MUMBAI, Aug. 29 -- A Mumbai special court on Friday granted bail to a CGST additional commissioner, a superintendent and a private person arrested in connection with an alleged Rs.40-lakh bribery case, holding that their arrests were "illegal" because the procedure prescribed by law had not been followed. The CBI, which arrested the three a day earlier, said it would challenge the bail order in a higher court. The accused are Vinay Kantheti, additional commissioner (GST), CGST Raigad; Rakesh Sinha, superintendent (GST), CGST Raigad; and private person Narinder Rajput. Kantheti is a 2009-batch Indian Revenue Service (IRS) officer. The case came to light after a complaint alleging that Sinha had demanded Rs.1.50 crore from a representative of the stone-quarrying firm to settle a departmental proceeding in the company's favour. The demand was later allegedly negotiated down to Rs.40 lakh, according to the CBI. The agency said Sinha and Kantheti arranged for the money to be collected through Rajput and directed the company representative to pay him. The CBI laid a trap on Thursday and allegedly caught Rajput accepting Rs.40 lakh. The agency then arrested Kantheti and Sinha after establishing their alleged involvement during verification of the complaint. The three arrests occurred between 7:30pm on Thursday and 5:15am on Friday. "The acceptance of the bribe amount was subsequently acknowledged by the accused superintendent of CGST, as well as the accused additional commissioner of CGST," a CBI official said. The CBI had registered an FIR on Wednesday against Sinha over the alleged demand. The case relates to a GST and royalty issue involving the stone-quarrying firm. During searches at the premises of the accused, the CBI recovered Rs.43 lakh in cash and jewellery valued at around Rs.90 lakh, officials said. While rejecting the CBI's remand application, the court questioned the manner in which the arrests were documented and carried out. The court held that the law requires the accused to be informed in writing of the grounds and reasons for arrest, and granted bail....