TaxTMI 
TaxTMI 
2023 (3) TMI 1509
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...."SBI"). 3. The challenge in the Petition is to an order of 11th August 2022 passed by the 2nd Respondent, the Deputy Director, Directorate of Enforcement, Bengaluru Zonal Office. The 1st Respondent is the Joint Director of the Directorate of Enforcement. Both are Authorities under Section 49 of the Prevention of Money Laundering Act 2002 ("PMLA"). The 2nd Respondent enjoys powers conferred under PMLA read with the Prevention of Money Laundering (Issuance of Provisional Attachment Order) Rules 2013 ("POA Rules"). The 3rd Respondent is an Assistant Director of the Directorate of Enforcement, also appointed under Section 49 of the PMLA. 4. The 11th August 2022 impugned order is a provisional attachment of assets worth Rs. 300,43,00,000/-, i.e., over Rs. 300 crores. The attachment was supposed to be in respect of 'assets' of the Mantri Group which includes two entities and one individual, (a) Castles Vista Pvt Ltd, (b) Mantri Developers and (c) Sushil Mantri. SBICAP has a beneficial interest in some assets of Castles Vista. 5. The Mantri Group, essentially through Castles Vista had undertaken a development of a project known as "Mantri Serenity" valued at over Rs. 285 crores. ....
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....galuru itself. One was brought to completion with the cooperation of the land owners and the flat purchasers who formed an association. Possession was delivered. There were similar projects in Gwalior, Solapur, a second project in Bengaluru and at least two projects in Mumbai. In every one of these cases, there were distressed buyers either for residential or commercial properties. Many of them had taken loans from banks, but without the project being completed, these purchasers were confronted with having to service the debt on their own but without any prospect of realizing the asset for which they had taken the loan in the first place. This is the kind of stressed situation that is the underlying philosophy of SWAMIH. SWAMIH steps in to ensure project completion while closely monitoring fund spending. The funding is only for project completion. No amount of funding is allowed to be diverted. Sums that are due and are collected from purchasers are held in an escrow account controlled by SWAMIH and these are also used only for construction-related expenses. The entire fund is driven by financial input from the Government of India and other public sector financial institutions incl....
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....s. These provided for cash flow mechanisms. 11. The details of these are unimportant for our purposes today. The fact is that the unsold units were mortgaged to SBICAP and the receivables were hypothecated to it. 12. Mantri Groups projects everywhere were in trouble. Some home buyers filed police complaints. The substance of these was that the Mantri Group had taken funds but did not deliver possession. There were also allegations of diversion of funds for non-project expenses, such funds having been received either through loans or from home buyers. Sections 417 and 420 of the Indian Penal Code 1860 were invoked and applied. Now these are scheduled offences under the Section 2(i)(x) and (y) of the PMLA Act. This is why the Respondents registered a case and triggered an investigation under the PMLA. 13. On 7th April 2022, the 3rd Respondent sent a letter to the Debenture Trustee asking for documents regarding credit and loans extended to Mantri Developers Pvt Ltd. There was another notice dated 11th April 2022 calling for further information. The Debenture Trustee clarified on 29th April 2022 that it had not extended a credit or a loan to Mantri Developers at all, but to C....
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....he purpose of the establishment and formation of SWAMIH, the centrally funded project meant to assist desperate home buyers. 20. We do not understand how the impugned order can say that the 'beneficial interest in the attached units might be transferred by the Mantri Group'. There is not the slightest possibility of this ever happening, because these units are all secured to the Petitioner and it is impossible for "the Mantri Group" to effect any such transfer or to transact these assets. Every sale of a flat in this project is subjected to what is called a waterfall mechanism. The funds run through the Debenture Trustee. The funds are first put towards completion of the rest of the projects and are then utilized to repay the amounts due under the debentures. There is no involvement of any Mantri Group entity in this at all and it cannot transfer any interest in the attached units. No such transfer would be recognized or valid in law. The second charge, that of Piramal, continues and is for Rs. 650 crores. Now there is a hypothecation of the receivables in favour of the Petitioner and the Piramal Group. From where this theory is derived that the Mantri Group "might" transfer an ....