Why Delhi High Court granted bail to ‘mastermind’ of Rs 311-crore ‘LOXAM’ app money laundering fraud

‘Material gap in chain of evidence’

• Prima facie there is a material gap in the chain of evidence sought to be attributed to the applicant.
• This singular, sweeping assertion (of laundering money using 38 mule accounts) is unsupported by any fresh or independent material specifically implicating the applicant.
• It does not materially alter the complexion of the case, as it stands at this stage.
• At the stage of consideration of bail, the court is not required to conduct a mini-trial or render findings on the evidence.
• The inquiry is confined to a prima facie assessment on broad probabilities.
• The addition of 24 new FIRs, none of which name the applicant, does not strengthen the ED‟s case against grant of bail.

• The fact that the predicate offence complaint has been quashed, ensures to the benefit of the applicant.
• A careful scrutiny of the material on record, at this stage reveals several aspects that weigh in favour of the applicant seeking grant of bail.
• The applicant was neither named in the FIR registered at police station Cyber Crime, Hyderabad, nor was he arrayed as an accused or shown as absconding in the chargesheet filed in the predicate offence.
• Moreover, the said FIR has also been quashed.

‘Prima facie no case’

• There is prima facie no case against the applicant, showing his complicity, except statements of co-accused persons.
• The primary witnesses whose statements form the edifice of the ED‟s case did not name the applicant in their initial statements recorded over a period of nearly three years.
• Any property being derived or obtained directly or indirectly as a result of criminal activity which is a scheduled offence, would be termed as proceeds of crime, under PMLA.
• The material placed on record prima facie indicates that this figure (Rs 311 Crore) represents the cumulative gross transactions in certain accounts over a period of time and not the specific amount directly traceable to the scheduled offence in question.
• This figure is also a culmination of more than 200 Complaints with allegations of cyber fraud through similar as well as different modus operandi.
• Complaints were clubbed; the ED is required to prima facie demonstrate the nexus between the alleged proceeds of crime and the applicant.
• The applicant is not named in the FIRs.
• Moreover, the figure of money arrived at, is by adding the accounts of all other accused.

Custody, liberty, speedy trial

• The Delhi High Court also took into account that Arora had been in custody for several months and that the trial in such complex financial matters is likely to take considerable time.
• Reiterating the constitutional importance of personal liberty under Article 21, the court emphasised that pre-trial detention should not become punitive.

Rs 311 crore probe

• The case traces its origins to a complaint filed by one Mohammad Ghouse Pasha, who alleged that he had been duped of Rs 1.16 lakh by unknown persons operating an online investment application styled as “LOXAM”.
• The app promised unusually high returns and falsely projected itself as being linked to a reputed foreign company.
• On July 26, 2022, an FIR was registered at the Cyber Crime Police Station, Hyderabad, under Sections 419 (cheating by personation) and 420 (cheating) IPC and provisions of the IT Act.
• The Hyderabad Police later filed a chargesheet against 15 accused persons and showed 10 as absconding.
  Bhupesh Arora was neither named in the FIR nor arrayed as an accused in the chargesheet.
• However, during investigation, the authorities claimed that the cheated money was routed through payment gateways into virtual accounts linked to Xindai Technologies Private Limited, which allegedly operated multiple virtual and physical bank accounts.
• These accounts, according to the prosecution, saw pay-ins aggregating to over Rs 150 crore.
• Based on these developments, the Enforcement Directorate (ED) registered a case on October 14, 2022 under Sections 3 and 4 of the PMLA.
• ED’s case: Mastermind of money laundering syndicate
• The ED projected Arora as the “central mastermind and ultimate beneficiary” of a sophisticated laundering network.

• According to the ED chargesheet, funds collected through the LOXAM app were routed via payment gateways into virtual accounts.
• From there, money was allegedly transferred to multiple mule accounts, including Delhi-based entities such as Ranjan Moneycorp Private Limited and KDS Forex Private Limited.
• The funds were allegedly converted into foreign currency and withdrawn in cash.
• Part of the proceeds of crime (POC) was allegedly siphoned off abroad through hawala channels.
• The ED quantified the proceeds of crime routed through certain channels at approximately Rs 311 crore.
• The agency further alleged that Arora operated or controlled several companies, including Freebie Solutions Private Limited, Levelnext Ideas Private Limited, Analytiq Business Ventures Private Limited, Bestpay Solutions Private Limited, URPay Solutions Private Limited, Faithpay Systems Private Limited, and others in the names of employees or associates, while retaining actual control.
• Opposing bail, the ED described Arora as the face of the syndicate, which involves Chinese nationals who came together to cheat.

• The agency alleged that he defrauded thousands of individuals of their hard-earned money and used the money for their nefarious designs to lead a lavish lifestyle.
• The agency also argued that he posed a serious flight risk, pointing to earlier proceedings in Nagaland where he had been declared a ‘Fugitive Economic Offender‘ (FEO).
• Though that declaration was later set aside by the Gauhati High Court, the ED maintained that he had previously remained abroad and evaded arrest.

Defence: No proceeds of crime

• Senior Advocate Vikas Pahwa, appearing for Arora, mounted a multi-pronged defence.
• He argued that the applicant was not named in the FIR or chargesheet in the scheduled offence.
• No coercive action was ever taken against him by the Hyderabad Police.
• The entire predicate FIR had been quashed by the Telangana High Court on January 22, 2026.
• The ED’s case rested largely on statements of co-accused recorded under Section 50 of the PMLA.
• There was no direct material showing that any proceeds of crime were received by him.
• It was further submitted that the investigation had concluded, the prosecution complaint had already been filed, and the evidence was primarily documentary in nature.
• Continued incarceration, it was argued, would serve no investigative purpose.

‘Proceeds of crime’ must be property derived

Senior advocate Vikas Pahwa told The Indian Express, “The Delhi High Court has granted regular bail after a detailed examination of the statutory framework under Section 45 of the Prevention of Money Laundering Act. The court has reiterated that while PMLA is an independent offence, the existence of a subsisting predicate offence and demonstrable ‘proceeds of crime’ remain foundational requirements.”

He said that the high court has emphasised that ‘proceeds of crime’ must be property derived or obtained as a result of a scheduled offence, in line with the law laid down in Vijay Madanlal Choudhary.

Mere aggregation of gross banking transactions, without establishing a prima facie nexus with the alleged scheduled offence, cannot suffice at the stage of bail, he added.

The senior advocate said that the court further observed that when the predicate FIR stands quashed.

After examining the material on record on broad probabilities, without conducting a mini-trial, the high court held that the twin conditions stood satisfied and granted regular bail, he added.