Mumbai, Oct 4 (PTI) The Bombay High Court on Tuesday granted bail to former Maharashtra home minister Anil Deshmukh in a money laundering case registered by the Enforcement Directorate observing "two components of credits" in the account of his family trust were not "proceeds of crime.

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The HC, however, stayed the order till October 13 as Additional Solicitor General (ASG) Anil Singh said the ED would challenge it in the Supreme Court.

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Two components of credits (Rs 10.42 crore and Rs 1.12 crore) in the account of a trust controlled by the Deshmukh family, flagged by the ED, were not "proceeds of crime," a single-judge bench of Justice N J Jamadar noted in the order.

The high court also said the statements given by former Mumbai Police commissioner Param Bir Singh and dismissed cop Sachin Waze alleging that Deshmukh had taken money from police officers for favourable postings were "prima facie hearsay".

"These statements ex-facie lack the element of certainty as to the source, time and place. They prima facie appear to be hear-say," the order said.

The Nationalist Congress Party leader, arrested on November 2, 2021, is also facing a corruption case registered by the Central Bureau of Investigation (CBI).

Justice Jamadar stated the bail plea has been allowed and Deshmukh shall be released on a bond of Rs 1 lakh.

The HC noted that the possession of unaccounted property acquired by legal means may be actionable for tax violations, yet will not be regarded as proceeds of the crime unless it constitutes an offence which is included in the Schedule.

"For being regarded as proceeds 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," the judgment said.

Deshmukh, who was a minister in the previous MVA government, is lodged in Arthur Road jail in Mumbai.

The HC in April 2021 directed the CBI to carry out a preliminary inquiry over allegations of extortion levelled by Param Bir Singh. The CBI, based on this inquiry, registered an FIR against Deshmukh and his associates for alleged corruption and misuse of official power. The ED began its probe after the CBI registered the case.

The ED claimed Deshmukh had misused his official position and collected Rs 4.70 crore from various bars and restaurants in Mumbai.

The money was channelled to Nagpur-based Shri Sai Shikshan Sansthan, an educational trust controlled by the Deshmukh family, it alleged.

But the high court noted in the order on Tuesday that two components of credits in the trust's account were not "proceeds of crime".

"The third component (of credit) amounting to Rs 1.71 crore depends on the statement of Sachin Waze which after discussion this court has held that it falls in favour of the applicant (Deshmukh)," the court said.

Justice Jamadar noted that the statements given by Waze and Param Bir Singh only said that they "heard or learnt" that Deshmukh had taken money from police officers in exchange for favourable postings.

"These statements ex-facie cannot bear the weight of the allegation of generation of proceeds of crime out of the alleged predicate offence of exercise of influence over the transfers and postings of the police officials," the court said.

The HC also raised questions as to who was the "No 1" Waze kept referring to while collecting bribe money from bar and restaurant owners.

The bench noted there are two versions - while some say in common parlance the Commissioner of Police is referred to as "No 1", while the prosecution's case is that Waze was referring to Deshmukh.

The HC also gave Deshmukh the benefit of a proviso of section 45 of the Prevention of Money Laundering Act, the judge added. As per this provision, a court can grant bail if an accused is a woman, or if he is ailing.

Justice Jamadar noted that Deshmukh has been suffering from multiple ailments and he is 73 years old.

"The medical reports/certificates also show that the Applicant is suffering from chronic ailments, as well. In the light of the material on record, it would be audacious to observe that the Applicant is not a sick person," the order said.

The bench instructed that Deshmukh shall not tamper with evidence when released.

He shall attend the trial on every date and surrender his passport, it added.

Param Bir Singh had alleged in March 2021 that Deshmukh, then home minister, had given a target to police officers to collect Rs 100 crore per month from restaurants and bars in Mumbai.

The then assistant police inspector Waze, arrested in the 'Antilia' bomb scare case in March last too had levelled similar allegations.

Deshmukh's lawyers Vikram Chaudhari and Aniket Nikam had argued for bail on grounds of his age, health, and absence of criminal antecedents.

The ED had said that he could receive treatment in a jail hospital.

The Supreme Court had earlier asked the Bombay high court to expedite the hearing on his bail plea as it was pending for six months.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)