On 16 September 2026, Justice Krishan Pahal of the Allahabad High Court rejected a bail application by a real-estate promoter in a money-laundering case registered by the ED in Lucknow in December 2024 (2026 LiveLaw (AB) 717). The ED alleged that about Rs 522.90 crore was collected from homebuyers for 1,468 units, that possession was given to only 35 buyers, and that Rs 126.30 crore was diverted to associate companies through equity, debentures, preference shares and loans.
What was decided
The applicant argued that the amounts were promoter contributions, inter-corporate loans and deposits, and that the company had spent more than it collected and fallen into financial distress. The Court held that, at the bail stage, an independent audit report supported the diversion of Rs 126.30 crore, and that it was not a fit case for bail.
The Court noted that the applicant’s counsel had been absent on several trial dates and had delayed the trial. It directed the trial court to decide the case quickly, without unnecessary adjournments. It said white-collar crime has become “too pervasive and too costly” to be met with anything less than firm enforcement, and that its observations were limited to bail and would not affect the trial.
Why it matters
This order sits alongside recent Supreme Court bail orders that emphasise long custody. It shows that where an independent audit supports diversion of homebuyer funds, the High Court may give that more weight than time in custody. Delay caused by the defence also counts against the accused when the court weighs the right to a speedy trial.
For promoters and directors of real-estate companies in Lucknow, Noida, Greater Noida and the Yamuna Expressway area, the audit trail of buyer collections, RERA escrow accounts and transfers to group entities is likely to decide both the ED case and any bail plea.
Practical points
- Have a forensic review of fund flows done early, so the defence does not rely on the prosecution’s audit alone.
- Document the commercial reasons for inter-corporate loans and investments in group entities when they are made.
- Make sure counsel is present on trial dates. Adjournments sought by the defence weaken a later argument for bail on grounds of delay.
- Keep RERA account withdrawals and certificates in order. They are often read together with ED allegations.
Sources: LiveLaw, 17 Sep 2026.
For a confidential discussion on ED/PMLA matters, see ED and PMLA Defence.
General legal information only; not legal advice or solicitation.
