The Patiala House Court has cancelled the bail granted to businessman Sumit Khaneja in the Economic Offences Wing (EOW) case relating to the alleged cheating of former cricketers Irfan Pathan and Yusuf Pathan in connection with the “Great Palace Dehradun” real estate project. The Court held that the accused repeatedly violated settlement undertakings that formed the basis of the bail order and had thereby abused the judicial process.
The order was passed by Additional Chief Judicial Magistrate Mridul Gupta in an FIR registered by the EOW under Sections 406 and 420 IPC. According to the complaint, the accused persons induced investors to deposit large sums in the Dehradun-based real estate project by promising assured returns.
The complainant argued that bail had initially been granted in 2022 on the basis of a settlement agreement under which Khaneja undertook to repay investors. It was alleged that despite repeated assurances and a second Memorandum of Understanding (MoU) executed in July 2024, the accused failed to honour payment obligations and commitments relating to repayment schedules and sale of apartments.
The accused sought modification of the bail conditions, arguing that compliance with settlement terms could not legally be imposed as a bail condition under Section 437 CrPC, and financial difficulties arising from insolvency proceedings involving MNT Buildcon Pvt Ltd and Unitech Ltd had prevented compliance.
Rejecting the contention, the Court noted that the July 2024 bail order expressly recorded that the accused had been granted bail subject to compliance with the terms of the MoU and the complainant would be free to seek cancellation of bail in the event of breach. The Court held that the settlement was a “decisive factor” in the grant of bail and therefore could not later be treated as a mere private arrangement.
The court referred to Gajanan Dattatray Gore v. State of Maharashtra, 2025 INSC 913, where it was observed that litigants could not be permitted to obtain discretionary relief on undertakings and subsequently resile from them.
Holding that Khaneja had admittedly failed to comply with both settlement agreements and had not fulfilled commitments regarding payments and sale of apartments, the Court concluded that the accused had “misused liberty, abused the process of law, and violated a solemn undertaking given to the Court.”
Accordingly, the Court allowed the complainant’s application for cancellation of bail, cancelled the bail granted on July 22, 2024, and dismissed the accused’s plea seeking modification of bail conditions. The Court directed Khaneja to surrender before the Jail Superintendent by 4 p.m. on May 18, 2026, failing which coercive steps would be taken.
Appearances
Ld. Substitute APP for the State.
Sh. Prateek Som, Sh. Chaitanya Tripathi and Sh. Aditya Shukla, Ld. Counsels for complainant.
Sh. Satish Rai, Ld. Counsel for accused/ applicant through VC. Accused Sumit Khaneja through VC.