Explained: The case in which ED has attached assets of Varsha Raut, wife of Shiv Sena MP Sanjay Raut

The assets of Varsha and the two others — businessman Pravin Raut, and Swapna Patkar, wife of the MP’s close associate Sujit Patkar — have been attached under the Prevention of Money Laundering Act (PMLA). The case is about irregularities in the redevelopment of Patra chawl project by Guru Ashish Construction Pvt Ltd, a subsidiary of Housing Development and Infrastructure Ltd (HDIL).

What is the Patra Chawl redevelopment project?

Siddharth Nagar, popularly known as Patra Chawl, is located in Goregaon area of Northern suburb of Mumbai. It had a total of 672 houses spread over 47 acres of plot. For the last 14 years, people here have been waiting to get their homes.

In 2008, the Maharashtra Housing and Area Development Authority (MHADA) took up the redevelopment project and gave the contract to GCPL to rehabilitate 672 tenants and to redevelop the locality. A tripartite agreement was signed between GCPL, the tenants Society and MHADA for the redevelopment of 47 acres of Patra chawl.

What is the ED’s case?

The ED has alleged that Guru Ashish Construction had signed a tripartite agreement with the Maharashtra Housing and Area Development Authority (MHADA) to provide flats to 672 tenants of Patra chawl, develop flats for MHADA and then sell the remaining area to private developers.

However, the ED claims, Pravin Raut and the other directors of Guru Ashish Constructions misled MHADA and sold the floor space index (FSI) to nine private developers, collecting Rs 901.79 crore, without constructing the rehab portion for the 672 displaced tenants or the MHADA portion.

Subsequently, Guru Ashish Construction also launched a project called Meadows and took the booking amount of around Rs 138 crore from flat buyers. The ED has alleged that the total proceeds of the crime generated by Guru Ashish Constructions through these “illegal activities” amount to Rs 1,039.79 crore.

What does ED claim to have found during its probe?

The agency has claimed that Pravin received Rs 100 crore from HDIL and “diverted” it to various accounts of “his close associates, family member, his business entities” including the family of Sanjay Raut.

The ED has alleged that in 2010, a part of a part of the proceeds of crime of Rs 83 lakh was transferred to Varsha Raut, who used it to buy a flat in Dadar. Apart from this, at least eight plots of land were purchased at Kihim beach at Alibaug in Maharashtra in the name of Varsha Raut and Swapna Patkar.

What went wrong with the project?

As per the agreement, the developer had to pay rent to all 672 tenants every month till the completion of the project. However, the rent was paid only till 2014-15. It was then that the tenants started complaining against the developer for non-payment of rent and delay in the completion of the project.

At the same time it was also revealed that Pravin Raut and the other directors of GACL misled MHADA and sold the floor space index (FSI) to nine private developers, collecting Rs 901.79 crore, without constructing the rehabilitation portion for the 672 displaced tenants or the MHADA portion.

Subsequently, GACL also launched a project called ‘Meadows’ and took the booking amount of around Rs 138 crore from flat buyers.

Due to the non-payment of rent, delay and the irregularities by the developer, the MHADA issued a termination notice to the developer on January 12, 2018. Against this notice, nine developers who bought the FSI from GACL, filed a suit in the Bombay High Court. Owing to these illegalities, the redevelopment project was stalled, leaving 672 tenants in the lurch.

What is the status of the project?

In 2020, the Maharashtra government appointed a one-member committee of Johnny Joseph, a retired chief secretary of Maharashtra to study and recommend solutions for the rehabilitation and rental payment to 672 tenants.

Following the recommendations of the committee and feedback from MHADA, the state cabinet, in June 2021, approved redevelopment of the Patra Chawl again and the government resolution was issued in July 2021.

On February 22 this year the stalled construction work was restarted by Maharashtra Chief Minister Uddhav Thackeray.

Now, MHADA will develop the project and give possession of flats to the 672 residents. It will also immediately complete the remaining work in 306 flats in the building – for which a lottery draw was held – before handing over the flats to the lottery winners.

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“MHADA itself will now be working on the entire project as a developer and will be providing 650 square feet carpet area flats to the 672 tenants through the redevelopment project,” said an official.

What is likely to happen next?

The ED arrested Pravin Raut on February 4 and filed a chargesheet against him on April 1, but has not named Varsha Raut as an accused in the case. Pravin Raut is in jail currently.

After the provisional attachment of assets by ED, the adjudicating authority under PMLA will have to pass an order either confirming the attachment or lifting it, after going through the submissions of the ED and the affected party. This order can take up to 90 days from now and can be challenged in higher courts.