Vasai-Virar Illegal Constructions Case: Supreme Court Issues Notice On ED's Challenge To HC Quashing Arrest Of IAS Officer

The Supreme Court today issued notice on a plea filed by the Enforcement Directorate challenging Bombay High Court's declaration of suspended IAS officer and Vasai Virar City Municipal Commissioner Anilkumar Pawar's arrest as illegal.

A bench of Justices Vikram Nath and Sandeep Mehta passed the order, after hearing Additional Solicitor General SV Raju (for ED). On a specific Court query, the ASG informed that the photographs of ornaments (stated to be recovered during raids) were taken prior to Pawar's arrest. "My lords will be shocked if you look at the Whatsapp chats", the ASG said.

Senior Advocate Rajiv Shakdher appeared for Pawar and submitted that it is not a case that merits intervention. He contended that Pawar has not been named in any of the 5 FIRs lodged over the allegations and that out of over 40 builders arraigned in the FIRs, only 1-2 were named in the prosecution complaint.

"You are alleged to be hands-in-glove with YS [Reddy]..." noted Justice Mehta. Ultimately, the bench issued notice on the petition and called for the respondents' counter-affidavits.

To recap, the case involves allegations of illegal constructions in the Vasai-Virar region between 2008 and 2010. With regard to the same, the first FIR was lodged in 2019 at the instance of an Assistant Commissioner of VVCMC. ED on its part registered an ECIR in 2025.

During investigation, ED statedly recovered incriminating material such as ornaments, cash, etc. from the premises of former Deputy Director of Urban Planning-YS Reddy. Pawar and others were arrested by the agency on August 13. It filed the prosecution complaint stating that the proceeds of crime amounted to Rs.300.92 crores, of which about Rs.169 crores were linked to Pawar.

The allegation levelled against Pawar, among others, was that he overlooked rampant illegal constructions of 41 buildings in the region in exchange for bribes. As per the agency, the case was supported by statements of builders, WhatsApp chats and cash deposits.

Following his arrest, Pawar approached the High Court. Besides his arrest, he challenged the remand orders passed by the Sessions Court. He submitted that he joined as the Municipal Commissioner at VVCMC on 13 January 2022 and actively pursued complaints against illegal construction in VVCMC. Since he was not there between 2008-2010, he had no role to play in the grant of sanction for the concerned development plans. So far as his arrest, he pleaded that the arresting officer ought to have had tangible material to be able to form reasons to believe that he was guilty of an offense under PMLA.

Per contra, ED justified the arrest by stating that there was abundant material in possession of the arresting officer such as evidence showing (i) transfer of money from YS Reddy, (ii) YS Reddy being charged with predicate offence of corruption and (iii) statement of YS Reddy recorded under Section 50 of PMLA being corroborated by the statements of the architects and the promoters/developers.

After hearing both sides, the High Court declared as illegal Pawar's arrest, being of the view that at the time of arrest, ED lacked “tangible material”. Ordering his release, the Court noted that no recovery was made from Pawar or his family members.

“The case built up by the ED based on the statement of Mr. Y. S. Reddy that a Codeword system for collection of commission was devised and huge tainted money was received does not lead anywhere inasmuch as no recovery was effected from the premises of the petitioner or from his possession or in the possession of his family members."

It further observed,

"The allegations of keeping a blind eye and taking no action over the rampant illegal constructions on government/private land and the petitioner receiving more than Rs.17.75 crores from Mr. Y. S. Reddy are without any description of such project and no details of the development plan are disclosed by the ED. The ED does not say that any incriminating material such as WhatsApp chats, diary, message etc. are recovered from the possession of the petitioner or his mobile phone. No details of any investment made or the so-called company, partnership etc. formed by the wife of the petitioner or his family members as sought to be projected by the ED are provided."

The Court also recorded that in the FIR registered on August 1, after conducting of raids at the premises of YS Reddy which led to recovery of ornaments, cash, etc., Pawar was not named as an accused. It further commented that ED's stand was based on speculation and "hazy facts".

Insofar as the agency pleaded that the prosecution complaint gave details of materials collected post Pawar's arrest, the Court said,

"...in our opinion, any material collected by the ED after 12th August 2025 cannot be looked into to examine the legality of the arrest of the petitioner on 13th August 2025 and such materials can be used by the ED to support its case against the petitioner as narrated in the Prosecution Complaint."

Though ED sought stay of the order, the same was declined. Aggrieved, it approached the Supreme Court.

Appearance: ASG SV Raju (for ED); Sr Adv Rajiv Shakdher, AoR Niteen Kumar Sinha (for Pawar)

Case Title: DIRECTORATE OF ENFORCEMENT Versus ANILKUMAR KHANDERAO PAWAR AND ANR., SLP(Crl) No. 16841/2025