NEW DELHI — India's Supreme Court has granted bail to an opposition MP and leader of Delhi's governing Aam Aadmi Party (AAP) in a money laundering case.

Sanjay Singh was arrested in October in an investigation into the city's now-scrapped policies over alcohol sales.

Singh, who denies the corruption allegations, had challenged his arrest in court.

On Tuesday, the court observed that India's financial crimes agency did not recover any illegal funds from him.

"Fact of the matter is that money has not been recovered," it said and granted Singh bail.

The court, however, dismissed a second plea by Singh accusing the Enforcement Directorate (ED) of arresting him "illegally".

Singh's release comes days after his colleague and Delhi's Chief Minister Arvind Kejriwal was arrested in the same case.

The move sparked criticism from opposition parties that the government was stifling them ahead of the general elections, which are due in few weeks.

ED officials say they are investigating allegations that an alcohol sale policy implemented by the Delhi government in 2022 — which ended the government monopoly — gave undue advantages to private retailers.

Several AAP leaders have been accused of taking bribes in exchange of granting liquor licences to select businesses. Singh was the second AAP leader to be arrested after Delhi's former deputy chief minister Manish Sisodia in February 2023.

The Aam Aadmi Party (AAP) denies any wrongdoing and says the cases against its leaders are politically motivated.

Questions around financial misconduct are a sensitive matter for the AAP, which emerged from a major movement against corruption more than 10 years ago.

AAP leaders allege their party is being "targeted" by Prime Minister Narendra Modi's Bharatiya Janata Party (BJP).

Other opposition parties in the country too have accused the BJP of using federal investigation agencies "to settle political scores" — a charge it denies. — BBC