Court Cites Independent Audit Report and Dilatory Trial Tactics, Emphasizes Strict Enforcement Against Financial Crimes
In a significant judgment delivered on September 16, 2026, the Allahabad High Court dismissed the bail application of Anil Mithas, a reputed builder, who stands accused of diverting Rs.126.30 crore of home buyers' funds in connection with the Aranya Project. The court, presided over by Justice Krishan Pahal, emphasized the gravity of financial crimes and the necessity for stringent enforcement, particularly under the Prevention of Money Laundering Act, 2002 (PMLA).
The case arose from an Enforcement Case Information Report (ECIR) registered on December 23, 2024, at Lucknow, based on allegations that Anil Mithas collected Rs.522.90 crore from buyers for 1,468 units but handed over possession to only 35 buyers. An independent audit by Currie and Brown India Pvt. Ltd. substantiated the prosecution's claim by revealing a diversion of Rs.107 crore from the buyers' funds. The investigation revealed that the diverted amount was routed through various financial instruments including equity investments, debentures, bonds, preference shares, and loans to associate companies.
The applicant sought bail under Sections 3 and 4 of the PMLA, arguing that the ECIR was vague and filed with ulterior motives, that he had cooperated fully with the investigation, and that no proceeds of crime were in his possession. He further submitted that many of the predicate offences underlying the PMLA case had been settled or closed for lack of evidence and highlighted his medical condition as a ground for bail.
However, the court was not persuaded by the applicant's contentions. The prosecution's case was supported by an independent audit report confirming the diversion of funds. Moreover, the court noted the applicant's history of multiple criminal cases involving fraud, breach of trust, and forgery, and observed dilatory tactics by the applicant's legal team during trial proceedings, which had delayed the framing of charges.
Justice Pahal underscored the distinct and serious nature of financial offences, noting their pervasive and damaging impact on society, which often dwarfs that of conventional crimes. He referred to Supreme Court precedents that stressed strict scrutiny in bail matters under the PMLA and the importance of applying the rigours of Section 45 of the PMLA, which imposes stringent conditions for bail in money laundering cases.
The court also highlighted that the principle of "bail is a rule and jail is an exception" must be balanced against the potential for the accused to tamper with evidence or commit further offences. Given the established diversion of Rs.126.30 crore and the applicant's failure to satisfy the twin conditions of Section 45, the court held that bail could not be granted.
The judgment directs the trial court to proceed expeditiously without granting unnecessary adjournments and clarifies that the observations made in the bail order are limited to the bail proceedings and do not prejudge the merits of the case.
This ruling reinforces the judiciary's firm stance against white-collar crimes and signals that economic offences involving large-scale financial deception will be met with uncompromising enforcement measures.
Bottom Line:
Bail application under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA), rejected due to established evidence of diversion of Rs.126.30 crores by the applicant, as substantiated by an independent audit report, coupled with dilatory tactics in trial proceedings.
Statutory provision(s):
Prevention of Money Laundering Act, 2002 Section 3, Section 4, Section 45; Criminal Procedure Code, 1973 Section 439; Constitution of India Article 22
Anil Mithas v. Directorate of Enforcement, (Allahabad) : Law Finder Doc Id # 2980653
