HC flags police-developer collusion, declares businessman’s arrest illegal in extortion case

A division bench of Justices AS Gadkari and Kamal Khata also called for strict action, including the immediate suspension of the police sub-inspector and other officers concerned

MUMBAI: A businessman’s arrest in a 2017 extortion case was illegal and marked an abuse of police powers in alleged collusion with a developer, the Bombay high court ruled on Thursday, directing the Maharashtra government to pay him ₹5 lakh in compensation within two weeks.

HC flags police-developer collusion, declares businessman’s arrest illegal in extortion case.

A division bench of Justices AS Gadkari and Kamal Khata also called for strict action, including the immediate suspension of the police sub-inspector and other officers concerned.

Describing the arrest and remand as “high handed” and arbitrary, the court said they had been carried out “without application of mind and without following the basic statutory provisions of law.”

The case dates back to August 4, 2017, when Bipin Satish Chandra Agarwal was arrested after developers of New Aarti Co-operative Housing Society in Andheri East accused him of extortion. The society was undergoing redevelopment, and Agarwal was negotiating with the developer on behalf of his mother-in-law, who owned a flat there.

Agarwal told the court that he had negotiated the sale of a flat for approximately ₹1.64 crore. The developers allegedly handed him ₹2 lakh as an advance at their office that day. Soon after he received the money, police arrived, handcuffed him and took him to Azad Maidan police station. Subsequently, an FIR was registered against him for extortion under Section 384 of the Indian Penal Code.

He secured bail from the sessions court on August 28, 2017, and subsequently challenged the legality of his arrest before the high court, citing inconsistencies in the record to indicate that his arrest was malafide and illegal.

The bench said it was deeply anguished by what it found in the case, calling it a “classic case” of a police sub-inspector exploiting his position and using the police machinery to advance the developer’s interests. According to the court, the action was apparently taken because Agarwal had refused to accept the deal offered and had threatened to expose alleged wrongdoing involving the developer and certain society members.

It found discrepancies in the arrest records, including overwritten dates, missing information on the grounds of arrest and whether Agarwal’s wife had been informed, as well as contradictions between station diary entries and the FIR. It also questioned why the police had not first examined the circumstances in which the ₹2 lakh was handed over or verified the complaint.

The bench said the police had tried to portray Agarwal as a “gangster, history-sheeter or an extortionist” without evidence and without investigating the complaint’s veracity.

Finding that the arrest had caused financial loss and irreparable harm to Agarwal’s reputation, the court ordered the state to pay ₹5 lakh in compensation within two weeks.

It also flagged the magistrate’s failure to independently assess the case and record reasons for authorising Agarwal’s continued detention. The high court registry has been directed to place the judgment before the administrative committee for appropriate action against the concerned magistrate.