Research › Search › Judgment

Telangana High Court · body

2025 DIGILAW 1575 (TS)

Kraft Alloy Private Limited v. Union of India

2025-11-20

NAGESH BHEEMAPAKA

body2025
ORDER : 1. Heard Sri Mayur Reddy, learned Senior Counsel on behalf of Sri Saini Aravind, learned counsel for petitioner, Sri D. Narender Naik, learned Standing Counsel for Enforcement Directorate and Sri S.M. Moizuddin, party-in-person. 2. Petitioner-M/s Kraft Alloy Pvt. Ltd. filed this Writ Petition seeking three reliefs against Respondent Nos. 3 and 4 viz., Deputy Director, Enforcement Directorate, Hyderabad and the Sub-Registrar, District Registrar Officer, Ranga Reddy District. They are: a) to declare the action of Respondents 2 and 3 in passing the attachment orders dated 26.08.2021 and 18.08.2022 as illegal and void in respect of petitioner’s property which was purchased under the SARFAESI Act prior to the said attachment orders; b) quash the provisional and final attachment orders dated 26.08.2021 and 18.08.2022 relating to the lands mentioned as items 22 and 23 in the list of immovable properties covered by the attachment orders and declare all correspondence sent to the Sub-Registrar, Ranga Reddy in connection with these attachment orders as non-operative and void; c) to direct the Sub-Registrar, RR District to register all deeds of sale and transaction documents relating to petitioner’s property without reference to or obstruction from the attachment orders dated 26.08.2021 and 18.08.2022. 3. The brief case of Petitioner is that: M/s Aashi Realtors and M/s Neeharika Infrastructure Pvt Ltd. were the absolute owners of the land admeasuring Acs.4.07 gts. and Acs.4.00, totally Acs. 8-07 gts, in Survey No. 78, Hafeezpet Village, Serilingampally Mandal, RR District, Hyderabad. They availed Rs. 110 crores financial facility from M/s SREI Equipment Finance Ltd. and mortgaged the property in question in their favour. Since M/s Aashi Realtors defaulted in repayment, the Creditor-M/s SREI Equipment Finance Ltd., invoked the provisions of SARFAESI Act; loan accounts were declared as Non-Performing Assets (NPA) on 16.01.2019; thereafter, the Authorized Officer under the SARFAESI Act brought the property in question to public auction on 30.12.2019. Petitioner emerged as the successful bidder. After receiving the entire sale consideration, a sale certificate dated 14.01.2020 was issued in favour of petitioner in accordance with the SARFAESI Act, thus, petitioner has become the absolute owner and lawful possessor of the property in question with effect from the said date. 3.1. Petitioner emerged as the successful bidder. After receiving the entire sale consideration, a sale certificate dated 14.01.2020 was issued in favour of petitioner in accordance with the SARFAESI Act, thus, petitioner has become the absolute owner and lawful possessor of the property in question with effect from the said date. 3.1. On issuance of Sale Certificate dated 14.01.2020, petitioner approached the Sub-Registrar concerned seeking registration of Sale Certificate, however, registration was denied on the ground that the Tahsildar stated that lands situated in Survey No. 78 of Hafeezpet are prohibited from registration under Section 22-A of the REGISTRATION ACT . Hence, petitioner filed Writ Petition No. 24348 of 2020, wherein this Court, by order dated 04.02.2021, directed the Sub-Registrar to register the documents submitted by petitioner. Since the said orders were not implemented, petitioner filed Contempt Case No. 262 of 2021. 3.2. It is stated, to circumvent the contempt proceedings, the State authorities preferred SLP No. 2844 of 2021 challenging the order of this Court dated 04.02.2021. The Hon'ble Supreme Court while admitting the SLP, had not granted any interim stay or interim suspension. Meantime, the Hon'ble Supreme Court in SLP No. 2844 of 2021 and other tagged SLPs filed by the State, by order dated 13.03.2023 granted leave and directed that the existing orders of status quo would continue to operate. Petitioner contends that no status quo was ordered in SLP and only a direction not to take coercive steps was ordered. Thereafter, on 13.03.2023, the contempt proceedings were closed with liberty to petitioner to approach the appropriate forum if grievance subsists. 3.3. It is stated, the sale certificate under the SARFAESI Act was duly issued in favour of petitioner on 14.01.2020 and on the same date, the secured creditor delivered vacant and peaceful possession of the property to petitioner along with all original title deeds, documents and keys, etcetera. In view of the settled legal position that registration of sale certificate is not required, being absolutely vested with the title and possession of the auction-purchased property, has divided the land into smaller plots of various extents. It is further stated, when petitioner approached the 4 th respondent for registration of the plots, they were informed that the 3 rd respondent forwarded the letter dated 28.09.2022, directing not to create any encumbrance or register any conveyance deed in respect of the land purchased by petitioner in the public auction. It is further stated, when petitioner approached the 4 th respondent for registration of the plots, they were informed that the 3 rd respondent forwarded the letter dated 28.09.2022, directing not to create any encumbrance or register any conveyance deed in respect of the land purchased by petitioner in the public auction. Challenging the said letter, petitioner filed Writ Petition No. 29088 of 2025. Subsequent to filing the above Writ Petition, petitioner came to know about certain attachment orders passed by the Enforcement Directorate relating to petitioner’s properties in a distinct Enforcement Case Information Report (ECIR) namely ECIR/05/HYZO/2014. It is further stated that upon enquiry, petitioner ascertained that the attachment orders pertain to a separate ECIR and are distinct and independent from the facts and ECIR involved in the Writ Petition already filed and the present Writ Petition. 3.4. Petitioner contends that the 3 rd respondent in ECIR/05/HYZO/2014 pending against M/s Aashi Realtors, the borrower of the secured creditor, passed provisional attachment order dated 26.08.2021 attaching the property which petitioner herein had purchased under a sale certificate dated 14.01.2020. The statement of Encumbrance dated 28.04.2021 obtained by the Enforcement Directorate clearly demonstrates execution of the MODT deed dated 20.12.2018 by M/s Aashi Realtors in favour of M/s SREI Equipment Finance Ltd., the secured creditor. After noticing the Encumbrance in the name of M/s SREI Equipment Finance Ltd., the 3rd respondent ought not to have passed the provisional attachment order. It is alleged that neither the secured creditor or petitioner was served with notice nor opportunity of hearing was given prior to passing the provisional attachment order, thereby violating the principles of natural justice. Based on the said provisional attachment order, petitioner came to know that the 2 nd respondent passed final attachment order dated 18.08.2022, including petitioner’s property as Item Nos. 22 and 23 in the list of immovable properties subject to attachment. Despite receiving and perusing the Statement of Encumbrance submitted by the 3rd respondent, the 2 nd respondent neither took any steps to exclude the said properties from attachment nor afforded notice or an opportunity of hearing to the secured creditor or the petitioner, but instead mechanically passed the final attachment order. 3.5. Despite receiving and perusing the Statement of Encumbrance submitted by the 3rd respondent, the 2 nd respondent neither took any steps to exclude the said properties from attachment nor afforded notice or an opportunity of hearing to the secured creditor or the petitioner, but instead mechanically passed the final attachment order. 3.5. Petitioner contends that as held by the Hon'ble Supreme Court in The Inspector General of Registration v. G. Madhurambal , 2022 Live Law (SC) 969 , a Sale Certificate does not require registration under Section 17(2)(xii) of the REGISTRATION ACT . Existence of a predicate offence is an essential and indispensable condition for continuation of any proceedings under the Prevention of Money Laundering Act, 2002. This principle extends to continuance and validity of ECIR. Without a valid underlying FIR for the scheduled offence, the very foundation upon which PMLA proceedings rest becomes untenable. In the absence of such a predicate offence or a valid FIR, the ECIR which is ancillary and dependent on the schedule offence, loses its legal sanctity and cannot be continued, is the other contention. 4. The 3rd respondent-Enforcement Directorate filed the memo stating that PAO No. 7 of 2021 dated 26.08.2021 was issued strictly in accordance with the information and material that was available on record at the relevant time. At the time of passing the said order, they had no knowledge or intimation whatsoever that properties referred to in Writ Petition had been sold or transferred to any third party under proceedings initiated by the secured creditor under the SARFAESI Act, 2002. It is further stated, no communication or disclosure was made by the borrower, the secured creditor or petitioner company regarding the alleged sale or transfer of the said properties prior to issuance of the attachment orders. The information regarding transfer of properties attached in the attachment order was not known to this respondent until filing of affidavit filed by petitioner on 10.10.2025 in this Writ Petition. The information regarding transfer of properties attached in the attachment order was not known to this respondent until filing of affidavit filed by petitioner on 10.10.2025 in this Writ Petition. It is further stated, this respondent acted bona fide and in the normal course of official duty, relying solely upon the documents, reports and records available in connection with ECIR/05/HYZO/2014 and the corresponding investigation under the Prevention of Money Laundering Act, 2002; the attachment was made in good faith in furtherance of statutory obligations and without any intent to prejudice the rights of any third party purchaser who was not known to them at that time. However, upon subsequent perusal of the affidavit and documents filed by petitioner and upon being apprised of the fact that subject properties were reportedly sold by the secured creditor in a public auction on 14.01.2020, i.e. prior to the date of attachment order dated 26.08.2021, it is stated they have no objection for release of properties mentioned in petitioner’s affidavit dated 10.10.2025 subject to verification of the authenticity of the sale certificate, conformation of payment of consideration and compliance with applicable legal procedures. 5. While things stood thus, one Mr. Sahebzada Mohammed Moizuddin S/o late Mohammed Ghouse Mohiuddin Khan, an Advocate by profession, filed I.A. No. 2 of 2025, seeking permission to come on record as Respondent No.5, on the ground that he has rights and interest in the lands in Survey No. 78, Hafeezpet Village, Balanagar Mandal, Medchal Malkajgiri District ie. lands in question. He also filed I.A. No. 3 of 2025 seeking permission to contest the writ petition in person. Writ petitioner's preliminary objection is that Mr. Sahebzada Mohammed Moizuddin S/o late Mohammed Ghouse Mohiuddin Khan has been declared as Vexatious Litigant in OSA No. 3 of 2022 and the same was upheld by the Hon'ble Supreme Court, hence he does not have any right to interfere with the present Writ Petition. However, the said Applications were ordered by this Court on 03.11.2025. 6. Be that as it may. Admittedly since M/s Aashi Realtors and M/s Neeharika Infrastructure Pvt Ltd., who have availed financial facility of Rs. 110 crores from M/s SREI Equipment Finance Ltd., defaulted in repayment of the same, the mortgaged property i.e. land in question was sold in public auction to the highest bidder i.e. petitioner and a Sale Certificate dated 14.01.2020 was issued duly confirming the sale. 110 crores from M/s SREI Equipment Finance Ltd., defaulted in repayment of the same, the mortgaged property i.e. land in question was sold in public auction to the highest bidder i.e. petitioner and a Sale Certificate dated 14.01.2020 was issued duly confirming the sale. When writ petitioner approached the 3 rd respondent for registration of Sale Certificate the same was denied, at the first instance, on the ground that lands in question are prohibited lands under Section 22-A of the REGISTRATION ACT . Against this rejection, petitioner filed Writ Petition No. 24348 of 2020 and this Court by order dated 04.02.2021, directed the registration authorities to register the Sale Certificate. Later the matter was carried to the Hon'ble Supreme Court, where no order adverse to petitioner was passed. When petitioner approached the 4th respondent for registration of Sale Certificate, it was rejected on the ground that Enforcement Directorate addressed the letter dated 28.09.2022 not to create any encumbrance or register any conveyance deed for the lands in question. Challenging the said letter, petitioner filed Writ Petition No. 29088 of 2025. Subsequent to filing the above Writ Petition, petitioner came to know about certain attachment orders passed by the Enforcement Directorate relating to petitioner’s properties in a distinct Enforcement Case Information Report (ECIR) namely ECIR/05/HYZO/2014. It is further stated that upon enquiry, petitioner ascertained that the attachment orders pertain to a separate ECIR and are distinct and independent from the facts and ECIR involved in the Writ Petition already filed and the present Writ Petition. 7. Petitioner contends that the 3rd respondent in ECIR/05/HYZO/2014 pending against M/s Aashi Realtors, the borrower of the secured creditor, passed provisional attachment order dated 26.08.2021 attaching the property which petitioner herein had purchased under a sale certificate dated 14.01.2020. The statement of Encumbrance dated 28.04.2021 obtained by the Enforcement Directorate clearly demonstrates execution of the MODT deed dated 20.12.2018 by M/s Aashi Realtors in favour of M/s SREI Equipment Finance Ltd., the secured creditor. After noticing the Encumbrance in the name of M/s SREI Equipment Finance Ltd., the 4 th respondent ought not to have passed the provisional attachment order. It is alleged that neither the secured creditor nor petitioner was served with notice or opportunity of hearing was given prior to passing the provisional attachment order, thereby violating the principles of natural justice. After noticing the Encumbrance in the name of M/s SREI Equipment Finance Ltd., the 4 th respondent ought not to have passed the provisional attachment order. It is alleged that neither the secured creditor nor petitioner was served with notice or opportunity of hearing was given prior to passing the provisional attachment order, thereby violating the principles of natural justice. Based on the said provisional attachment order, petitioner came to know that the 2 nd respondent passed final attachment order dated 18.08.2022, including their property as Item Nos. 22 and 23 in the list of immovable properties subject to attachment. Despite receiving and perusing the Statement of Encumbrance submitted by the 4 th respondent, the 3rd respondent neither took any steps to exclude the said properties from attachment nor afforded notice or an opportunity of hearing to the secured creditor or the petitioner, but instead mechanically passed the final attachment order. 7.1 Now the 3 rd respondent-Enforcement Directorate in their memo has categorically stated that it has no objection for release of the properties in question subject to verification of the authenticity of the Sale Certificate, Confirmation of payment of sale consideration and compliance with applicable legal procedures. As rightly contended by petitioner, registration of Sale Certificate is not mandatory as held by the Hon'ble Apex Court in The Inspector General of Registration v. G. Madhurambal (supra) . In any case, this proposition is not disputed in this Writ Petition. 8. In view of the unequivocal and categorical assertion of the 3 rd respondent-Enforcement Directorate in their memo that in view of the fact that subject properties were reportedly sold by the secured creditor in a public auction on 14.01.2020 i.e. prior to the date of the attachment order dated 26.08.2021, they have no objection for release of the properties mentioned in petitioner’s affidavit dated 10.10.2025, subject to verification of the authenticity of the Sale Certificate, confirmation of payment of sale consideration and compliance with applicable legal procedures and it is for petitioner to approach the 3 rd respondent with all the requisite documents. On such approach, the 3 rd respondent is directed to verify the same and if they are intact, release the properties. 9. The Writ Petition is disposed of with the above direction. No costs. 10. The miscellaneous Applications, if any shall stand closed.