Vasai-Virar Illegal Construction Scam: Bombay HC Denies Bail To Former VVMC Official, Says Bribe Is ‘Proceeds Of Crime’

Mumbai, March 10: The Bombay High Court has denied bail to a former Vasai Virar Municipal Corporation (VVMC) official in a money laundering case, declaring that accepting a bribe amounts to acquiring 'proceeds of crime.'

HC dismisses plea challenging arrest

A bench of Chief Justice Shree Chandrashekhar and Justice Gautam Ankhad dismissed the plea of former VVMC Deputy Director Y Shiva Reddy, who had sought to declare his arrest by the Directorate of Enforcement (ED) as illegal and quash his remand. Reddy has been in judicial custody since his arrest on August 13, 2025.

Petitioner challenges predicate offence and recovery

In his petition, Reddy contended that the predicate offence registered against him under the Prevention of Corruption Act was lodged only after the ED conducted searches at his residence. He also claimed that there was no evidence to show that the cash and jewellery allegedly recovered from his residence were proceeds of crime arising from the predicate offence.

However, in its judgment, a copy of which was made available on Tuesday, the high court noted that the Prevention of Money Laundering Act (PMLA) defines “proceeds of crime” in wide terms to include any property derived or obtained, directly or indirectly, as a result of criminal activity.

“If a person takes a bribe, he acquires proceeds of crime,” the court said.

ED allegations over illegal construction permissions

According to the ED, Reddy and other officials between 2019 and 2023 permitted illegal construction of 41 buildings by developers using forged permissions and fabricated documents on land reserved for a sewage treatment plant and a dumping ground.

The bench observed that the recovery of unaccounted cash, jewellery and other incriminating material, along with statements of witnesses, provided sufficient basis for the ED to believe that Reddy was prima facie involved in money laundering.

The agency has alleged that Reddy used the bribe money to purchase jewellery and other luxury items.

Court cites evidence and due process

The court also noted that the arrest memo indicated “tangible and credible evidence” of Reddy’s involvement in the alleged offence.

Further, the bench said the quantification of proceeds of crime may change as the investigation progresses.

During searches conducted at Reddy’s residences, the ED allegedly recovered unaccounted cash worth Rs 8.23 crore and jewellery valued at Rs 23.28 crore.

Rejecting Reddy’s plea, the bench held that it did not find any prima facie case for interference. “No case is made out to declare the arrest as illegal or to quash the subsequent remand orders,” the court said.

The court also held that due process of law had been followed before Reddy’s arrest.

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Probe into alleged scam

The ED carried out searches at Reddy’s residences on June 23, 2025, and subsequently shared information with local police, based on which an FIR was registered on August 1, 2025.

The agency had initiated its probe into the alleged scam in February last year, during which Reddy’s role in granting development permissions for illegal construction on government land came to light.

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