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Issues: (i) Whether the Special Court's order directing restoration of attached properties to the insolvency professional on an association's application was legally sustainable; (ii) Whether a monitoring committee should be constituted to verify genuine homebuyers and maintain information concerning attached assets, and whether the insolvency professional could participate in that process; and (iii) Whether immediate liquidation or restoration of the attached assets should be directed.
Issue (i): Whether the Special Court's order directing restoration of attached properties to the insolvency professional on an association's application was legally sustainable.
Analysis: Section 8(8) of the Prevention of Money-laundering Act, 2002 permits restoration only to a claimant having a legitimate interest and a quantifiable loss. Rule 2(b) and Rule 3A of the Prevention of Money-laundering (Restoration of Property) Rules, 2016 require a qualifying claimant, framing of charge before restoration during trial, and an opportunity of hearing to the owner. The association was not itself a homebuyer, had not suffered a quantifiable loss, and could not satisfy the statutory requirements of a claimant.
Analysis: The attached assets belonged to former promoters and other persons or entities, and not to the corporate debtor undergoing insolvency proceedings. An insolvency-regulator circular and the insolvency professional's undertaking could not displace the statutory scheme under the Prevention of Money-laundering Act, 2002 or confer a role upon the insolvency professional in relation to non-corporate-debtor assets. The undertaking recorded in proceedings concerning an individual homebuyer was not an undertaking in rem for all homebuyers.
Conclusion: The Special Court's restoration order was set aside. The related interim orders founded upon that order were recalled and vacated.
Issue (ii): Whether a monitoring committee should be constituted to verify genuine homebuyers and maintain information concerning attached assets, and whether the insolvency professional could participate in that process.
Analysis: The number of affected purchasers, competing claims over attached assets, and the need for an expeditious and transparent verification process warranted an independent supervisory mechanism. The insolvency and money-laundering regimes concern distinct asset pools. The committee's work cannot interfere with the ongoing corporate insolvency resolution process, and the insolvency professional has no role before it because the attached assets are not assets of the corporate debtor.
Conclusion: A monitoring committee was constituted to verify genuine homebuyers irrespective of whether payment was made to either developer, and to maintain updated particulars, attachment status, pending challenges, and valuations of attached assets. The insolvency professional was excluded from the committee's process.
Issue (iii): Whether immediate liquidation or restoration of the attached assets should be directed.
Analysis: Restoration of attached property during trial remains governed by section 8(8) of the Prevention of Money-laundering Act, 2002 and Rule 3A of the Prevention of Money-laundering (Restoration of Property) Rules, 2016. Challenges to individual attachments and appellate remedies remained pending; the statutory scheme recognises a deemed embargo on restoration while such remedies are unresolved. Detailed directions on restitution were deferred until a comprehensive record regarding claimants and asset status becomes available.
Conclusion: No immediate liquidation or restoration of the attached properties was directed; further directions were reserved for a subsequent stage.
Final Conclusion: The statutory process for dealing with attached property is preserved, while an independent verification and asset-information mechanism is established to facilitate future consideration of relief for genuine homebuyers without affecting rights in the ongoing insolvency proceedings.
Ratio Decidendi: Restoration of attached property under the Prevention of Money-laundering Act, 2002 must conform to the statutory requirements for a qualifying claimant and the conditions prescribed for restoration during trial; an insolvency undertaking cannot substitute those requirements or extend to assets that do not belong to the corporate debtor.
PMLA Property Restoration Requires Qualifying Claimants and Separates Attached Promoter Assets from Corporate Insolvency Proceedings
Restoration of property attached under the PMLA during trial is confined to claimants with a legitimate interest and quantifiable loss, subject to framing of charge and a hearing for the owner under the Restoration of Property Rules. An association that is not itself a homebuyer and has no quantifiable loss cannot qualify; the restoration order obtained on its application was set aside. Assets of former promoters or other entities remain outside the corporate debtor's insolvency estate, and an insolvency professional's undertaking cannot alter that position. An independent monitoring committee will verify genuine homebuyers and maintain asset data, while liquidation or restoration remains deferred pending attachment challenges and available remedies.
Restoration of attached property during trial under the PMLA - Claimant status of a homebuyers' association - Distinct operation of PMLA restoration and IBC insolvency processes - Monitoring of Greenopolis homebuyer claims and attached assetsRestoration of attached property during trial under the PMLA - Claimant status of a homebuyers' association - PMLA restoration and IBC insolvency processes - Validity of the PMLA Court's restoration order made on an application by a homebuyers' association in relation to attached assets not belonging to the corporate debtor. - HELD THAT: - Restoration of attached property during trial is governed by the statutory conditions under the PMLA and the Restoration Rules. A homebuyers' association, being neither a purchaser nor a person that had itself suffered a quantifiable loss, could not qualify as a claimant with a legitimate interest in the attached properties. Restoration under the Rules could arise only after framing of charge, a stage not reached in the proceedings. The IBBI circular could apply only where assets of the corporate debtor had been attached; it could neither govern assets of former promoters and other persons nor override the PMLA scheme. The IRP consequently had no statutory role in restoration proceedings concerning such assets, and the undertaking furnished in proceedings concerning a single homebuyer could not operate in rem for all homebuyers. The previous interim directions, founded on the contrary understanding, were likewise misconceived. [Paras 117, 118, 122, 123, 124]The impugned restoration order was set aside, and the related interim orders were recalled and vacated.Monitoring of homebuyer claims and attached assets - Verification of genuine homebuyers - Non-interference with CIRP proceedings - Constitution and limited remit of a monitoring committee for verification of Greenopolis homebuyers and compilation of information concerning assets attached in the PMLA proceedings. - HELD THAT: - In view of the number of claimants and competing claims over the attached assets, a monitoring committee was required to streamline the process and provide tangible relief to victim homebuyers. The committee was directed to verify genuine homebuyers irrespective of whether payments had been made to either developer, and to maintain an updated list of attached assets, their claimed ownership, attachment status, pending challenges and valuation. The Court deferred detailed directions on restoration or liquidation, since the attachment status and competing proprietary claims required to be ascertained. The committee's work would not interfere with the CIRP, and the IRP was assigned no role in the committee's proceedings. [Paras 130, 132, 135, 136, 137]A monitoring committee was constituted with a confined verification and information-gathering remit; liquidation or other disposal of attached assets was deferred pending further directions.Final Conclusion: The impugned PMLA restoration order and the related interim orders were set aside. A monitoring committee was constituted to verify genuine homebuyers and compile information on attached assets, while liquidation was deferred and the CIRP was kept outside the committee's remit.