The Punjab and Haryana High Court on Friday officially rejected the regular bail plea of Punjab Cabinet Minister and Aam Aadmi Party leader Sanjeev Arora in connection with an ongoing investigation into a multi-crore GST fraud case. The order, delivered by Justice Kuldeep Tiwari in open court, keeps the minister in judicial custody at Bhondsi Jail, Gurugram, where he has been incarcerated since his arrest on May 9. This latest judicial development marks a significant setback for the minister, who had sought to challenge the legality of his arrest and the underlying remand proceedings initiated by the Enforcement Directorate.

The case originated from allegations involving Hampton Sky Realty Limited, a company previously led by Arora, which is under scrutiny for irregularities linked to a Rs 100-crore mobile phone export business. The Enforcement Directorate alleges that between May and October 2023, the firm facilitated the export of devices worth approximately Rs 102.50 crore to entities based in the United Arab Emirates. Authorities contend that these transactions, comprising 43 separate shipments, were embedded with fraudulent claims for GST refunds and customs duty drawbacks, a portion of which—over Rs 2 crore—was formally rejected by tax authorities in November 2024.

Scrutiny of Mobile Export Allegations

The Enforcement Directorate’s investigation suggests that the export chain involved several shell entities and dummy corporations utilized to generate fraudulent input tax credit through accommodation entries. According to the agency, these activities were designed to project the proceeds of crime as legitimate business gains. The minister, however, has consistently maintained that the export transactions conducted by Hampton Sky Realty Limited were entirely genuine and supported by a robust documentary trail.

Defense counsel argued during the proceedings that the company maintained comprehensive records including purchase invoices, e-way bills, and bank realization certificates. Furthermore, the defense pointed out that these exports had undergone standard customs examination, with the competent authorities issuing " let export orders " for the shipments. According to the petitioner, the prosecution’s case is "fundamentally flawed" as it fails to establish any causal link between the petitioner and the alleged generation of proceeds of crime . Counsel stated, "No material had been produced demonstrating that the petitioner participated in the concealment, possession, acquisition, use or projection of any alleged proceeds of crime ."

The matter gained criminal momentum in May 2025, when Hampton Sky Realty Limited itself filed a complaint against individuals including Kamal Ahmed and Azhar Haider, alleging that they had manipulated the company’s supply chain to avail input tax credit through fraudulent shell companies. The subsequent Enforcement Directorate investigation, launched via an Enforcement Case Information Report in May 2026, resulted in the provisional attachment of the company's bank accounts and properties belonging to the minister.

Procedural Challenges and Statutory Safeguards

Arora’s legal challenge against his arrest rested on claims of procedural overreach. The petitioner contended that the arrest process under the Prevention of Money Laundering Act was conducted without regard for statutory safeguards. Specifically, the defense alleged that a detailed 17-page document outlining the grounds of arrest was furnished to the petitioner merely 35 minutes after his statement was recorded, suggesting that the decision to arrest had been pre-determined.

Beyond the technicalities of the arrest, the petition emphasized the petitioner’s status as a former Rajya Sabha member and a current Cabinet Minister with significant community roots. The defense argued that the ongoing investigation is largely based on documentary evidence that is already securely within the possession of the Enforcement Directorate. Given that the seized records include all relevant digital and financial documents, the defense posited that there was no risk of the petitioner tampering with evidence or attempting to influence witnesses.

The court’s decision to deny bail follows a similar rejection by the District and Sessions Judge in Gurugram on June 15. The minister’s counsel further highlighted that at 62 years of age, the petitioner is suffering from multiple medical ailments, which should have been considered as grounds for granting relief. Despite these arguments, the High Court has maintained the judicial custody status, with the detailed written order expected to provide further clarity on the bench’s reasoning regarding the evidence presented and the necessity of continued detention.

As the legal proceedings remain ongoing, the case continues to center on whether the documented export transactions were indeed legitimate commercial activities or, as the agency alleges, a cover for laundering illicit funds. The Enforcement Directorate maintains that the complexity of the supply chain and the use of shell entities necessitates the continued presence of the accused to facilitate further investigation. With the bail plea dismissed, the petitioner remains under judicial watch while his legal team prepares for the next stage of the litigation. The resolution of this matter is expected to hinge on the court's final assessment of the documentary evidence provided by both the agency and the defense regarding the nature of the international transactions.