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NOTABLE JUDGMENTS MAY 2026
1. No Absolute Right to Personal Hearing in Bank Fraud Classification: Supreme Court Clarifies
Case Title: State Bank of India v. Amit Iron Private Limited & Ors. (Click Here)
Case Number: 2026 INSC 323
Court: Supreme Court of India
Decided On: 07.04.2026
FACTS:
The respondent borrowers had availed credit facilities from banks led by State Bank of India.
Due to irregularities in repayment, their accounts were classified as Non-Performing Assets (NPAs). A forensic audit was conducted indicating suspicious transactions and diversion of funds. Based on the audit findings, the banks issued show cause notices proposing classification of the accounts as "fraud" under RBI Master Directions. The borrowers submitted written replies but contended that they were not granted a personal/oral hearing and that the forensic audit reports were not furnished to them. The borrowers challenged the fraud classification before the High Court, relying on the precedent in Rajesh Agarwal v. RBI (2023). The matter ultimately reached the Supreme Court.
ISSUES:
- Whether borrowers are entitled to a personal/oral hearing before classification of their account as fraud?
- Whether the principles of natural justice mandate such a hearing under RBI Master Directions?
- Whether banks are required to disclose forensic audit reports relied upon for fraud classification?
JUDGMENT:
The Supreme Court held that natural justice does not mandate a personal hearing in every case. It clarified that compliance with natural justice is satisfied if a show cause notice is issued, the borrower is given an opportunity to submit a written reply, and a reasoned order is passed.
The Court emphasized that the earlier judgment in Rajesh Agarwal (2023) did not lay down an absolute requirement of oral hearing. Making oral hearings mandatory in all cases would delay the process of fraud detection and affect the banking system. However, the Court ruled that if the bank relies on a forensic audit report, it must be disclosed to the borrower, as using undisclosed material would violate principles of fairness.
The Court upheld the validity of the RBI Master Directions (2024), observing that they provide an adequate procedural framework balancing fairness with administrative efficiency. The judgment reinforces that natural justice is flexible while oral hearing is not an absolute right, disclosure of all material relied upon is essential for a fair decision-making process.
2. Proof Beyond Recovery: Reaffirming Demand and Presumption under the Prevention of Corruption Act
Case Title: Dinesh Dutt v. State of Delhi (Click Here)
Case Number: 2026: DHC: 2833
Court: Delhi High Court
Decided On: 06.04.2026
FACTS:
The Appellant, a Company Commander in the Delhi Home Guards, was alleged to have demanded ₹100 as illegal gratification from the Complainant (PW3) for assigning him traffic duty. The initial demand was made on 25.10.1997, followed by repeated insistence, including a threat to mark the complainant absent if the bribe was not paid. On 28.10.1997, the complainant lodged a complaint with the Anti-Corruption Branch, leading to a trap operation.
During the trap, the complainant handed over ₹100 (treated with phenolphthalein powder) to the accused upon demand. The accused accepted the money and kept it in his shirt pocket. The raiding party apprehended the accused, recovered the tainted money, and conducted hand-wash and pocket-wash tests, both of which turned pink. The trial court convicted the accused under Sections 7 and 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. The accused appealed, contending that the money was repayment of a loan and that no demand for bribe was made.
ISSUES:
- Whether the prosecution successfully proved the demand and acceptance of illegal gratification by the accused beyond reasonable doubt?
- Whether the recovery of tainted money and phenolphthalein test were sufficient to sustain conviction?
- Whether the accused successfully rebutted the statutory presumption under Section 20 of the Prevention of Corruption Act by claiming the amount was repayment of a loan?
- Whether any inconsistencies in witness testimonies or procedural aspects created reasonable doubt in the prosecution case?
JUDGMENT:
The High Court upheld the conviction and dismissed the appeal. The testimony of PW3, corroborated by PW4 (independent witness), clearly established a prior and specific demand for ₹100. The accused's refusal to accept ₹50 further reinforced the existence of a conscious demand. Evidence showed that the accused voluntarily accepted the tainted money; recovery immediately after the signal confirmed acceptance. The positive phenolphthalein test supported the prosecution case of handling tainted currency.
Discrepancies regarding who recovered the money were held to be insignificant and did not affect the core prosecution case. The Court reaffirmed that once acceptance of money was proved, a presumption arose that it was illegal gratification, shifting the burden to the accused. The defense of "loan repayment" was unsupported by evidence a bare plausible explanation is insufficient; it must be proved. The Court found no motive for false implication and noted that individuals generally do not undergo the burden of trap proceedings without genuine grievance. Accordingly, the conviction and sentence were affirmed.
3. From Civil Claim to Criminal Conspiracy: Anticipatory Bail Refused in Property Dispute
Case Title: Dinesh Kumar v. State of Haryana (Click Here)
Case Number: 2026: PHHC: 051892
Court: Punjab and Haryana High Court
Decided On: 06.04.2026
FACTS:
The case arises out of FIR No. 370 dated 20.12.2022 registered at Police Station Ratia, District Fatehabad under Sections 420, 465, 467, 468, 471 and 120-B IPC. The complainant, Smt. Kiran Singla, alleged that the accused persons conspired to cheat her by preparing a forged agreement to sell dated 26.04.2022 in respect of her residential property, falsely recording that she had agreed to sell her house for ₹40,00,000, of which ₹15,00,000 was shown as paid in cash.
The complainant denied executing any such agreement or receiving any consideration. A forensic examination concluded that the disputed signatures did not match her genuine signatures. It was alleged that one co-accused had prior access to her documents and signatures, which were misused to fabricate the agreement. The accused allegedly used this forged document to assert rights over her property and to extract money.
The petitioners sought anticipatory bail, contending the dispute was civil in nature and a civil suit for specific performance was already pending. The State and the complainant opposed the plea, emphasizing the seriousness of allegations, the forensic report confirming forgery, and the necessity of custodial interrogation.
ISSUES:
- Whether the petitioners are entitled to anticipatory bail under Section 438 CrPC (now under BNSS, 2023)?
- Whether the dispute is purely civil in nature or involves criminal elements such as forgery and conspiracy?
- Whether custodial interrogation of the accused is necessary for effective investigation?
- Whether the gravity of the offence and available evidence justify denial of anticipatory bail?
JUDGMENT:
The High Court dismissed both anticipatory bail petitions. The allegations were found to be serious and prima facie supported by material evidence, including the forensic report confirming forgery. The role of petitioner Dinesh Kumar was found to be central as the beneficiary of the forged agreement, while the co-accused actively participated in its preparation and execution.
Rejecting the contention that the matter was purely civil, the Court observed that allegations of fabrication of documents and conspiracy give the case a clear criminal dimension. The existence of a parallel civil dispute does not bar criminal proceedings when elements of fraud and forgery are present. Custodial interrogation was held necessary to uncover the larger conspiracy and ascertain the specific roles of each accused.
Balancing individual liberty with societal interest and the need for fair investigation, the Court held that no exceptional circumstances existed to justify anticipatory bail, and granting such relief would impede the investigation. Both petitions were accordingly dismissed.
4. Cancellation of Bail under PMLA: Reaffirming the Threshold of Supervening Circumstances
Case Title: Assistant Director, Directorate of Enforcement v. Yatin Yadav (Click Here)
Case Number: 2026: JKLHC-JMU: 985
Court: High Court of Jammu and Kashmir and Ladakh
Decided On: 08.04.2026
FACTS:
The Directorate of Enforcement (ED) filed an application seeking cancellation of bail granted to the respondents, Yatin Yadav and Anil Kumar Yadav, by the Special Court under PMLA. The case arose from an ECIR dated 31.03.2023, based on a CBI FIR relating to the leakage of the J&K Services Selection Board (JKSSB) Sub-Inspector examination (27.03.2022). The respondents were allegedly involved in leaking examination papers for monetary consideration, collecting approximately ₹10 lakh per candidate, with total proceeds of crime estimated at ₹2.52 crore.
The respondents were arrested in June-July 2024 and later granted bail on 26.11.2024 by the Special PMLA Court. The ED challenged the bail on grounds that the Special Court ignored the "twin conditions" under Section 45 PMLA, undertook a mini-trial at the bail stage, and that there was a risk of tampering with evidence and influencing witnesses. The respondents contended full compliance with bail conditions and the absence of new or supervening circumstances.
ISSUES:
- Whether the bail granted to the respondents was liable to be cancelled under law?
- Whether non-compliance with Section 45 PMLA (twin conditions) justified cancellation of bail?
- Whether absence of supervening circumstances bars cancellation of bail already granted?
JUDGMENT:
The High Court dismissed the ED's application and upheld the bail. The Court emphasized that bail once granted can only be cancelled upon cogent and overwhelming circumstances such as misuse of liberty, tampering with evidence, absconding, or violation of bail conditions. None of these were established in the present case.
Cancellation of bail operates in a different legal sphere than grant of bail it requires subsequent misconduct, not merely re-evaluation of the original order. The Court held that the Special Court had considered the rigors of Section 45 PMLA and found that the prosecution failed to establish sufficient material to deny bail, noting lack of recovery from the respondents and insufficient evidence to satisfy the statutory threshold.
The High Court declined to interfere merely because another view was possible. It reaffirmed that cancellation of bail is an exceptional remedy requiring clear evidence of misuse of liberty or supervening circumstances. In the absence of such factors, even alleged procedural or legal errors in the original bail order are insufficient to justify cancellation.
5. Proof of Demand in Corruption Cases: Conviction Sustained on Circumstantial and Corroborative Evidence Despite Death of Complainant
Case Title: Hari Prasad Pandey v. The State Through CBI (Click Here)
Case Number: 2026: DHC: 3114
Court: Delhi High Court
Decided On: 16.04.2026
FACTS:
The appellant, a Section Officer in the Freedom Fighters Division, Ministry of Home Affairs, was alleged to have demanded illegal gratification from the complainant, Devesh Singh, for processing a Freedom Fighter Pension for his father. The demand was allegedly reduced to ₹2,000 as an initial payment, to be delivered on 11.07.1991. The CBI laid a trap on 11.07.1991 and ₹2,000 in tainted currency notes was allegedly handed over to the accused and recovered from his possession. Phenolphthalein tests on the accused's hands and pocket wash reportedly yielded positive results.
However, the complainant died before trial and could not be examined. The prosecution relied on the testimony of shadow witnesses, recovery witnesses, and the trap laying officer, along with scientific evidence. The trial court convicted the accused under Sections 7 and 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988. The accused appealed before the Delhi High Court.
ISSUES:
- Whether proof of demand is established beyond reasonable doubt, especially in the absence of the complainant's testimony?
- Whether recovery of tainted money and positive phenolphthalein test alone are sufficient to sustain conviction?
- Whether the presumption under Section 20 of the PC Act can be invoked without direct evidence of demand?
- Whether alleged inconsistencies in witness testimonies, lack of prior verification of complaint, and procedural irregularities render the prosecution case unreliable?
- Whether the defense claim of false implication due to forged pension documents and personal enmity raises reasonable doubt?
JUDGMENT:
The Delhi High Court dismissed the appeal and upheld the conviction. The Court held that proof of demand and acceptance can be established even in the absence of the complainant, relying on the Constitution Bench ruling in Neeraj Dutta v. State (NCT of Delhi), clarifying that demand may be proved through circumstantial and corroborative evidence.
The testimony of the shadow witness (PW2), recovery witness (PW3), and trap laying officer (PW9) consistently established demand and acceptance of bribe. Recovery of tainted currency from the accused's pocket, coupled with his conduct upon apprehension, was treated as a strong incriminating circumstance. The positive phenolphthalein test, corroborated by the CFSL report, reinforced that the accused handled the tainted money. Objections regarding fading of color in wash solutions were dismissed as a normal chemical phenomenon.
Defense arguments relating to forged pension documents, alleged enmity, and lack of prior verification were held insufficient to rebut the statutory presumption under Section 20. The Court emphasized that even if the complainant's claim were false, it does not justify acceptance of illegal gratification by a public servant. The foundational facts of demand and acceptance were proved, the statutory presumption validly arose, and the accused failed to rebut it even on a balance of probabilities. The conviction and sentence were accordingly affirmed.
6. Bail Denied in Large-Scale GST Evasion: Judicial Approach to Economic Offences
Case Title: Hansraj Gurjar v. Union of India, Through Intelligence Officer (Click Here)
Case Number: 2026: RJ-JP: 16356
Court: Rajasthan High Court at Jaipur
Decided On: 18.04.2026
FACTS:
The Petitioner filed a bail application under Section 483 BNSS. He was arrested in connection with offences under Sections 132(1)(a), (f), (h), and (l) of the CGST Act, 2017, relating to large-scale GST evasion. The prosecution alleged that the petitioner was part of a wellorganized syndicate engaged in creating fake firms and generating bogus invoices, e-way bills, and transport documents without actual supply of goods. These activities facilitated fraudulent availment and passing of Input Tax Credit (ITC), resulting in an alleged tax evasion of approximately ₹48 crores.
The investigation revealed that the petitioner, along with co-accused, operated fictitious transport entities and shell firms to simulate transactions involving marble and granite. Documentary evidence, electronic records, statements under Section 70 CGST Act, WhatsApp chats, and financial links indicated his active involvement. The petitioner argued false implication, contended the "triple test" was satisfied, and that the investigation was complete.
He had already undergone substantial custody since August 2025.
ISSUES:
- Whether the petitioner was entitled to bail considering the nature and gravity of the offence under the CGST Act?
- Whether prolonged custody and delay in trial justified grant of bail under Section 480(6) BNSS?
- Whether economic offences should be treated differently while considering bail applications?
- Whether the material on record established a prima facie case against the petitioner sufficient to deny bail?
JUDGMENT:
The Rajasthan High Court dismissed the bail application. The material collected during investigation prima facie established the petitioner's active involvement in a structured and deep-rooted conspiracy involving fake invoicing and GST evasion.
The Court held that economic offences constitute a distinct category requiring a stricter approach, as they affect the financial health of the country. The magnitude of the alleged fraud
(₹48+ crores) and the organized nature of the scheme weighed heavily against bail. Section 480(6) BNSS does not confer an absolute right to bail; it is discretionary and subject to judicial assessment of facts. Prolonged custody alone is not a sufficient ground in serious economic offences, and the petitioner's role was not distinguishable from co-accused whose bail had already been rejected.
While acknowledging the importance of personal liberty under Article 21, the Court held it must be balanced against the seriousness of the offence, societal interest, and the possibility of tampering with evidence. Accordingly, the application was dismissed.
7. 4.39 Crore Cash Deal Without Paper Trail- Delhi HC Draws the Line on Criminal Liability
Case Title: N.G. Dev v. State (NCT of Delhi) (Click Here)
Case Number: 2026: DHC: 3265
Court: Delhi High Court
Decided On: 20.04.2026
FACTS:
The Petitioner filed a criminal complaint under Sections 406/420/120B/34 IPC, alleging cheating and criminal breach of trust. He claimed that the respondent induced him between April-August 2008 to purchase a property for ₹6 crores, promising future appreciation, and persuaded him to pay a cash component of ₹4.39 crores before execution of sale documents, through multiple cash payments between November 2008 and January 2009. No Agreement to Sell or MOU was executed despite the petitioner's insistence. The respondents allegedly misappropriated the money and failed to complete the transaction.
The petitioner's application under Section 156(3) Cr.P.C. was dismissed. After pre-summoning evidence, the Chief Metropolitan Magistrate (CMM) dismissed the complaint citing lack of proof of payment and transaction. The Additional Sessions Judge (ASJ) upheld the dismissal noting improbabilities and lack of evidence. The Petitioner then filed the present petition under Section 482 Cr.P.C. before the Delhi High Court.
ISSUES:
- Whether the petition under Section 482 Cr.P.C. is maintainable, or amounts to a second revision petition?
- Whether a prima facie case of cheating and criminal breach of trust is made out against the Respondents?
- Whether the dismissal of the complaint by the CMM and ASJ suffers from illegality or perversity warranting interference?
JUDGMENT:
The Court held that the petition was in the nature of a second revision, which is not permissible. Section 482 Cr.P.C. cannot be used merely to re-appreciate evidence or correct alleged errors unless there is abuse of process or miscarriage of justice.
The Court agreed with the findings of the lower courts, highlighting several key deficiencies: no documentary evidence of any agreement to sell or property transaction; payments of over ₹4 crores in cash without documentation were inherently improbable; the respondents were not the owners of the property, and the actual owner was not involved; no proof of source of funds or legitimate withdrawal of money from companies existed; and the receipts relied upon were on plain paper, contained inconsistencies, and were not clearly linked to the alleged transaction. The Court emphasized that financial transactions must be supported by cogent evidence, even where trust exists. Finding no illegality or perversity in the concurrent findings of the CMM and ASJ, and noting the petition was merely an attempt at re-appreciation of evidence, the petition was dismissed.
8. Limits of Provisional Attachment under PMLA: The Necessity of Nexus and Scheduled Offence
Case Title: Ranu Sahu v. Deputy Director, Directorate of Enforcement (Click Here)
Case Number: MA No. 26 of 2026
Court: Chhattisgarh High Court
Decided On: 22.04.2026
FACTS:
The appeals were filed under Section 42 PMLA challenging a common order of the Appellate Tribunal affirming confirmation of a Provisional Attachment Order (PAO). The Enforcement Directorate (ED) initiated proceedings based on FIR No. 129/2022 registered in Bengaluru concerning alleged obstruction of Income Tax officials, and later expanded to include criminal conspiracy and extortion. Based on this FIR, an ECIR was registered by the ED alleging a large-scale coal levy/extortion scam in Chhattisgarh involving illegal collection of ₹25 per ton of coal.
Ranu Sahu, an IAS officer, was not named in the FIR or initial prosecution complaints but was later implicated on allegations of facilitating the scheme while serving as District Collector, and accused of receiving ₹5.52 crore as illegal gratification. The ED relied primarily on handwritten diary entries by a co-accused, WhatsApp chats, and alleged disproportionate assets. Properties worth approximately ₹5.52 crore belonging to the appellant and her relatives were provisionally attached under Section 5 PMLA, later confirmed by the Adjudicating Authority and the Appellate Tribunal.
ISSUES:
- Whether existence of a scheduled offence is a sine qua non for initiating proceedings under PMLA?
- Whether the Provisional Attachment Order and its confirmation were valid in absence of a subsisting scheduled offence?
- Whether there was a demonstrable nexus between the alleged proceeds of crime and the attached properties?
- Whether reliance on diary entries, presumptions, and uncorroborated material satisfies the threshold under PMLA?
- Whether the orders of the Adjudicating Authority and Appellate Tribunal were vitiated for being mechanical and non-reasoned?
JUDGMENT:
The High Court allowed the appeals and set aside the impugned orders. The Court reaffirmed that existence of a scheduled offence is a sine qua non for PMLA proceedings. In the present case, the charge sheet was ultimately filed only under Sections 204 and 353 IPC, which are not scheduled offences, thereby undermining the very basis of invoking PMLA.
The ED failed to establish a clear link between the alleged proceeds of crime and attached properties. The properties were purchased prior to the alleged generation of proceeds of crime; the timeline of alleged bribe receipts and property acquisitions was inconsistent; and there was no direct evidence connecting the appellant to the alleged funds. The Court rejected reliance on handwritten diary entries, generic WhatsApp chats (no financial linkage), and presumptions regarding cash transactions, holding that such material does not meet the evidentiary threshold under PMLA. Both the Adjudicating Authority and Appellate Tribunal had passed templated, non-speaking orders and failed to consider the appellants' submissions, rendering their orders legally unsustainable. The Court further held that attachment under Section 5 PMLA requires reasonable belief based on material evidence, and in the absence of valid linkage, attachment is arbitrary. PMLA cannot operate on conjectures.
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