoning off funds were taken place with their active involvement. Being the authorised person to operate the bank accounts they have siphoned off the proceeds generated out of sale of FSI according to their whims and fancies . Each and ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72 Crore. Basis for this action was the allegation that, HDIL had availed huge illegal loan from PMC Bank and total Rs.6117.93 Crore thereof was outstanding. Next contention for the said PAO was that HDIL had paid an amount of Rs.95 Crore to the applicant(A3). For that Ld. Sr. Counsel Mr. Aabad Ponda filed copy of PAO No.16 of 2020 in F.No.ECIR/MBZOI/09/2019 dt.31.12.2020. It is necessary to reproduce relevant portions from OC 1396 of 2021 as follows, The total outstanding loan of INR 6117.93 crores from PMC Bank to HDIL Group constitute the proceeds of crime. 9.1 Investigation also revealed that from the aforesaid proceeds of crime M/s. HDIL paid an amount of INR 95 Crores to Mr. Pravin Raut. ... Thus, during investigation, it was revealed that Pravin Raut has received Rs.95 Crores from HDIL, which has availed loans from PMC Bank fraudulently and this money has been utilised for purchase of land in Palghar Taluka... So, this contention of ED itself clearly indicates that the source of Rs.95 Crore received by Pravin Raut(A3) from HDIL is out of outstanding loan availed by HDIL (A1 and A2) from the PMC Bank. On 25.01.2021 ED filed and Original Complaint No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1039.79 Crore. ED may take such two altogether different self-contradictory rather self destructive stands, but the same cannot be acknowledged at law, when the serious question of Right of Liberty of a person is before the Court. 61. At the cost of repetition, it is necessary to refer three different stands taken by ED which are as follows, a. HDIL (A1 and A2) are generators of Proceeds of Crime through illegal loan and Pravin Raut(A3) is recipient of Rs.95 Crore thereof. b. In Prosecution Complaint against the Applicant(A3) it is alleged that, he(A3) is generator of POC and also recipient of Rs.95 Crore thereof. c. In Supplementary Complaint against Sanjay Raut(A5) ED now contends that neither A1, A2, their HDIL and the Applicant(A3) are the main persons in the process of money laundering, but Sanjay Raut(A5) is the main person behind this entire show and Pravin Raut(A3) is his puppet, proxy, front man who generated POC for him(A5) and allegedly paid a meager thereof Rs.1,06,44,375 (Main PC) and Rs.3,27,85,475 (Supplementary Complaint) to Sanjay Raut(A5). In this way, ED itself contends that Sanjay Raut (A5) who is the main person behind the curtain did all these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally have no place in the PC. b. None of the transactions from Bhoomi mentioned in PC and reply (Exh.8A), shows that those amounts were transferred to the personal account of the Applicant(A3). c. Similarly two transactions mentioned at Items 16 and 17, page 14 of reply (Exh.8A) to show that, monies from Ekta have been transferred to HDIL, PMC bank account. However, as per complaint in relation to the same transactions from Ekta (page 29 PC Items 1 and 3) monies were further transferred to certain accounts of other entities and not to the account of the Applicant(A3). d. Two transactions mentioned at Items 18 and 19 at page 14 of the reply (Exh.8A) to show that the monies from Kiyana have been transferred to HDIL, PMC Bank accounts. Applicant's(A3) case is that he was then paid from this account and from these moneies. However, as per the complaint in relation to the same transaction from Kiyana (page 34 of PC Items No.2 and 3) monies were further transferred to certain accounts of other entities and not to the account of the Applicant(A3). In this way, Ld. Sr. Counsel Mr. Aabad Ponda rightly pointed out that no material whatsoever either in the reply or eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.10.2009 5 Crore Not mentioned in the Prosecution Complaint 6. 03.11.2009 2 Crore Serial No. 14 / Page 29 TRF TO HDIL IDBI VENDORS 7. 03.11.2009 2 Crores Not mentioned in the Prosecution Complaint 8. 06.11.2009 50 Lakhs Serial No. 16 / TRF TO SAPPHIRE PMC 1024 9. 09.11.2009 1 Crore Not mentioned in the Prosecution Complaint 10. 21.11.2009 1 Crore Not mentioned in the Prosecution Complaint 11. 23.11.2009 1 Crore Not mentioned in the Prosecution Complaint 12. 24.11.2009 1 Crore Not mentioned in the Prosecution Complaint 13. 20.02.2010 1 Crore Not menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic role PC attributed to him. Hearing of this bail application was going on from June, 2022. In the meantime ED arrested Sanjay Raut(A5) on 01.08.2022. Investigation in respect of Supplementary Complaint against him (A5) was allegedly going on. PC against the Applicant(A3) was filed on 07.04.2022. In this way, in the meantime prior to filing of Supplementary Complaint against Sanjay Raut(A5), the present Applicant(A3) had disclosed his defence by way of two volumes of this bail application, detailed written submissions (Exh.8B and Exh.8E). Therefore, filing of Supplementary Complaint deviating earlier stand taken in the Main PC by ED attributing main role to Sanjay Raut(A5) speaks volumes. 65. The basic case of ED in the Main PC was that it is the Applicant(A3) who generated POC and received Rs.95 Crore/Rs.100 Crore/Rs.112 Crore out of Rs.1039.79 Crore and further transferred a very meager of Rs.1.06 Crore to his wife and then to the wife of Sanjay Raut(A5). In this background Supplementary Complaint against Sanjay Raut(A5) came with an altogether new invention that it was not the Applicant(A3), but Sanjay Raut(A5) is the main person/culprit who was doing all such activities beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to 47 Acres. The role played by Mr. Sanjay Raut(A5) was crucial in granting the Siddharth Nagar Project to GACPL. He introduced Pravin Raut (A3) as his front in GACPL at 25% share without any investment in the company. g. Mr. Pravin Raut(A3) was a proxy and confidante of Mr. Sanjay Raut(A5). Due to the understanding between Accused No.1,2 and 5, the Applicant(A3) was inducted in GACPL and was authorised to liaise with MHADA on behalf of GACPL. Mr. Pravin Raut (A3) was a close a friend of Mr. Sanjay Raut(A5) and was authorised to correspond with MHADA and other local authorities. Mr. Pravin Raut (A3) obtained favourable approvals from MHADA and was able to sell FSI to developers, due to his proximity with Mr. Sanjay Raut(A5). h. Cash worth INR 13.6 Crores was withdrawn from the account of accused No.4 by accused No.1 and 2. Mr. Sanjay Raut has been connected with the purported proceeds of crime by stating that, Sanjay Raut has acquired many assets during the period the POC was siphoned off and also cash amount has been used by Sanjay Raut and for acquiring some of these assets and also for meeting various personal expenses. The cash received by Accused No.5 has been u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already discussed in detail how the Hon'ble High Court took the note of this fact and held A1, A2 and HDIL responsible for the misdeeds in respect of GACPL. I have also noted the stand taken by MHADA everywhere consenting and admitting this situation. I have also noted how even MHADA has not pointed any finger of objection towards the Applicant(A3) or even Sanjay Raut(A5) at the relevant time right from the beginning i.e. from 2006 07 till before resignation of Applicant(A3) in 2013 and thereafter, till 2018 (even after registration of FIR No.22 of 2018) before the Hon'ble High Court in various proceedings. Records further clearly show that even after termination of Tripartite Agreement and Modification Deed, MHADA went on negotiating with Rakesh(A1), Sarang(A2) and HDIL and also accepted the verdicts of the Hon'ble High Court wherein Sarang(A2) had filed Affidavit making a sworn statement how he, Rakesh (A1) and HDIL had executed 12 agreements with third party developers for the sale of FSI. 69. It has to be noted that, contention of ED without any particulars of time and minutes of meetings with the then Union Minister and the then Chief Minister, Sanjay Raut and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handan Kelekar is material and significant. It is because previously when the investigation against the Applicant(A3) was going on prior to filing of the Main PC, this Mr. Chandan Kelekar had submitted his first statement under Sec.50(2) and (3) of the PML Act on 17.09.2021. It is material to note that in this first statement he has not even whispered about any such meeting among the then Union Minister, Chief Minister, MHADA Officers, he himself etc. But it is only after the Applicant(A3) filed two big volumes of this bail application with written submissions and made out his defence. For the first time on 25.08.2022, Mr. Chandan Kelekar has made statement as follows, Firstly, in around September 2007 a meeting was called upon by the then Hon'ble Chief Minister of Maharashtra, Shri Vilasrao Deshmukh to know the financial implications of the project as per the current as well as the future proposed Development Control Regulations. In this meeting Shri Sanjay Raut, the office bearer of Patra Chawl viz Shri Rajaran Shinde, Shri P.Y. Shinde, Coordinator, Shri Gavas, the MHADA Officers viz T. Chandrashekhar (V.P.), Chief Officer, Legal Adviser, Chief Engineer, Chief Architect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onae' and transposed the role of the Applicant(A3) and attributing main role to Sanjay Raut(A5). Except this statement there is absolutely nothing against the Applicant(A3) and even against Sanjay Raut(A5). Even otherwise also his statement prima facie demonstrates that the Applicant(A3) was liasoning with MHADA, occupants and the same which supports the contentions of the Applicant(A3). 72. Careful examination of the statement dt.21.02.2022 of Mr. Parag Munot recorded under Sec.50(2) and (3) of the PML Act, clearly indicates that he specifically stated how HDIL was marketing for selling the Development Rights/FSI in Siddharth Nagar. He further states that in an around August September,2010 they had a meeting with Rakesh Wadhawan(A1) and Sarang Wadhawan (A2) of HDIL . Stepping head he further clearly states that he had not interacted with Pravin Raut(A3) relating to this project. As such there is no interaction with him, however, in one meeting with Rakesh Wadhawan(A3) and Sarang Wadhawan (A2) in HDIL Tower, Mr. Rakesh Kumar Wadhawan (A1) introduced Pravin Raut(A3). 73. Careful perusal of the statement dt.21.02.2022 of Mr. Manish Agarwal recorded under Sec.50(2) and (3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akesh Kumar Wadhawan (A1) was the person with whom persons from his company KBJ Developers Pvt. Ltd. were interacting. He specifically stated that, they do not know Pravin Raut (A3). 77. Mr. Akshay Jayantilal Doshi in his statement dt.02.03.2022 recorded under Sec.50(2) and (3) of the PML Act, gave answer to the question as to how he had received project from GACPL, as Rakesh Kumar Wadhawan (A1) himself approached him, introduced and convinced him for the project of Siddharth Nagar, which is available for investment and potential business. He clearly states that, he had never any interaction with Pravin Raut (A3) with regard to the dealing of the project and Mr. Chandan Kelekar, their Project Architect introduced him to Pravin Raut (A3), during a meeting with MHADA. 78. Rakesh Wadhawan (A1) in his statement dt.24.03.2022 recorded under Sec.50(2) and (3) of the PML Act, states that, the FSI was sold for raising finance and increasing the viability of the project. He further stated that, money was utilised for payment of rent to the Society members/tenants which may be in the range of Crores of rupees (Approximately to 600 tenants), payment to MHADA i.e. approval expenses which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 till 14.10.2010. The charge is Annexure 'X' to Part II of the Bail Application. The Applicant(A3) has also filed bank statement of Pravin Raut showing the flow of these amounts which prima facie indicates that not a single penny he(A3) had received from any third party FSI buyer of free sale component. Even otherwise contention raised by ED is PAO for ECIR 2019, itself indicates that whatever they contended in this present ECIR is false and Pravin Raut(A3) did not receive anything. 82. Similarly in his statement Mr. Hemant Patil states his awareness about applicant's (A3) association with HDIL in Siddharth Nagar Project as, I am not linked or connected with Patra Chawl Redevelopment Project . Prosecution has recorded statements of number of witnesses, but I am of the opinion that unless prosecution prima facie establishes that the amount of Rs.95 Crore/Rs.100 Crore/Rs.112 Crore is the POC generated from the criminal activity relating to the Scheduled Offence of cheating and criminal conspiracy, that too supported by prima facie evidence, such materials by way of statements cannot become sole basis for prima facie holding the Applicant(A3) is involved and had co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to minimum guaranteed profits in Irani land deal and Siddharath Nagar Project from 23.04.2010 to 14.10.2010. He has filed various documents which prima facie justify his role in resolving the property of Iranis situated at Palghar. In this way, according to him, none of these amounts were received during the period when the POC Rs.1039.79 Crore was received/illegally collected. There is no document to prima facie show that the applicant received any POC. On the other hand ED contends that whatever he received i.e. Rs.95 Crore, is POC in respect of ECIR 2019, which was generated and laundered by A1,A2 and their HDIL by illegally raising loan from PMC Bank, which itself prima facie proves contention of Pravin Raut (A3). 85. In order to support his contention regarding Rs.50 Crore, he filed the Annual Returns of GACPL dt.21.05.2010, Evincing that he had transferred 2,49,900 shares in GACPL in favour of HDIL and 100 shares in GACPL in favour of Rakesh Kumar Wadhawan (A1). Secondly Form 20B filed by GACPL with the Ministry of Corporate Affairs evinces that during the financial year ending 31.03.2010, he had no shareholding in GACPL. He further filed following proofs of receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed it to become absolute and final. On the contrary alleged meager recipients of Rs.95 Cr./Rs.100 Cr./Rs.112 (A3) Cr. as well as Rs.1,06,44,375. (A5) are behind bars from a very long time, indicating disparity. 87. Apart from this, prima facie it appears that the huge-battle of litigations which is going on right from the inception of the Project (and even prior to it since 1995 when Lokhandwala Developers were initially undertook the task, but did nothing till 2006) and the same continued even after 2013 (A3's resignation) till date, delayed the said project and it was not due to any money laundering by the Applicant(A3). I have already discussed in detail with the settled position of law that intention of cheating right from the inception i.e. beginning, is a material ingredient to attract offence of cheating. I have clearly noted that absence thereof which further goes to show that there was no Predicate Offence. It is also apparent that initially Accused No.3 was arrested under Sec.19 of the PML Act purely for this Civil litigation, which is not a Predicate Offence. Therefore, prima facie his arrest is completely illegal. Therefore, question of attracting stringent twin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Applicant(A3) has satisfied rigors of twin conditions. At the cost of repetition I am of the opinion that, basically there is no Scheduled Offence and whatever alleged is a purely civil dispute, which is not a Predicate Offence to qualify arrest under Sec.19 of the PML Act and further to satisfy the rigors of twin conditions under Sec.45(1) of the PML Act. II. BAIL APPLICATION NO.582 OF 2022 OF SANJAY RAUT (A5) 90. This applicant(A5) was subsequently arrested when the Prosecution Complaint against Pravin Raut (A3) was filed and his Bail Application was being heard. So by way of supplementary complaint this applicant (A5) is being prosecuted. The case alleged in the Supplementary Prosecution Complaint is as follows, FIR No.22/2018 dt.13.03.2018 was registered by EOW, Mumbai under Ss. 409, 420, 120B of IPC against Rakesh Kumar Wadhawan(A1), Sarang Wadhawan (A2) and others on the complaint of Mr. Nitin Gadkari, Executive Engineer, MHADA, Mumbai as M/s. Guru Ashish Construction Pvt. Ltd. (A4), has cheated MHADA by floating the proposal for redevelopment of the land belonging the MHADA and including MHADA to enter into contractual arrangement for rehabilitation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.37.50 Lakhs over and above the original amount with in the span of 1 month Smt. Varsha Raut and Shri Sanjay Raut 3 For investment of Rs.5625/only in firm Avani Infrastructure by Smt Varsha Raut. Rs.13,94,375/ Smt. Varsha Raut Total Rs.1,06,44,375/ 92. Rakeshkumar Wadhawan(A1), Sarang Wadhawan(A2), Pravin Raut (A3) through M/s GACPL (A4) entered into an agreement for the redevelopment of the Patra Chawl, Siddharth Nagar, Goregaon (West), Mumbai. As per the terms of agreement entered into with the Society and MHADA, they were to rehabilitate 672 tenants and to provide to MHADA constructed built up area 1,11,476.82 sqmtrs on the said property. Further they agreed to construct flats for MHADA. In consideration, the Developer was entitled to develop the free sale component on the land belonging to MHADA and to sell flats to various third party flat purchasers. However, GACPL sold the free sale component before completing its obligation. The sale procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be holding 25% shares of GACPL and was just the face, whereas everything was controlled by Sanjay Raut(A5) being de facto shareholder/ owner. In this way Sanjay Raut(A5) was operating from behind the veil and controlling the activities through his proxy Pravin Raut (A3). In this way, IT APPEARS that Pravin Raut (A3)/Sanjay Raut(A5) MIGHT HAVE received more POC in the manner best known to them. It is also revealed that, Sanjay Raut(A5) has acquired many assets during the period the POC was siphoned off and also cash amount has been used by him (A5) for acquiring some of these assets and also for meeting the various personal expenses. He(A5) sourced these cash from his proxy Pravin Raut (A3) through GACPL. Besides the recipient of the amount of POC directly through banking channel, huge cash were received by him(A5) from GACPL(A4) and/or A1 and A2. It was utilized for acquisition of assets in Kihim for the proposed Resort project during that period. The details of cash utilized in the purchase are as under, Sr No Name of Sellers Details of the property Registered Value Cash given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way, it was revealed that, Sanjay Raut(A5) has diverted the POC in the following manner, i. Total cash of Rs.2,04,00,000/ was infused in acquisition of 10 parcel of land at Kihim during 2010 2 12, ii. Rs.55 Lakhs routed through the Bank account of wife of accused No.3 Pravin Raut utilised acquisition of flat at Garden Court, Dadar East, Mumbai. iii. Rs.37.50 Lakhs routed through the Bank account of the firm of A 3 i.e. Prathmesh Developer utilised for acquisition of flat at Garden Court. iv. Rs.13,94,375/ routed through Avni Infrastructure received in the bank account his wife Varsha Ratu. v. Rs.5,00,000/ and Rs.12,41,100/ were routed through the bank account of Dhananjay Lendhe and G'Diam Jewel reportedly belongs to Kanti Bhai Dadar which is yet to be identified. Scope of initial project of Patra Chawl for constructing rehab for tenants in 13.18 Acres was extended to 47 Acres after entry of Sanjay Raut(A5), hence he played crucial role in granting the same. He introduced Pravin Raut(A3) as his front in GACPL at 25% share without investment. Pravin Raut (A3), old acquaintance of Sanjay Raut(A5) was spending his money on Air ticket, domestic an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32, 24,24/1 to 48 and 27 (part) at Viilage Pahadi, Goregaon. f. It is an admitted fact that Mr. Pravin Raut (A3) on 09.06.2011 had applied to MHADA seeking permission to sell the free sale component to raise funds for completing the said project. g. It is also an admitted fact that MHADA vide its Order dt.26.07.2011 had permitted M/s GACPL to sell the free sale component to raise funds to complete the project. h. Hence, money received by GACPL from the sale component is under the permission of MHADA and the same was given for raising funds for completing the project. i If contention of ED is believed that money received by GACPL was siphoned of and used for purposes other than completing the project, then certainly such money is not POC and the same is not derived by committing a Predicate Offence or any activity relating to it. j. Basically no Predicate Offence is made out as any rights, liabilities, performances, non performances violation of terms of agreement would be Civil in nature and warrant Civil Remedies before appropriate Forum. k. The applicant (A5) is charged of receiving proceeds of Crime to the tune of Rs.1,06,44,375/ on 3 major allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered against Pravin Raut (A3) being ECIR MBZO I/9/2019 and ECIR MBZO I/80/2021 by the same Investigating Agency i.e. ED and it is the same Investigating Agency, the ED who in the ECIR MBZO I/09/2019 claims that Rs.112 Crore received by Pravin Raut (A3) is POC derived from PMC Bank fraud which is a totally different case and no where connected to the present case. In the said case properties of Pravin Raut (A3) had been already attached. s. On the other hand the same Investigating Agency , the ED in the present case claims that the same Rs.112 Crore as received by Pravin Raut (A3) is POC derived from the sale of FSI in the Patra Chawl Project, which itself speaks volumes. t. The Applicant (A5) is a victim of the Political change of power and thereby abuse of criminal machinery at the hands of ruling party. There is no likelihood of his absconding. u. The Applicant(A5) is heart patient and has undergone Angioplasty twice and there are 6 stents in his heart. He is under strict diet, medication and observation of the doctor. He is ready to abide conditions imposed by the Court and undertakes to remain present whenever called. These are the grounds the Sanjay R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rima facie from the point of the qualifications provided under Sec.45(1)(i)(ii) of the PML Act, I arrived at following main conclusions; A. Considering the long battle of Civil litigation, there is complete absence of fraudulent or dishonest intention of Pravin Raut(A3) in cheating MHADA and the Society of 672 occupants. It is also held that the facts and circumstances of transaction of the contemporary period (2007 2011) nowhere indicate that Pravin Raut(A3) undertook the said task to generate POC by indulging an activity relating to Scheduled Offences i.e. Sec.420,120B IPC. B. In the background of A above, I further prima facie arrived at conclusion that there is absolutely no Predicate Offence involved in this case as alleged in the FIR. Hence, question of any criminal activity relating to it for generating POC does not arise. C. It is further held that Accused No.3 is prima facie neither generator of POC Rs.95 Cr./Rs.100 Cr./Rs.112 Cr. nor recipient thereof by way of criminal activity relating to Scheduled Offence. D. It is also prima facie held how ED itself contended in ECIR 2019 that Accused No.3 received Rs.95 Crore through HDIL out of outstandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut(A5) is the main person behind this project and Pravin Raut (A3) was his front man . It is Sanjay Raut(A5) behind the curtain, who was doing everything and received Rs.1,06,44,375 (Main PC) and Rs.3,27,85,475 (as per Supplementary Complaint) POC. Not only this but, he(A5) is now made wholly responsible in generating POC and laundering the same by transposing Pravin Raut (A3) as a secondary person. Gist of allegations in Supplementary Complaint is as follows, a. Pravin Raut(A3) received Rs.112 Cr. through A1,A2 and their HDIL, in his bank account. Out of these, 1.06 Cr. was moved from Pravin Raut's (A3) bank account to the bank account of Sanjay Raut(A5). b. On 14.08.2006 Secretary, Housing Department, prepared a Note contending that, the then Union Agricultural Minister had desired discussion about redevelopment of Siddharth Nagar Project. Sanjay Raut(A5) participated the said meeting and indicated that redevelopment of the Siddharth Nagar Project as per G.R. of 1988 may not be viable. c. Thereafter, Development Agreement dt.18.08.2006 was executed between the Society and GACPL for 13.18 Acres of land for 672 tenants. d. Some time in September, 2007 a meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceptional toplevel protocols. Allegations made in the Supplementary Complaint indicate that these two high dignitaries had allegedly took two meetings in the presence of Sanjay Raut(A5) and high level Government Officials. The allegations in the Supplementary Complaint further indicate that a policy decision in respect of Patra Chawl Project was taken in those meetings. When such high dignitaries took any such decision, it is very astonishing that no minutes of any of such two meetings had been recorded. In fact minutes of such high level official meetings are bound to be recorded as per the Protocol. Even some record is always maintained in respect of such meetings for the official purpose. Because those two meetings were not held by politicians but were held by the then Union Agriculture Minister and Chief Minister of Maharashtra. 105. Careful examination of whole documents and statements it is prima facie evident that, except Chandan Kelekar, who is not any Government Official, but allegedly participated those meetings states about the same with minute details out of his photographic memory. ED has not recorded statements of the MHADA and Government Officers present in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts material and character, there will be no scope for application of judicial mind. In that situation it will lead to hazardous consequences that, not the Court but altogether strange person like Mr. Chandan Kelekar, authors of such statements will take the fate of the case in their hands, which is not the true purport of Sec.45(1)(i)(ii) of the PML Act. Therefore, Mr.Chandan Kelekar's statement which allegedly assumes importance, is the only statement regarding alleged two meetings of the then Union Agriculture Minister and the then Chief Minister, therefore requires cautious consideration and examination. 108. The date 25.08.2022 when Mr. Chandan Kelekar's second statement was recorded, has great significance. It is material to note that his second statement was recorded when Main Prosecution Complaint was already filed and Pravin Raut (A3) had already filed his bail application (Exh.8) way back on 05.05.2022 and also had completely disclosed his defence, making it known to everyone including ED. Hence, the date 25.08.2022 of his second statement carries great significance. I have already noted how by Supplementary Complaint, ED astonishingly made 'Dramatis Persona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Chandan Kelekar without support of any quality official materials, are accepted to be true in the guise of Sec.24 of the PML Act, certainly there is no presumption under any law that criminal conspiracy to cheat and misappropriate, was hatched in those two meetings with the then Union Agriculture Minister and the then Chief Minister. It will be far fetched to hold as such. Even if his words in the statement dt.25.08.2022 are straight way accepted as true, without application of judicial mind, T. Chandrashekhar, the then V.P. and high level MHADA Officers, Government Officials will also have to be considered as a part of the said criminal conspiracy as per Sec.120B IPC. 110. Careful perusal of the Main and Supplementary Complaints prima facie indicates that, ED has allegations against MHADA, yet the following questions still remain unanswered : i. Why all the Government and MHADA Officials participated the said two meetings are not accused herein? ii. Why only Pravin Raut (A3) and Sanjay Raut(A5) were arrested and main money launderers Rakesh Wadhawan (A1) and Sarang Wadhawan (A2) who had admitted their misdeeds by making sworn statements in the Affidavit befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anjay Raut(A5) straight way no inference can be drawn that those were POC generated from certain act/criminal activities done by him in respect of Predicate Offence. It is material to note that, the order dt.21.03.2020 passed by the Ld. Addl. Sessions Judge (C.R.No.37), Mumbai in Bail Application No.831 of 2020 in respect of Predicate Offence allegedly committed by Pravin Raut (A3), the Investigating Officer had made a statement across the bar that, he and prosecution would be filing report under Sec.169 Cr.P.C against Pravin Raut (A3) and this aspect cannot be ignored. 114. It is an admitted fact that, once upon a time Pravin Raut (A3), his wife, Sanjay Raut(A5), his wife, Swapna Patkar and her husband Mr. Sujit Patkar, were very close family friends. Except statements recorded under Sec.50(2) and (3) of the PML Act, there is nothing which remotely suggests that the Applicant(A5) was instrumental in all what has been alleged in the Supplementary Complaint. Old acquaintance between Pravin Raut (A3) and Sanjay Raut(A5) as well as their family relations is not much disputed fact. Mere giving of money by Pravin Raut (A3) to Sanjay Raut(A5) would not amount sharing of POC, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further she clearly states that all negotiations were made by Sujit Patkar and Sanjay Raut(A5) and she simply had gone for registration, which prima facie indicates that she has no actual knowledge of the real circumstances of transaction. 117. ED's case is that, monies received by Sanjay Raut(A5) and his wife Varsha Raut were invested in purchasing various plots/lands at Kihim, Alibaug. For that Sanjay Raut(A5) allegedly threatened the said land owners and compelled them to sell their lands/plots to him and Sujit Patkar. Their contention as such is based on the statements of witnesses including this witness Ms. Swapna Patkar. She on page 184 (Vol.II) clearly states that when she met Mr. Shridhar Edekar he was a very old person and he informed her that, I came to know later that he has been threatened to sell his land. Therefore, prima facie it is clear that it is not her first hand knowledge of the said fact, but the same is based on the hearsay knowledge of someone else. I am constrained to note that, Ld. A.S.G. Mr. Anil Singh while arguing the case vehemently referred word Whosoever in Sec.3 of the PML Act and contended how the case of Sanjay Raut(A5) falls under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion No.4 indicates contradiction to page 180/183. 119. Mr. Sujit Patkar is husband of Mr. Swapna Patkar makes contradictory statement with the statement of his wife Ms.Swapna Patkar that it was Ms. Swapna Patkar, who wanted to start residential project at Alibaug and for the same she had discussion with Sanjay Raut(A5). On page 479 he specifically states that, he met the land owners at the time of registration of the land, which is against the statement and contention of Ms. Swapna Patkar that, it was her husband Sujit Patkar who did all the negotiations. While answering question No.11 (page 479) he specifically states that he had not negotiated with the sellers of the land at Kihim and his wife Ms. Swapna Patkar has carried out the deals by herself at her office in Sion, Mumbai. 120. As noted above Mrs. Swapna Patkar, her husband Sujit Patkar had dealt with other work i.e. meeting land owners etc., but on page 479 while answering question No.12 Mr. Sujit Patkar states that, he was not even present at the time of negotiations with the land owners and further relating to question No.15 states that, he does not have any information if any payments were given through other me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Sanjay Raut(A5) to her father. Answers given by her to question 3 (page 73) are not aware and in similar pattern, prima facie indicating that she is not aware of real facts and circumstances of transaction. 123. Mr. Bharat Ushirkar in his statement dt.04.02.2022 states about sell proceedings for Rs.6 Lakh and no cash was ever received. Whereas in the statement dt.07.09.2022 he states having received Rs.24 Lakh in cash and Rs.6 through cheque. 124. Mr. Avinash Deshpande on 04.02.2022 states that he received Rs.13 Lakh in cash and Rs.17 lakh through cheque. Whereas in the statement dt.07.09.2022 he states having received Rs.30 lakh in cash and Rs.17 through cheques. Mr. Amit Shukla in his statement dt.04.02.2022 states that he did not receive any payment in cash. Whereas, in the statement dt.05.08.2022 he states having received Rs.24 Lakh in cash and Rs.4 Lakh through cheque. Mr. Dilip Morgaria in his statement dt.04.02.2022 states that he did not receive cash. Whereas, in his third statement dt.05.08.2022 states that, he received Rs.18 Lakh in cash and Rs.4 through cheque. 125. All these, which are referred above, are the statements of vendors who allegedly sold their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and every unaccounted money, would not epso facto indicate the commission of an offence under the PMLA 2002. In other words in order to prove the offence of money laundering it has to be established that the money involved are the proceeds of crime and having full knowledge of the same, the person concerned projects it as 'untainted property'. The process undertaken in doing to amounts to offence of 'money laundering'. Sanjay Raut(A5) though had received some monies as alleged in the Prosecution Complaint from Pravin Raut (A3), yet there is absolutely nothing to show that, it is a POC with knowledge thereof to Sanjay Raut(A5). Basically it is not a POC. Therefore, some unaccounted money had been dealt with by Sanjay Raut(A5) at the relevant time during 2007 11 or any other period thereafter, for purchasing plots at Kihim, cannot be thrown in the stock of POC. Possessing and dealing with unaccounted money may have different consequences under the different Penal Laws, but the same cannot be equated with the term POC defined under Sec.2(1)(u) of the PML Act for making Sanjay Raut(A5) accountable and liable under the wide meaning of the opening word Whosoever i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his statement dt.05.02.2022 wherein he states that, Sanjay Raut(A5) and Mrs. Varsha Raut had invested in premises developed by Prathmesh Developers LLP in Kurgaon village, Palghar Taluka. They have invested Rs.35 Lakh approximately and purchased ground + 2 structure admeasuring 5000 sq. feet. Though the RCC structure was completed, yet the Kul (tenancy right holder) had filed an appeal claiming tenancy right before Prant Adhikari, wherein the Appellate Authority passed an order in his favour. When he(A3) took bookings, was not aware of this fact, hence, he returned the total amount + profit i.e. Rs.50 Lakh (booking amount of Rs.35 Lakh + profit of Rs.15 Lakh) taken from Mrs. Varsha and Sanjay Raut(A5). He further stated that when the said tenancy dispute was revealed, Mrs. Varsha and Sanjay Raut(A5) were interested in that particular premise only therefore, he returned the initial booking amount + profit within a month. Therefore, whatever stated by Kantilal Doshi on 07.08.2022 is fully corroborated to the statement of Pravin Raut (A3) dt.05.02.2022. Again the question remains that, those amounts Rs.17,10,000/ and Rs.12,40,000/ invested by Mrs. Varsha and Sanjay Raut(A5) do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solely due to Rakesh (A1), Sarang (A2) and their HDIL. He has further clearly shown how the ED has shown the same Rs.95 Cr. being POC generated by Rakesh (A1), Sarang (A2) and HDIL by obtaining illegal loan from PMC Bank and he became alleged recipient thereof. I have also noted how this approbate and reprobate stand of the ED cannot be acknowledged at law. There are no POC nor any criminal activity relating to the Scheduled Offence to prima facie hold Pravin Raut (A3) responsible for the same. 133. Ld. Sr. Counsel Mr. Mundergi submitted that Sanjay Raut(A5) has shown Rs.55 Lakh personal loan taken from Mrs. Madhuri Pravin Raut and mentioned the same in his Affidavit submitted for Rajya Sabha Election. Simply he had returned the same, pursuant notice received from EOW, does not mean that he admits his guilt in respect of money laundering. Regarding Rs.30 Lakh he has given the explanation that Mrs. Varsha Raut received the same from Avani Infrastructure and the same is supported by the Ledger Account of the said Avani Infrastructure. Not only this but also Sanjay Raut(A5) had mentioned this amount as outstanding loan in his Rajya Sabha Declaration Form. Regarding repayment of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Affidavits submitted by Sanjay Raut(A5) in the process of Rajya Sabha Election prima facie indicate that he had mentioned each and every Assets therein including Rs.55 Lakh and whatever alleged in the complaint alongwith the source thereof. ED has made much capital about Avani Infrastructure being bogus entity availed by the applicant(A5) only to accommodate entries in the name of Mrs. Varsha Ratu. However, copies of Ledger Account of Avani Infrastructure which is the best prima facie evidence do not support such contention of ED. In this background, I hold that even statement of Shoaib Sequeira dt.11.07.2022 does not carry much importance as the same has no connection with the Scheduled Offence and had been recorded when Pravin Raut(A3) filed his bail application and disclosed his contention. 137. It is ED's contention that, Sanjay Raut(A5) has purchased several plots at village Kihim, Alibaug at the rate below market value and also paid the remaining amount in cash and thereby he (A5) has used and influenced the cash received from the POC for purchasing the said plots. I have already discussed in detail the quality of material available through the statements of plots s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute, both the parties have already approached Hon'ble Family Court and the same is pending for hearing. 21. The allegations made by applicant Smt. Swapna Patkar are found to be without any evidence and are borne out of her troubled marriage relationship dispute over property. The disputes are civil in nature and both parties can approach competent courts to resolve the issues. Hence, the application needs no further inquiry. 139. Statement of Pravin Raut (A3) recorded by ED on 05.02.2022 gives prima facie clear account about the claims of ED. In the written submissions (Exh.20) filed by ED on 02.11.2022, everywhere the same story is repeated which is alleged in the Supplementary Complaint. It is also reiterated how Sanjay Raut(A5) could not give satisfactory explanation for the amount came into his account and in the account of his wife. Basically ED cannot travel reverse saying that particular amounts revealed in the investigation and found during house search of Sanjay Raut(A5) were unaccounted and without any satisfactory explanations, hence the same are POC. Basically first of all ED has to point out foundational facts relating to existence of POC beyond reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney, would not epso facto indicate the commission of an offence under the PMLA 2002. In other words, in order to prove the offence of moneylaundering it has to be established that the money involved are the proceeds of crime and having full knowledge of the same, the person concerned projects it as untainted property . The process undertaken in doing so amounts to offence of money laundering . 140. In the background of above detailed discussion in respect of bail application of Pravin Raut (A3) and Sanjay Raut(A5), I hold that, basically there are no POC nor was there any Scheduled Offence to qualify the ECIR. Pravin Raut (A3) was arrested for civil litigation and Sanjay Raut(A5) for no reason. Basically arrest of both of them under Sec.19 PML Act is illegal for want of Scheduled Offence and the civil dispute not being Scheduled Offence. Therefore, question of coming rigors of stringent twin conditions under Sec.45(1)(i)(ii) in their way does not arise. Even if for the sake of consideration it is assumed that the said rigors attract, yet I hold that both accused (A3 and A5) have satisfied the twin conditions as held by the Hon'ble High Court in the case of Madan Gopal C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be used exceptionally as a last resort. The Hon'ble Supreme Court and the Hon'ble High Court have repeatedly laid down that, arrest has far reaching consequences and power to arrest is extreme and has to be exercised with great caution, sparingly as a last resort. The Hon'ble Lordship Shri Justice R.V. Raveendran of the Hon'ble Supreme Court recently in the Journal Section of the ( 2022)8 SCC (J)1 mentioned various factors in his article JUSTICE DELIVERY SOME CHALLENGES AND SOLUTIONS, on page 9 para 2 as follows, Not all accused are guilty. Many an innocent are being accused of crimes or are framed on the basis of slip shod investigations, false accusations, political or local rivalry, and family vendetta. Though a person accused of a crime is deemed innocent till proved guilty in a court of law, an arrest or being charged with an offence takes away his freedom and livelihood, apart from destroying his reputation. His family members are shunned, becoming outcasts overnight. At any given point of time, there are about three lakh undertrials (persons held in custody awaiting trial) locked up in prisons, making up fo about two thirds of the prison popula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be scot free, for the reasons best known to them. 144. On the other hand, ED arrested Pravin Raut (A3) purely for a civil dispute which is not any Scheduled Offence and Sanjay Raut(A5) for no reasons. All this prima facie indicates that the extreme and exceptional powers of arrest, ED Investigating Officers have used very casually in utter disregard to Sec.19 of the PML Act, which is very very serious in the background of repeated guidelines of the Hon'ble Supreme Court in respect of arrest. It cannot be ignored that Pravin Raut (A3) was arrested on 02.02.2022 and eversince till date for about nine months he has been behind bars. Similarly Sanjay Raut(A5) was arrested on 01.08.2022 and eversince till date behind bars more than three months. Basically, there was no reason nor any occasion to arrest both of them under Sec.19 of the PML Act for the allegations which are basically nothing but a civil dispute. Basically, the arrest of both of them under Sec.19 is not qualified. It is material to note that, initially ED raided the house of Sanjay Raut(A5) on 31.07.2022 and did not allow him(A5) to move anywhere throughout the day. Thereafter, he was brought to ED office and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Cr.P.C. is consumed and exhausted in seeking ED custody of the accused. Once any accused is remanded in judicial custody, the pace taken by ED for arresting him automatically gets down to almost zero. Once the applicant (accused) files bail applications, ED takes at least three to four weeks or more than that to file their reply. In the instant case, Pravin Raut filed his bail application on 05.05.2022. From 18.05.2022 onwards, 31.05.2022 and 08.06.2022 ED did not file their say. On 21.06.2022 ED filed their say, which clearly indicates that one and half months ED took to file say to bail application of Pravin Raut (A3) when he is an under trial prisoner. Decision of his bail application is condition precedent to decide bail application of Sanjay Raut(A5) also, which the ED wanted to prolong for long time. Apart from this, in every matter it is noticed that, ED takes very very long time to reply the simple applications filed by any accused. 147. I am constrained to refer the example on this aspect. In Special Case No.6 of 2019 Purshis (Exh.127) on behalf of Accused No.2 informing his death was filed on 12.05.2022 alongwith copy of death certificate. In order to safeguard inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Satender Kumar Antil Vs. Central Bureau of Investigation and every bail application has to be decided as expeditiously as possible not more than the span of time provided therein. In this background it is necessary to take serious note that Pravin Raut's (A3) bail application has been pending since 05.05.2022 i.e. more than six months, and even Sanjay Raut's (A5) bail application has been pending since 08.09.2022 i.e. more than three months, even if both of them were illegally arrested under Sec.19 of the PML Act. Yet, the ED wants to keep those applications pending for uncertain period. This is very serious. All this prima facie indicates that, ED is forgetting that, we are in the era of Vijay Madanlal Choudhary (paragraphs 31 to 33), D.K. Basu, Arnesh Kumar and Satender Kumar Antil. The directions in the Satender Kumar Antil are equally binding on ED. 149. Contention of ED in the Supplementary Complaint of making 'Dramatis Personae' while transposing roles attributed to Pravin Raut (A3) and Sanjay Raut(A5) and that Pravin Raut (A3) was front man, proxy for Sanjay Raut(A5), is not sustainable in the natural course of conduct. Their own case ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prasad Prajapati (2020 SCC OnLine SC 843). v. Satish Jaggi Vs. State of Chhattisgarh and others, (2007)11 SCC 195. vi. Gharban Ali Pour Azadi Vs. Intelligence Officer, Air Intelligence Unit, Bombay and Others (1996 SCC OnLine Bom 59). vii. Gautam Kundu Vs. Directorate of Enforcement (Prevention of Money Laundering Act) Government of India, through Manoj Kumar, Assistaant Director, Eastern Region, (2015)15 SCC 1. I carefully studied the ratio, guidelines and law laid down in the above authorities. However, facts in the instant case are peculiar, wherein ED has taken duel stand and contended the Proceed of Crime involved in the instant ECIR and in the ECIR of 2019 is one and the same. Basically this Court prima facie held that such self destructive stand itself proves the case of the applicants. Apart from this, I am of the prima facie opinion that civil litigation is the reason for arrest and ECIR of both accused which is basically not a Predicate Offence. There is absolutely nothing to show that right from the inception in 20062007 Pravin Raut (A3) and also Sanjay Raut(A5) keeping himself behind the curtain, entered this project with a wise brain with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble High Court, yet astonishingly lodged FIR No.22 of 2018 for the facts and circumstances of transaction which had allegedly taken place during 2006 to 2013. In this way the conduct of MHADA right from beginning till date is suspicious and even ED admitted the same in their complaints, yet ED has not made any MHADA staff accused. vi MHADA's attitude as such lodging FIR No.22 of 2018 on one fine morning can neither throw dust in the eyes of the Court nor can brush of and wash out long civil litigations which were even acknowledged by the Hon'High Court. Hence, this Court cannot join its voice in the chorus of ED and MHADA. vii Rakesh and Sarang (A1 and A2) for their misdeeds and being the main accused persons admitted the same by affidvit of Sarang Wadhawan, were not arrested by the ED but they have been left scot free. But at the same time Pravin Raut(A3) was arrested for civil dispute, whereas Sanjay Raut(A5) for no reason. All this clearly indicates disparity, pick and choose attitude of the ED and the Court cannot put premium on the same but legally bound to make parity. viii If the Court still accepts contention of ED and MHADA and further re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th this, I hold that both accused are basically arrested illegally. Both of them are entitled to parity in view of disparity made by the ED in not arresting the main accused persons Rakesh(A1), Sarang (A2), their HDIL, MHADA and Government Officials/staff responsible for misdeeds of A1 and A2 at the relevant time in 20062018. Apart from this, I also held that both accused have satisfied twin conditions under Sec.45(1)(i)(ii) of the PML Act. There is absolutely nothing before the Court that eversince Pravin Raut (A3) has been released on bail in a Scheduled Offence, he has committed any breach of the conditions imposed by the said Court. Similarly, whatever contended by ED against Sanjay Raut(A5) can be safeguarded by imposing certain conditions on him. Hence, there is no likelihood that both of them will likely to commit any offence while on bail. Hence, Point No.1 is answered in the affirmative and following order is passed : ORDER 1. Bail Application (Exh.8) and Bail Application No.582 of 2022 are allowed. 2. Pravin Raut (A3) and Sanjay Raut (A5) be released on bail in PMLA Special Case No.356 of 2022 (ECIR/MBZOI/80/2021 by everyone of them executing PR bond of Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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