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2023 DIGILAW 503 (UTT)

Gaurav Soni v. Directorate of Enforcement through its Director

2023-09-04

RAVINDRA MAITHANI

body2023
JUDGMENT : (Ravindra Maithani, J.) : By means of this petition, the petitioners seek the following reliefs:- “I. Issue a writ in the nature of mandamus directing respondent no.1 to remove the attachment of Orchid Park. II. Direct the respondent no.2 to proceed with and expedite the proceedings under Section 8 of RERA with respect to Orchid Park in a time-bound manner. III. Award the cost of the present writ petition to the petitioners. IV. Pass a suitable writ, order or direction in favour of petitioners and against the respondents which the Hon’ble Court may deem fit and proper in the facts and circumstances of the present case.” 2. Heard learned counsel for the parties and perused the record. 3. The petitioners are buyer of flats under a project called “Orchid Park”. They booked the flats and paid the money, but they were not given the flats. The respondent no.3 i.e. Pushpanjali Realms and Infratech Ltd. (“the Developers”) is the developers of the flats. The petitioners filed a complaint before the Real Estate Regulatory Authority (“the RERA”) against the developers. These proceedings are pending. The respondent no.7, the Bank proceeded against the developers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (“the SARFAESI Act”) and issued the auction notice. The petitioners along with some other buyers moved an application for stay of the auction. The respondent no.2, the RERA passed an order in favour of the petitioners pursuant to which respondent no.7, the bank cancelled the auction. One of the buyers had filed an FIR against the developers. On the basis of the FIR lodged against the developers, the respondent no.1, the Enforcement Directorate took cognizance of the matter and initiated the investigation under the provision of the Prevention of the Money Laundering Act, 2002 (“the PMLA Act”). On 29.03.2022, a provisional attachment order was passed. 4. According to the petitioners, the attachment of Orchid Park by the Enforcement Directorate has caused even greater prejudice to the allottees as it is the effectively the only assets available to the allottees for recovery of their hard earned money. It appears that the petitioners made a representation to respondent no.1, the Enforcement Directorate, which according to the petitioners was not considered by the respondent no.1. 5. It appears that the petitioners made a representation to respondent no.1, the Enforcement Directorate, which according to the petitioners was not considered by the respondent no.1. 5. It is the case of the petitioners that respondent no.1, the Enforcement Directorate has incorrectly attached the project site of the Orchid Park as the project site was not acquired by “the proceeds of crime”, as contemplated under Section 5 of the PMLA Act. 6. Learned counsel for the petitioners would submit that the proceedings under Section 8 of the Real Estate (Regulation and Development) Act, 2016 (“the RERA Act”) are still pending before the RERA, which have yet not been concluded. During this proceeding, respondent no.1, Enforcement Directorate has proceeded under the provisions of PMLA Act and provisionally attached the property, which has been confirmed. It is stated that the respondent no.7, the Bank has already challenged the attachment confirmation order under Section 26 of the PMLA Act before the Appellate Authority. It is argued that the petitioners may not approach the Authority. The respondent no.2 the RERA is not proceeding in the matter because the property has already been attached under the provision of PMLA Act. Therefore, it is argued that the intervention of the Court is required. 7. On the other hand, learned counsel appearing for the respondent no.1, the Enforcement Directorate would submit that the complaint under the provision of the PMLA Act is to be filed against the developers. At this stage, the petitioners may very well approach the Special Court challenging the attachment order. He would also submit that the order of confirming the provisional attachment has already been challenged by the respondent no.7, the Bank before the Appellate Authority under Section 26 of the PMLA Act, which is also pending. 8. Learned counsel appearing for respondent no.2, the RERA would submit that, in fact, the developers have also challenged the order confirming the attachment. Learned counsel for the respondent no.2, the RERA would submit that the proceedings have not been stayed by the RERA. The proceedings are still continue. 9. Even this fact was brought to the notice of the respondent no.2, the RERA that during the course of its hearing, the respondent no.1, the Enforcement Directorate has provisionally attached the property. In its hearing on 02.05.2023, the respondent no.2, the RERA had issued following directions:- “8. The proceedings are still continue. 9. Even this fact was brought to the notice of the respondent no.2, the RERA that during the course of its hearing, the respondent no.1, the Enforcement Directorate has provisionally attached the property. In its hearing on 02.05.2023, the respondent no.2, the RERA had issued following directions:- “8. The Authority, therefore, decided to issue following directions before proceeding further:- i) ED is directed to comply the order dated 02.02.23, and also submit on an affidavit the basis of arriving the POC amount, and attaching the entire project land and building (incomplete towers) of project Orchid Park, wherein the allottees, including the complainant, have already paid substantial amount to the respondent company or its directors. ii) The respondent company and its directors are directed to comply the order dated 05.04.2023 and submit with an affidavit a copy of application filed by them before the Appellate Tribunal, PMLA challenging the attachment order, and certified copies of interim order/final order passed, if any. iii) PNB is directed to submit a copy of an appeal filed by them before the Appellate Tribunal, PMLA. iv) Mr. Rajpal Walia is directed to submit his response, on an affidavit, before next date, to the conditional consent letter of the complainants, and other allottees, in respect of his proposal for getting the left-out work of project ‘Orchid Park’ completed by developer Queenstown Reality Projects LLP based on an MoU executed on 30.12.2020 between Sri Rajpal Walia and Queenstown Reality Projects LLP. v) The allottees, including the complainants, are directed to submit a detailed Scheme to the Authority within a period of two months, taking into consideration the view of Authority, as at para 7 above. vi) The respondent company and its directors are directed to appear in person or through their authorized representative /advocate on the next date to present their case before the Authority. The case be listed for hearing on 13.06.2023.” 10. On 13.06.2023, when the matter was taken up, the respondent no.1 the Enforcement Directorate submitted its affidavit, thereafter, the respondent no.2 the RERA passed the following order: “2. ED has submitted an affidavit dated 12.06.2023 in compliance of the order dated 02.05.2023 vide which they were directed to comply the order dated 02.02.2023, and also submit on an affidavit the basis of arriving the POC amount and attaching the entire project land and buildings of project “Orchid Park”. ED has submitted an affidavit dated 12.06.2023 in compliance of the order dated 02.05.2023 vide which they were directed to comply the order dated 02.02.2023, and also submit on an affidavit the basis of arriving the POC amount and attaching the entire project land and buildings of project “Orchid Park”. In their affidavit, the E.D. has stated that as the Directorate of Enforcement is in the process of filing Prosecution Complaint before the Special Court PMLA, Dehradun, the applicant by following the due process of law can file the application before the court for release of property. Further, the application filed by the applicant before this Authority is not tenable. It is further stated that the applicant if thinks that the said confirmation order is not valid can file the appeal before the appropriate forum, instead of filing it before this Regulatory Authority. 3. Shri Rajpal Walia has filed an affidavit dated 05.05.2023 stating therein that the Deponent has challenged the order of attachment by E.D. and has annexed a copy of the appeal filed before the Appellate Tribunal under Section 26 of the Prevention of Money Laundering Act, 2002 against order in Original Complaint No.1690 of 2022 dated 23.09.2022 passed by the Adjudicating Authority at New Delhi. Shri Rajpal Walia in his affidavit has also stated that as far as the state of company is concerned since there has not been any functioning and meeting since last some year, the deponent is not aware of it and the same can be obtained from the R.O.C. 4. Punjab National Bank has submitted a copy of appeal filed by them before the Appellate Tribunal under Section 26 of PMLA, 2002 against the order dated 23.09.2022 passed by Adjudicating Authority in O.C. No.1690/2022 whereby provisional attachment order No.02/2022 dated 29.03.2022 issued by Enforcement Directorate (E.D.) was confirmed under the provisions of PMLA, 2002. 5. Shri Rajpal Walia has not complied the order dated 02.05.2023 whereby he was directed to submit his response, on an affidavit, to the conditional consent letter of complainants and other allottees, in respect of his proposal for getting the left-out work of project ‘Orchid Park’ completed by developer Queenstown Realty Projects LLP, based on an MoU executed on 30.12.2020 between Sri Rajpal Walia and Queenstown Reality Projects LLP. 6. 6. The Authority, therefore, decided to issue following directions before proceeding further in the matter:- (i) Shri Rajpal Walia is again directed to submit his response, on an affidavit before the next date of hearing, to the conditional consent letter of the complainants and other allottees, in respect of his proposal for getting the left-out work of project ‘Orchid Park’ completed by developer Queenstown Realty Projects LLP, as directed earlier vide order dated 02.05.2023. (ii) The allottees, including the complainants are directed to submit a detailed Scheme to the Authority within a period of two months, taking into consideration the view of Authority, as at para 7 of the order dated 02.05.2023. (iii) The respondent company and its directors are directed to appear in person or through their authorized representative/advocate on the next date of hearing to present their case before the Authority. Notices be issued to them accordingly, through Registered post with AD and E-mail. The case be listed for hearing on 18.07.2023.” 11. It is abundantly clear that the order confirming provisional attachment is still pending adjudication under Section 26 of the PMLA Act. It has been challenged by the respondent no.7, the Bank as well as by respondent no.3, the developers. 12. Admittedly, the petitioners have yet not been given any possession of the property, that has been attached by the respondent no.1, Enforcement Directorate. Whether the property has been lawfully attached or not? Whether the property has been acquired by the proceeds of crime or not? This may not be decided in this petition at this stage, particularly, when two appeals – one by the respondent no.7, the Bank and another by respondent no.3, the developers are pending under Section 26 of the PMLA Act, which may find adjudication at that stage. 13. Learned counsel for the petitioners would submit that the petitioners have a legitimate expectation that the project may be completed and they may be given the flats as booked by them and for which they had paid entire consideration. This may not be denied. 14. Undoubtedly, if the facts are stated by the petitioners are true, they are in distress, agonized and must be feeling betrayed by the action of the developers. It is also clear that the petitioners, who are homebuyers are not concerned as to what proceedings are being taken against the developers. This may not be denied. 14. Undoubtedly, if the facts are stated by the petitioners are true, they are in distress, agonized and must be feeling betrayed by the action of the developers. It is also clear that the petitioners, who are homebuyers are not concerned as to what proceedings are being taken against the developers. What they are essentially interested is that they are not given the property which they had booked and for which they have paid. But then there are procedures that need to be followed. Merely on the assertions of the petitioners, it cannot be said that the property that has been attached by the respondent no.1, the Enforcement Directorate is not an outcome of the proceeds of crime. As stated, appeals under Section 26 of the PMLA Act are still pending. The complaint made by the petitioners before the respondent no.2, the RERA is still pending consideration. 15. A perusal of the proceedings of respondent no.2, the RERA, reveals that, in fact, the regulatory authorities has considered the interest of the Bank vis-a-vis allottees qua action of respondent no.1, the Enforcement Directorate. In its order-sheet dated 02.05.2023, it has been detailed extensively. 16. In a situation when an order confirming the attachment is pending adjudication before statutory authority under Section 26 of the PMLA Act, this Court refrains to adjudicate on the action of the respondent no.1, the Enforcement Directorate in attaching the project site of “Orchid Park”. The petitioners may at the most, if so advised, approach the authority making their claim, if any, or they may approach the Special Court under the PMLA Act challenging the action of the respondent no.1, the Enforcement Directorate. This is so because a statement is given by the learned counsel for the respondent no.1, the Enforcement Directorate that the complaint is to be filed in this month before the Special Court. 17. Having considered the entirety of facts, this Court is of the view that at this stage, no interference is warranted. Accordingly, the writ petition deserves to be dismissed at the stage of admission itself. 18. The writ petition is dismissed in limine.