HC grants bail to Priyavrat Mandhana in money laundering case
The Bombay High Court granted bail to Priyavrat Mandhana, ruling the ED lacked grounds for his arrest amid a fraud investigation involving ₹975.08 crore.
MUMBAI: The Bombay high court on Thursday granted bail to Priyavrat Mandhana, 35, son of Mandhana Industries’ promoter, Purushottam Mandhana, observing that the Enforcement Directorate (ED) did not have sufficient reasons to arrest him. He was arrested by the agency on July 29, after conducting a search and seizure operation at his residence in Parel.
Mandhana had approached the high court, seeking immediate release from jail, claiming that his arrest by the ED was illegal for failure of its officials to furnish him “reasons to believe”, as mandated under section 17 of the Prevention of Money Laundering Act (PMLA), 2002.
It was argued on his behalf that his arrest by ED officers, who entered his residence under the pretext of search and seizure, was illegal, untenable and against the principles enunciated in various pronouncement of the Supreme Court, especially in Delhi chief minister Arvind Kejriwal’s case which required ED to record in writing “reasons to believe” as to why arrest was necessary.
His counsel submitted that Mandhana was interrogated twice - first for around 32 hours and later for 15 hours - and his statements recorded by the ED on three occasions. He had fully co-operated with the agency officers, who did not feel it necessary to arrest him before his father, Purushottam Mandhana, was released on bail by the special PMLA court on July 25 by declaring the arrest illegal.
ED’s counsel, advocates Hiten Venegaonkar and Ayush Kedia, opposed the plea, contending that there was nothing illegal in the arrest. They pointed out that the grounds of arrest were furnished to Mandhana at the time of his arrest on July 29, 2024.
They submitted that the arrest was necessary to prevent destruction and tampering of evidence; to confront Mandhana with various persons involved in the crime; to trace diverted funds; to prevent him from influencing witnesses; and to identify other persons involved in the activities.
The ED counsel also pointed out that bank statements of Mandhana Industries Ltd, Balaji Corporation and Mahan Synthetics showed that an amount of ₹73.79 crore had been transferred to Priyavrat Mandhana and he was, thus, in receipt of proceeds of crime to that extent.
The division bench of justice Revati Mohite Dere and justice Prithviraj Chavan refused to accept the arguments advanced on behalf of ED and held that the subjective satisfaction recorded by ED officials was prima facie “sans rational connection to their formation of belief i.e. reasons to believe,” as the ED officials already had all the information long before Priyavrat Mandhana’s arrest. The court, therefore, granted him bail on furnishing a personal bond of ₹1 lakh with one or two sureties in the same amount.
ED’s probe is based on a September 2023 case registered by the Bank Security and Fraud Cell of the CBI following a complaint lodged by Bank of Baroda accusing Mandhana Industries Ltd of diverting loan funds through fraudulent transactions and circular trading worth ₹975.08 crore and, thus, duping a consortium of banks led by the public sector bank.