Bombay High Court

Y SHIVA REDDY S/O LATE GOPAL REDDYversusTHE ASSISTANT DIRECTOR DIRECTOR OF ENFORCEMENT AND ANR.

Decided: 9 September 2026
Disposal: Allowed

Holding

The bail application is allowed, subject to the conditions imposed by the Court.

Summary

Y. Shiva Reddy, a former Deputy Director of Town Planning for Vasai-Virar Municipal Corporation, was arrested on allegations that he issued certificates for 41 illegal buildings and failed to order their demolition. He sought bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 read with Section 45 of the Prevention of Money Laundering Act, 2002, after his bail plea in the PMLA Special Court was rejected. The prosecution argued that seized cash and jewellery worth about Rs.30 crore were proceeds of crime and that the applicant might flee or tamper with evidence. The Court observed that no material linked the seized assets to any scheduled offence, the investigation against the applicant was complete, and a co‑accused had already been granted bail in the same case. Relying on the twin conditions of Section 45 PMLA and the lack of a nexus between assets and crime, the Court allowed bail with stringent conditions.

Issues considered

Whether bail should be granted to the accused under Section 483 BNSS and Section 45 PMLA despite alleged proceeds of crime.
Whether the seized assets can be established as proceeds of crime under the PMLA.
Whether the investigation being complete justifies continued custody of the accused.
Whether the twin conditions of Section 45 PMLA are satisfied in the present case.

Legislation cited

Bharatiya Nagarik Suraksha Sanhita, 2023 — s. 483
Prevention of Money Laundering Act, 2002 — s. 3, 45, 50

Subjects

bail
PMLA
proceeds of crime
illegal construction
municipal planning
disproportionate assets
investigation
custody
Section 45
Section 483
BNSS

Judgment

BA.3607.2026.doc

Ajay

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION

BAIL APPLICATION NO. 3607 OF 2026

Mr. Y. Shiva Reddy, S/o. Late Gopal Reddy .. Applicant
Versus
The Assistant Director, Directorate of
Enforcement and Anr. .. Respondents

....................
 Mr. S. Nagamuthu, Senior Advocate a/w. Ms. Kathyaeni
Ramshetty, Mr. D. Vignesh Reddy, Mr. Y. Soma Srinath Reddy, Mr.
D. Shashi Preetham and Mr. Shreyas Kaushal, Advocates i/by
Pravada Raut for Applicant.
 Ms. Shilpa G. Talhar, APP for Respondent – State.
......…...........

CORAM : MILIND N. JADHAV, J.
DATE : SEPTEMBER 09, 2026.

P.C.:

1. Heard Mr. Nagamuthu, learned Senior Advocate for

Applicant and Ms. Talhar, learned APP for Respondent No.2 - State.

2. Present Bail Application is filed by Applicant under Section

483 of Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) read with

Section 45 of Prevention of Money Laundering Act, 2002 (PMLA)

seeking enlargement on bail in connection with

ECIR/MBZO-II/10/2025 in Special Case No.2109 of 2025.

3. Applicant was Deputy Director Town Planning, Vasai Virar

Municipal Corporation (VVMC) between 2019 and 2023 when he was

alleged to have issued Commencement Certificate and Occupancy

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Certificate to certain builders and developers in respect of 41 buildings

within the jurisdiction of VVMC. Furthermore, it is prosecution’s case

that Applicant turned a blind eye to illegal constructions and failed to

demolish the same. FIR No.330 of 2025 was registered on 01.08.2025

against Applicant at Achole Police Station and he was arrested on

13.08.2025. Prosecution Complaint dated 10.10.2025 was filed before

PMLA Special Court, Mumbai. Applicant filed Bail Application at

Exhibit 46 before PMLA Special Court seeking enlargement on bail

which came to be rejected by order dated 31.08.2026. Hence present

Application.

4. Mr. Nagamuthu, learned Senior Advocate appearing for

Applicant would submit that his arrest is flagrant violation of the

settled position of law and there is no material on record to show the

proceeds of crime that it originates from scheduled offence. He would

submit that the investigation is documentary in nature which is in

possession of the prosecution and there is no reason for the Accused to

have access or remain in custody for the same. He would submit that

properties of the Accused which is alleged of proceeds of crime are also

seized. He would submit that Accused has co-operated with the

investigation prior and post after his arrest and his statement under

Section 50 of PMLA is recorded. He would submit that Applicant did

not evade his arrest and in future will not abscond and is ready to

abide by all the conditions for grant of bail imposed by this Court.

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4.1. He would submit that Applicant has fulfilled the twin

conditions from grant of bail as contemplated under Section 45 of the

PMLA. He would submit that that first of twin conditions of Section 45

of the PMLA have been satisfied as Applicant is not guilty of the

offence under Section 3 of the said Act. He would submit that

Applicant is not named in the first FIR out of four predicate offences

under ECIR/MBZO-II/10/2025. He would submit that ECIR has been

filed after 06 years of the 1st predicate offence and 03 years after the

alleged other predicate offences and the chargesheets of the said

predicate offences are pending in the court of JMFC Vasai and there is

no material on record to believe to proceed with search against the

present Accused. He would submit that his is named in one predicate

offence of the ECIR and same is not connected with any scheduled

offence and the act of demolition of illegal buildings and structures is

falsely attributed to him. He has no role in illegal constructions of 41

buildings. He would submit that there is no nexus of the property

seized and the crime registered, that property of the Accused seized is

not the proceeds of crime, that there is no money trial for the

prosecution to show against the Accused. He would submit that there

is no evidentiary value of the WhatsApp chats and other record

allegedly seized by the investigation agency. He has co-operated the

investigation of the offence against him and is not at flight risk. No

proceeds of crime are identified against and attributed to him.

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5. Ms. Talhar would strongly resist the grant of bail by

vehemently arguing that the cash and jewelry recovered i.e. proceeds

of crime are of exuberant value of almost Rs.30 crores and therefore

there is a very real chance that Applicant would jump bail if he is

granted the same. She would submit that the proceeds of crime

recovered were disproportionate to his income and he has no proper

explanation for the same. She would submit that there is reasonable

ground to believe that Applicant will dispose his assets, tamper

evidence and hamper the trial. On the basis of these submissions, she

would urge this Court to dismiss the present Application.

6. I have heard the learned Advocates appearing for the parties

and with their able assistance, perused the record of the case.

Submissions made by learned Advocates at the bar have received due

consideration of the Court.

7. It is seen that one of the co-accused, namely one Sitaram

Gupta was granted bail in respect of the predicate offences under the

very same ECIR being ECIR/MBZO-II/10/2025. It is seen that

prosecution complaint records that there is no connection of the

Applicant herein with the 41 illegal constructions. It is seen that

Applicant herein was not named in 4 FIRs registered between 2019

and 2023 and charge sheets have been filed in three FIRs in which the

Applicant is not named and only FIR in which the Applicant was

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named is FIR No.330/2025 and the only contention of prosecution is

that there is a disproportionate assets FIR and the assets seized were

clearly explained by the Applicant and the investigation is pending in

this FIR. Prima facie there is no material on record to disclose any

nexus between the seized property and the scheduled offences and that

seized property constitutes proceeds of crime. It is seen that

quantification of Rs.51.77 crore being the proceeds of crime is based

on inference from statement of one of the witnesses, but the said

quantification is not based on any identified transaction or money trail.

8. It is seen that WhatsApp chats relied upon lack independent

corroboration. Prima facie it is seen that Applicant had also furnished

detailed explanation regarding the seized cash and jewellery to the

Adjudicating Authority on 10.08.2025 and he has fully cooperated

with the investigation, having appeared before the ED on 26 occasions.

It is seen that investigation against the Applicant herein is complete

and the prosecution complaint filed therefore presence and custody of

Applicant is not required.

9. It is seen that investigation is complete against only 4 out of

18 Accused and investigation in predicate offences in FIR No.195 of

2022 and FIR No.330 of 2025 is still pending and there is no

wherewithal of trial. It is seen that Applicant herein has undergone

pre-trial incarceration of over year and has been in custody since

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13.08.2025 and since the investigation is complete against the

Applicant herein, there is no justification for further incarceration.

10. Hence, in view of above prima facie observations and

findings, Bail Application of Applicant is allowed subject to the

following terms and conditions:-

(i) Applicant – Y. Shiva Reddy is directed to be

immediately released from prison in connection with

ECIR/MBZO-II/10/2025;

(ii) Applicant is directed to be released on bail on

furnishing P.R. Bond of Rs.50,000/- (Rs. Fifty Thousand

only) with one or two sureties in the like amount;

(iii) Applicant shall report to the Investigating Officer at

concerned Police Station, once every month, on the first

Monday of the month between 10:00 a.m. to 12:00

p.m. until commencement of trial and thereafter shall

attend all dates of hearing before the Trial Court;

(iv) Applicant shall cooperate with the conduct of the trial

and remain present before the Trial Court on all dates,

unless specifically exempted. Applicant shall not seek

unnecessary adjournments. Any such conduct shall

entitle the prosecution to apply for cancellation of bail;

(v) Applicant shall not leave the country without prior

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permission of the Trial Court;

(vi) Applicant shall not influence any of the witnesses or

tamper with the evidence in any manner;

(vii) Applicant shall keep the Investigating Officer informed

of his current residential address and mobile telephone

number and shall forthwith inform the Investigating

Officer of any change in his residential address or

mobile telephone number, as and when such change

occurs; and

(viii)Any breach or infraction of any of the aforesaid

conditions shall entail cancellation of the bail granted to

the Applicant.

11. It is clarified that the observations made in this order are

limited for the purpose of granting bail only and I have not made any

observations on merits of the case. The trial shall be adjudicated on

the strength of the evidence led and strictly on its own merits being

uninfluenced with any of the prima facie observations made

hereinabove in this order.

12. Bail Application is allowed and disposed in the above terms.

[ MILIND N. JADHAV, J. ]

Ajay
Digitally signed
HARSHADA by HARSHADA
HANUMANT
HANUMANT SAWANT
SAWANT Date: 2026.09.11
16:07:33 +0530
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