Guys, reason logically... if Dawood & Co. were interrogated
=> Dawood is known to have connections with many cine stars/stalwarts which would be definitely coughed up
=> His nexus with politicians (Indian/Pakistani or otherwise) would come to light
=> Numerous questions would crop up leading to a complex mass of mapped criminals
=> Definitely his harcore loyals? would disrupt the process by terror attacks (hostages!)
=> His sources of funding, from the Middle East, may also be thrown up!!!
They may ultimately work out detrimental to both Pak and India... and hence Pak/India would think of the following:
=> Try to hush the encounter and its facts, in which case this whole episode would seem only a farce
=> If the above is not possible, then to fake an elimination of D & Co., this would be to avoid US prying onto them
=> Even if the second option cannot be masked, then to permanently eliminate D & Co.
To avoid mass exposure in bureaucratic and political lines, Intelligence agencies would choose the option by which their skins would escape the torch...