Justice V P Vaish, who declined the relief sought by Khaitan, however, granted him opportunity to file fresh bail application after the investigation in the case is completed.
"The application is dismissed. Respondent (ED) is directed to complete the investigation as soon as possible. After the investigation in the case is completed, the petitioner can file fresh bail application," the court said.
Khaitan, who is in judicial custody since September 23, had moved the High Court seeking bail after a trial court on October 20 dismissed his plea, saying the investigation in the case is at a "crucial stage".
On the last date of hearing, Khaitan's counsel had sought bail for him contending that influential persons, who were also accused in the case, had not yet been arrested by the Enforcement Direcorate(ED).
Khaitan was arrested by ED under Prevention of Money Laundering Act (PMLA). ED had lodged a case in July against Khaitan, former Indian Air Force Chief S P Tyagi and 19 others in the VVIP chopper deal case to probe alleged kickbacks.
Earlier, the ED and Centre had opposed Khaitan's bail plea on the ground that there was a likelihood of the businessman fleeing from justice, tampering with evidence and hampering the ongoing probe which is at a crucial stage.
ED had informed the court that there is "damning evidence against him (Khaitan). He is a kingpin".
ED had also alleged that Khaitan was "actively involved" in the illegal transactions relating to proceeds of crime and he was one of the beneficiaries of the entire deal.
The agency had said that the recent judgement of an Italian court in the case acquitting former Finmeccanica CEO Giuseppe Orsi and ex-AgustaWestland head Bruno Spagnolini of corruption charges does not have any bearing here in the probe into a money laundering matter.
The Italian court had on October 9 acquitted Orsi and Spagnolini of graft charges in the chopper deal with India. They, however, were sentenced to a two-year jail term on lesser charges of falsification of invoices.
The agency had submitted that Khaitan was one of the directors in Chandigarh-based company Aeromatrix, which was allegedly a front firm for the financial dealings in VVIP helicopters deal and he resigned from the post after the Italian police started its probe.
According to CBI and other agencies, they had detected that funds for the particular deal were allegedly routed through this firm and few others.
ED had said a reference to Khaitan was also reportedly made in Italian prosecutor's report filed in a court there. CBI had earlier questioned him in this case. ED had registered a case in this deal under PMLA, nearly a year after CBI filed its case.
ED has booked Tyagi, his family members, European nationals Carlo Gerosa, Christian Michel and Guido Haschke, six companies--UK-based AgustaWestland, Italy-based Finmeccanica and Chandigarh-based IDS Infotech and Aeromatrix and one each based in Mauritius and Tunisia, and unknown persons in its criminal complaint.
The supply of 12 VVIP helicopters from AgustaWestland came under the scanner after the Italian authorities alleged that bribe of Rs 360 crore was paid by the company to clinch the deal.
The Italian prosecutor, who carried out the preliminary inquiry, alleged the CEO of Finmeccanica, the parent company of UK-based AgustaWestland, had allegedly used the services of middlemen to bribe Indian officials.