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The Supreme Court Thursday cancelled the bail of Pune stud farm owner and country’s top tax evader Hasan Ali Khan, sending him to four-day custody of the Enforcement Directorate (ED) to conduct his interrogation.

The apex court bench of Justice B. Sudershan Reddy and Justice S.S. Nijjar paved the way for the custodial interrogation of Khan after it stayed the March 11, 2011, order of a Mumbai court which rejected the EDs plea for his custody and granted him bail.

There shall be an interim stay of the order passed by the principal special judge, Mumbai, the apex court said Thursday.

We are satisfied that material available prima facie indicates commission of offence by Hasan Ali under the provision of the Prevention of Money Laundering Act, the court said.

The order passed by the principal special judge creates an extraordinary situation whereby it frustrates the investigation by the Enforcement Directorate. Having regard to the extraordinary situation, we consider it appropriate that respondent (Hasan Ali) is to be interrogated and accordingly directed to be taken into custody by the authorities of the Enforcement Directorate for four days, the court said.

Before passing its order, the court expressed its bewilderment over the Mumbai court’s order rejecting the EDs plea for Khan’s remand and making observation on the merit of the case.

While apex court said there was no difficulty in staying the operation of the Mumbai special courts order granting bail to Khan, it expressed its dilemma in passing order on the custodial interrogation of the stud farm owner without issuing him a notice.

Assailing the Mumbai court order, Solicitor General Gopal Subramanium said that under the Prevention of Money Laundering Act bail could not be given in the absence of compelling circumstances and without imposing stringent conditions.

Subramanium told the court that the special court had erred in granting bail to Khan and making observations on the merit of the case.

He said the special court could not make any adverse observation on the merit of the case when it was moved for Khan’s remand by the ED.

The solicitor general said that the principal special judge was requested not to make public the names of the people who have given information about money laundering activities of Khan and the details of the bank accounts and their number. Yet all these were mentioned in its order.

The court was told that at one stage, the principal special judge even confronted Khan with an EDs document asking him if it was genuine.

While questioning the authenticity of the documents presented by the ED against Khan, the special judge said: It is difficult to say the documents on which the Enforcement Directorate relied are genuine documents. They may have been created for some other purposes also.

The Supreme Court would Friday hold the next hearing on eminent jurist Ram Jethmalanis petition seeking direction to the central government to take steps for bring back black money stashed away in foreign banks in tax havens.

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