“Mere quashing of an FIR, by a compromise per se, will not obliterate the existence of the proceeds of crime,” the Supreme Court has held in a money laundering case in which the Enforcement Directorate alleges more than Rs 2,000 crore was laundered through fake investment apps. Bhupesh Arora’s bail stands cancelled and Rohit Vij’s has been refused.
New Delhi: In a money laundering case under the Prevention of Money Laundering Act, the Supreme Court has set aside the Delhi High Court’s bail order in favour of Bhupesh Arora and refused bail to co-accused Rohit Vij, finding that the High Court erred in leaning on the quashing of an FIR by compromise [Directorate of Enforcement v. Bhupesh Arora].
By an order dated September 29, 2026, a Bench of Justices M.M. Sundresh and Prasanna B. Varale allowed the Enforcement Directorate’s appeal against Arora, SLP (Crl.) No. 13532/2026, and dismissed Vij’s appeal, SLP (Crl.) No. 16623/2026. The allegations in the case are the Directorate’s, they are untested, the Court has recorded no finding of guilt, and both men are presumed innocent.
The Bench’s reasoning
Several other FIRs exist, the Bench pointed out, so the High Court was wrong to settle factual questions on the strength of the FIR quashing. On the effect of the compromise, it said:
“Mere quashing of an FIR, by a compromise per se, will not obliterate the existence of the proceeds of crime.”
Further investigation is required, the Court found, noting that the extent of the alleged laundering is likely to span the country, and the High Court ought not to have granted bail to Arora, who entered India while a Red Corner Notice was in force. Declining bail to Vij, it held:
“the rigour of Section 45 of the PMLA has to be pressed into service for both the accused persons.”
Five months to investigate, two weeks to surrender
The Directorate is expected to complete its investigation within five months of receiving the order, after which both accused may seek regular bail before the Special Court. Arora has two weeks to surrender. Until then he must keep the Directorate informed of his location at all times, cannot be arrested before that period ends and must not leave the country. Pending applications stand disposed of.
The case the Directorate describes
The case arises from ECIR/HYZO/46/2022, registered by the Directorate on October 14, 2022 under the PMLA. As the Directorate describes it, members of the public allegedly invested through an app called LOXAM in the belief that it belonged to a French multinational, and the money allegedly moved through a chain of entities and shell companies into mule and physical bank accounts. Vij is alleged to have converted funds into US dollars and UAE dirhams for a commission of 0.3 to 0.7 per cent, and his companies are alleged to have withdrawn about Rs 75 crore in cash, which was allegedly sent to Dubai and China through hawala and cryptocurrency.
The prosecution complaint puts the amount involved at more than Rs 2,000 crore, and the Directorate contends the actual proceeds could be higher.
From the High Court to the Supreme Court
In BA No. 4035/2025, the Delhi High Court granted bail to Arora on February 23, 2026, weighing the quashing by compromise of an FIR in the matter. Vij’s bail plea was rejected by the High Court. The Directorate appealed against Arora’s bail, and Vij challenged the refusal of his.
Section 45 of the PMLA lays down stringent conditions for bail, requiring the court to be satisfied on reasonable grounds that the accused is not guilty and is unlikely to commit an offence while on bail. Under the Act, the offence of money laundering turns on the existence of proceeds of crime derived from a scheduled offence, which is why the effect of quashing a predicate FIR on the PMLA case was the central question here.
Why the order matters
A PMLA case does not rise or fall with a single predicate FIR, the order reminds courts. Where other FIRs exist and the alleged proceeds of crime remain, a compromise in one criminal case does not by itself remove the foundation of the money laundering case.
It also signals that bail courts must apply the Section 45 conditions with rigour in large multi-State laundering cases, and that a five-month outer limit now applies to the Directorate’s further investigation here. The Court has expressed no view on the final merits of the case.
Case Title: Directorate of Enforcement v. Bhupesh Arora [SLP (Crl.) No. 13532/2026, with SLP (Crl.) No. 16623/2026]
Bench: Justice M.M. Sundresh and Justice Prasanna B. Varale, Supreme Court of India
Date of Order: September 29, 2026