Court Upholds Rigorous Bail Conditions Under PMLA, 2002, Citing Prima Facie Evidence of Fictitious Exports, Fraudulent IGST Refunds, and Round-Tripping of Funds
In a significant judgment dated October 16, 2026, the Punjab and Haryana High Court, presided over by Justice Kuldeep Tiwari, dismissed the regular bail petition of Sanjeev Arora, the erstwhile Chairman and Managing Director of M/s Hampton Sky Realty Limited (HSRL). The petitioner faced allegations of orchestrating a large-scale trade-based money laundering scheme involving fictitious domestic supply chains, fake export transactions of mobile phones, fraudulent claims of Integrated Goods and Services Tax (IGST) refunds and duty drawbacks, and complex round-tripping of funds amounting to approximately Rs. 157.12 crores during the financial year 2023-24.
The Enforcement Directorate (ED) had registered the Enforcement Case Information Report (ECIR) No. HIU-I/14/2026 on May 5, 2026, following a predicate First Information Report (FIR) No. 137 dated April 18, 2026, filed at the Udyog Vihar Police Station, Gurugram, under various provisions of the Bharatiya Nyaya Sanhita, 2023 (BNS). The FIR was based on findings from a search and seizure operation conducted under the Foreign Exchange Management Act, 1999 (FEMA), and Income Tax Act, 1961. The investigation revealed that HSRL, a real estate company, had unlawfully ventured into the mobile phone export business without requisite corporate authority, fabricating transactions to launder proceeds of crime.
The Court meticulously examined evidence including GST data, banking transactions, statements of proprietors of supplier entities, and analysis of International Mobile Equipment Identity (IMEI) numbers. Findings revealed that multiple supplier entities were shell or dummy firms issuing bogus invoices without actual goods movement. IMEI analysis showed that many mobile phones allegedly exported had been previously sold and activated in India, some even declared exported multiple times, indicating gross manipulation.
Rejecting the petitioner's contention that the issuance of Let Export Orders (LEO) by Customs and partial relief granted by the GST appellate authorities proved the genuineness of exports, the Court held that such orders were based on incomplete records and did not exonerate the accused. The Court also refuted the claim that arrest was unlawful due to lack of prior summons under Section 50 of the Prevention of Money Laundering Act (PMLA), 2002, clarifying that summons and arrest powers are distinct and the arrest complied with statutory safeguards under Section 19 of the PMLA and Article 22(1) of the Constitution.
Highlighting the mandatory twin conditions for bail under Section 45 of the PMLA, which require the Court to be satisfied that there are reasonable grounds for believing the accused is not guilty and not likely to commit an offence while on bail, the Court noted that these conditions apply even before constitutional courts. The petitioner failed to satisfy this stringent test given the prima facie evidence against him.
The Court observed that the petitioner was intricately involved in the scheme, controlling the company's bank accounts, sanctioning transactions, and benefiting from illicit gains, including Rs. 15.63 crores in fraudulent IGST refunds and Rs. 48.53 lakhs in duty drawbacks. It also noted the ongoing trial and pending examination of numerous witnesses, emphasizing that the observations made were only for bail consideration and would not influence the trial.
Medical grounds for bail were also rejected as the petitioner's health condition was stable with no urgent intervention required, consistent with the Supreme Court's prior directions for medical treatment.
The judgment underscores the judiciary's firm stance against economic offences involving trade-based money laundering, emphasizing that bail is an exception and must comply with statutory safeguards to uphold the objectives of the PMLA, 2002.
Bottom Line:
Prevention of Money Laundering Act, 2002 - Regular bail - Twin conditions under Section 45 apply even to constitutional courts - Bail declined where material prima facie disclosed trade-based money laundering through fake domestic supply chain, fictitious exports of mobile phones, fraudulent IGST refund/duty drawback claims and round-tripping of funds - Issuance of summons under Section 50 is not a precondition for arrest under Section 19 - Let Export Order and partial GST appellate relief do not by themselves establish genuineness of exports.
Statutory provision(s):
Prevention of Money Laundering Act, 2002 Sections 3, 19, 24, 45, 66; Bharatiya Nagarik Suraksha Sanhita, 2023 Section 483; Bharatiya Nyaya Sanhita, 2023 Sections 238(a), 316(2), 318(4), 336(3), 338, 340, 61; Foreign Exchange Management Act, 1999 Section 37; Income Tax Act, 1961 Section 132
Sanjeev Arora v. Directorate of Enforcement, (Punjab And Haryana) : Law Finder Doc Id # 2998841
