Mumbai, Sep 22 (PTI) A special court in Mumbai has issued summonses to Prathamesh Developers through its partner businessman Pravin Raut and another accused in a money laundering case linked to the Patra Chawl scam, noting they were involved in siphoning off the proceeds of crime.

Shiv Sena (UBT) Rajya Sabha MP Sanjay Raut is also an accused in the case and therefore a special court for lawmakers is hearing the matter.

Special judge for criminal cases involving MPs/MLAs Satyanarayan Navander, in a September 20 order, ruled that prima facie the offence of money laundering has been clearly made out.

The court issued summonses to Prathamesh Developers through its partner Pravin Raut, a close aide of Sanjay Raut, and another accused, Jitendra Mehta of Mehta Developers, after taking cognizance of the supplementary chargesheet filed by the Enforcement Directorate (ED) against them in the case.

"The company and Mehta were involved in the process of generating and siphoning off the proceeds of crime," the court said.

The ED case pertains to alleged financial irregularities in the redevelopment of Patra Chawl in suburban Goregaon, and related financial transactions.

Notably, a chawl is a type of old residential building with small rooms typically inhabited by low-income families. Such buildings were once a prominent feature of Mumbai's urban landscape.

Siddharth Nagar, popularly known as Patra Chawl, in Goregaon is spread over 47 acres and houses 672 tenant families.

In 2008, the Maharashtra Housing and Area Development Authority (MHADA), a government agency, assigned a redevelopment contract for the sprawling chawl to Guru Ashish Construction Pvt Ltd (GACPL), a sister company of the now-defunct HDIL (Housing Development and Infrastructure Ltd).

GACPL was supposed to build 672 flats for the tenants and also give some flats to MHADA. It was free to sell the remaining land to private developers.

But the tenants did not get a single flat as the company failed to redevelop Patra Chawl and instead sold land parcels and Floor Space Index (FSI or ratio that defines how much can be built on a plot) to other builders for Rs 1,034 crore, as per the ED.

The central agency has claimed that GACPL, through HDIL, launched a project in 2010, namely Meadows at Patra Chawl, and collected an amount of Rs 138 crore against bookings from 458 prospective homebuyers.

Prima facie, the accused generated a total amount of Rs 1039.79 crore from illegal sale of FSI. Some part of the said amount was utilized in developing the project, which remains incomplete, said the anti-money laundering agency.

Whereas most of the funds were siphoned off to various accounts, the ED has alleged.

The financial investigation agency has claimed HDIL promoter Sarang Wadhawan and Pravin Raut of Prathamesh Developers managed to sell FSI to third party developers and collected Rs 1039.79 crore during 2010-2014.

Instead of using these sale proceeds for construction of the flats for tenants and for the MHADA portion, they siphoned off the amounts to various accounts of HDIL and its group companies, according to the ED.

It was further claimed that Prathamesh Developers was utilized by Pravin Raut for integration of diverted proceeds of crime for acquiring immovable properties in the company's name.

The court held that Prathamesh Developers and Mehta were involved in generating and siphoning off the proceeds of crime and therefore, it is necessary to issue processes (summonses) against them. PTI AVI RSY

Money laundering: summons issued to developers over alleged siphoning of redevelopment proceeds and sale of FSI. The special court found prima facie money laundering allegations based on the ED's supplementary chargesheet that developers generated and sold FSI and land parcels, collected sale proceeds, and diverted most funds to group accounts rather than using them for tenant redevelopment; the court issued summonses to the realty firm via its partner and to another developer for involvement in generating and siphoning off proceeds of crime.