Mumbai: Slamming the Enforcement Directorate over its handling of the money laundering case involving controversial businessman Hasan Ali, a local court here on Friday rejected its remand plea of Ali.

Causing huge embarrassment for the ED, the court granted bail to Hasan Ali rejecting the plea by ED for his custodial interrogation.

"No material evidence has been presented by the ED that shows any scheduled offence has been committed by Khan," Principal Sessions Court Judge M L Tahaliyani observed while rejecting the agency's remand application.

The judge, however, set some conditions for enlarging 53-year-old Khan on bail, including barring the Pune-based stud farm owner, from leaving Mumbai for five days and directing him to appear before the ED officials every day.

Soon after the court dismissed ED's plea and ordered Khan to be released on bail, the investigative agency's counsel Rajiv Awasthi said they would move a superior court against the order after going through the full text of the judgment.

"We have overwhelming evidence (to show Khan's culpability in money laundering) but probably the court failed to appreciate those. We will appeal before a superior court," Awasthi told reporters.

Asserting that ED's investigation in the case was proceeding "effectively", Awasthi said, "We have received some links....Hasan Ali's remand was needed to bridge some gaps in the probe."

Khan, alleged to have stashed over USD 8 billion in UBS bank in Switzerland and made other illegal transactions abroad, was arrested on Monday midnight under the Prevention of Money Laundering Act and has been in ED custody since then.

The court had on Wednesday severely rebuked the Enforcement Directorate over its handling of the money laundering case, observing it had not been able to make out even a single case against the businessman to seek his custody and asked the agency to do its "homework".

In its application seeking Khan's remand, the ED had referred to the huge amounts allegedly stashed away by him abroad and links to international arms dealer Adnan Khashoggi.

The application also spoke about the multiple passports he had acquired using forged documents. Khan had been arrested by Mumbai police in this connection after the Regional Passport Office filed a complaint against him in 2008. He was later enlarged on bail.

The ED application said Khan had given instructions to transfer funds from his foreign bank accounts to various accounts outside India. It said that USD 700,000 was allegedly transferred from Khan's account in Sarasin Bank in Switzerland to the account of S K Financial Services based in the UK maintained by Barclays Bank, London through Citi Bank, New York.

The ED accused Khan of dealing in, acquiring and holding foreign exchange equivalent to Rs 36,000 crore.

On his Khashoggi links, it said," This requires intensive probe as it has a bearing on national security as well."

While taking note of accusations of Khan's links with Khashoggi and those involved in terror activities, the Supreme Court had on Tuesday asked the probe agencies to weigh the option of booking him under anti-terror law.

The Supreme Court had last week come down heavily on the ED for not being able to go after Khan and other alleged black money hoarders.