Sanjay Raut out on bail, court says arrest was illegal

Updated on Nov 10, 2022 04:13 AM IST

The PMLA court was scathing in its observation about the Enforcement Directorate probe in the Patrawala Chawl case, and held that the Shiv Sena (UBT) leader had been arrested illegally “for no reason.” Raut spent a hundred days in jail.

Shiv Sena (Uddhav Balasaheb Thackeray) leader and MP Sanjay Raut. (Photo by Bhushan Koyande/HT Photo)
Shiv Sena (Uddhav Balasaheb Thackeray) leader and MP Sanjay Raut. (Photo by Bhushan Koyande/HT Photo)
By, Mumbai

Sanjay Raut and his associate Pravin Raut were released from Arthur Road jail on Wednesday evening after the special PMLA (Prevention of Money Laundering Act) court granted them bail, and the Bombay high court refused to stay their release from prison.

The PMLA court was scathing in its observation about the Enforcement Directorate probe in the Patrawala Chawl case, and held that the Shiv Sena (UBT) leader had been arrested illegally “for no reason.” Raut spent a hundred days in jail.

Raut and his close friend Pravin Raut, a former director in Guruashish Construction Private Limited, were arrested for alleged financial irregularities in the redevelopment of the Patra Chawl in Goregaon East.

On Wednesday, special judge in the PMLA court, MG Deshpande, held that there was no predicate offence which enable the ED to register an Enforcement Case Information Report (ECIR) and that there are no proceeds of crime (POC) established as required under the Prevention of Money Laundering Act, 2002. “Prima ­facie there is absolutely nothing to show that whatever (money) received by Sanjay Raut (A5) is POC,” the court added. Pravin Raut’s arrest, the court said, was at best a civil matter while the Shiv Sena leader had been arrested for no reason. The court then went on to term their arrest illegal.

The court also refused to believe ED’s case against Sanjay Raut that he was involved in Patra Chawl redevelopment scam right from the conception of the project and that it was he who had brought in HDIL and its promoters Rakesh Kumar Wadhawan and his son Sarang Wadhawan into the multi-crore project. Kit also did not believe that Pravin Raut, his close family friend, had acted as his proxy.

The special court said that ED had, in a separate money laundering case, registered in the Punjab and Maharashtra Co-operative Bank scam, claimed that Pravin Raut had received tainted amount of 95 crore from the two HDIL promoters, the prime accused in that particular case. And ED then went on to claim that the same 95 crore was received by Pravin Raut from Wadhawans in Patra Chawl case as proceeds of crime.

In a third charge sheet the ED had then claimed that the Sena MP was actually the main conspirator and that Pravin Raut was merely his proxy, acted at Sanjay Raut’s behest.

The court further discarded ED’s indirect claim that the then Union Agriculture Minister Sharad Pawar and former chief minister late Vilasrao Deshmukh too were somehow involved in the Patra Chawl case. “Only the bald and bare words” of Chandan Kelekar, an architect who claimed that Sanjay Raut had arranged meetings with Pawar and Deshmukh for Patra Chawl redevelopment project in 2006, had formed the basis of ED’s supplementary charge sheet and resulted in Raut’s arrest, said the court. According to Kelekar, high level government and MHADA officials had participated in both the meetings but none of them was arrested or even made accused, in spite of the suspicious conduct of MHADA officials throughout, said the court.

IT went on to say that by “skipping all officials of MHADA and Government referred to by by Mr. Chandan Kelekar, Wadhawans and Ms. Swapna Patkar, was nothing but conveying a message to the then Union Agriculture Minister and then Chief Minister, creating fear psyche in their mind that they are the next in this queue,” said the special judge. “Certainly, this is not an object and true purport of the PML Act.”

The special PMLA court also expressed surprise that the prime culprits named by ED itself – Rakesh Kumar Wadhawan and Sarang Wadhawan-- were never arrested by the agency in this case. “It is astonishing that Rakesh (A1) and Sarang (A2) Wadhawans who not only generated Rs.1039.79 crores, but also allegedly placed, layered and integrated the same, were never arrested by the ED,” said the court.

Taking note of the fact that Pravin Raut, who was arrested on February 2, 2022, has already spent nine months behind bars and Sanjay Raut, arrested on August 1, has spent three months in jail, the court ordered their release upon furnishing personal bonds of 2 lakh each and one or two sureties of the same amount.

ED lawyers sought a stay on implementation of the bail order and moved the Bombay High Court but failed to get relief as a single judge bench of justice Bharati Dangre refused to stay the order. “The sessions court heard the matter for weeks and you expect us to pass orders after hearing you for a few minutes,” she said, added that if the agency wanted the bench to hear the application on merit it would do so on Thursday but could not grant any relief on urgent basis. ED’s plea will now be heard by the Bombay high court on Thursday.

What the Patra Chawl scam is all about

ED’s ECIR in the Patra Chawl case is based on an FIR registered by the Economic Offences Wing of the Mumbai police in March 2018 against HDIL’s Rakesh Wadhawan and his son Sarang, Guruashish Construction Private Limited, and its former director Pravin Raut, among others.

Guruashish Construction had taken up the redevelopment of Siddharth Nagar, popularly known as Patra Chawl, spread over 47 acres in Goregaon and owned by the Maharashtra Housing and Area Development Authority (MHADA). The project, estimated at 1,017 crore, aimed to rehabilitate the 672 tenants residing in 265 square feet tenements in 16 old buildings.

According to ED, an agreement was executed between the housing society formed by Patra Chawl tenants, MHADA, and Guruashish Construction on November 2011. Guruashish Construction was to give one 767 square feet built-up area flat to each of the 672 tenants and 2,28,961 square feet constructed area to MHADA.

As per ED’s investigation Guruashish Contruction, however, sold the entire floor space index of the project to nine builders and collected 901.79 crore from them without constructing the rehabilitation buildings and the portions promised to MHADA. The developer also collected an additional amount of 138 crore from 458 prospective flat buyers by launching a project at the site – thus taking the total proceeds of crime to 1,039.79 crore.

The agency also claimed to have found out that while the project was at a standstill, around 100 crore was transferred from HDIL to the account of Pravin, who in turn diverted part of these funds to various accounts of his close associates, family members, and their business entities.

The ED’s case is that Sanjay Raut and his family members were the direct beneficiaries of the tainted money received by Pravin Raut from HDIL in 2010-11. It also said that Pravin was Sanjay Raut’s front man and that he received 2 lakh from Pravin every month.

The agency also claimed that during their probe into the money trail, it was revealed that the money transferred from Pravin to Sanjay and his family members was used to buy 10 plots of land at Kihim near Alibag, with 60%-70% of the cost paid in cash.

The special court has, however, refused to believe in the ED’s claims and held that the Rauts were family friends and merely because some money transactions took place between them cannot be termed as tainted, especially when there is nothing to show commission of any scheduled offence and generation of proceeds of the crime.

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    Charul Shah is senior reporter covering the legal beat for Hindustan Times. She has spent over a decade in the industry covering criminal investigations and judiciary from Mumbai, Ahmedabad and Bengaluru.

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