TaxTMI 
TaxTMI 
2024 (11) TMI 1570
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....l Complaint No.2316 of 2024 dated 22nd May, 2024 filed by Respondent No. 1 before the Adjudicating Authority under Section 5(5) of The Prevention of Money-Laundering Act, 2002 ("PMLA, 2002"); the show-cause notice dated 27th May, 2024 issued by Respondent No.2 pursuant to the aforesaid complaint filed by Respondent No. 1; and the Order dated 16th October, 2024 passed by Respondent No.2 confirming the Provisional Attachment Order dated 25th April, 2024. The Provisional Attachment Order was levied on the following properties:- Sr.No. Name of the owner/Company Property Address 1 M/s. V-Hotels Ltd. (formerly known as M/s. Tulip Hospitality Services Ltd.) 1. Parcel of land together with building and structure including hotel structures made thereon situated at CTS-561/5 fore-shore S.No.69/112-T.S.No.859/1 to 21 at V Hotel Juhu Beach, Juhu Tara Road, Vile Parle (West), Mumbai. 2. Unit Bearing no. J-203 admeasuring 570 sq.ft. Carpet at Sunder Jamnotri CHS Ltd. 'J' Sunder Nagar, S.V. Road, Malad (W), Mumbai. 3. Unit Bearing no. J-506 admeasuring 570 sq.ft. Carpet at Sunder Jamnotri CHS Ltd. 'J' Sunder Nagar, S.V. Road, Malad (W), Mumbai. 4. Unit Bearing no. J-603....
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....rty of the corporate debtor in relation to an offense committed prior to the commencement of the CIRP, where such property is covered under the approved resolution plan, and which results in a change in control of the corporate debtor to a third party who is not disqualified under the parameters of Section 32A. The Learned Senior Counsels thereafter brought to our attention the explanation under sub-section (2) of Section 32A and submitted that the said explanation clarifies that an action against the property of the corporate debtor in relation to an offense shall include attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor. It is on the basis of these provisions that Mr. Dwarkadas as well as Mr. Ardeshir contend that even assuming for the sake of argument that the attachment was levied prior to the approval of the resolution plan, the attachment has to be lifted. It was of course also the argument of the Petitioner that the date of the Provisional Attachment Order is actually back-dated and has been passed only once the successful resolution plan was widely publicized on 28th April 2024. Mr. Dwarkadas was at p....
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....g on behalf of Respondent No. 1 relied upon the decision of the Hon'ble Supreme Court in the State Bank of Travancore & Anr. Vs. Mathew K.C. 2018 (3) SCC) 85. 7. Apart from the above preliminary objection, the argument canvassed on behalf of Respondent No. 1 is that the attachment levied on the properties mentioned in the provisional attachment order does not in any way hinder the Petitioner's restructuring efforts. The resolution plan approved by the NCLT and upheld all the way up to the Supreme Court can proceed without transferring ownership of the attached properties until the allegations of money laundering are adjudicated. It was further submitted that the actions of the Directorate of Enforcement (Respondent No. 1) aim at ensuring financial accountability and preventing misuse of the insolvency process to evade scrutiny for financial misconduct. Allowing the Petitioner to retain the proceeds of crime under the guise of a 'clean slate' would set a dangerous precedent and compromise public interest. For all these reasons, the Learned Counsel appearing on behalf of Respondent No. 1 submitted that there was no merit in the above Writ Petition and the same ought to be dismisse....
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.... of party-wise unsecured and secured interest expenses claimed by M/s V-Hotels Ltd in Income Tax Returns since AY 2004-05 to till date. (vi) The certified copy of statutory Audit Reports of V-Hotels Ltd for the year from 2003-04 to 2022-23. (vii) details of investments made by V Hotels Limited and its ultimate beneficial owners. (viii) Shareholding pattern of V Hotels Ltd. (ix) Copy of forensic audit report of Cox & Kings Group companies which was prepared by Mr. Paras Agarwal. (x) Details of bank accounts including A/c no., bank statements (ledger) for the period from FY 2003-04 to 2022-23 of V Hotels Ltd. Yours sincerely, (Pawan Kumar) Encl:-As above Assistant Director 9. This letter was replied to by the resolution professional by three separate e-mails. These emails can be found at Page No. 181 of the paper-book. The first email is dated 25th April 2024 and sent at 4.21 p.m. This email apparently bounced because the attachments to the said email were too voluminous. Accordingly, the fact that the said email had bounced was informed to the Enforcement Directorate by another email of 25th April 2024 sen....
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....e sake of convenience the relevant portion of Para 6.2 of the affidavit in reply reads as under:- "6.2. With regards to Para B-E it is submitted that in the instant matter, the resolution plan was approved on 26.04.2024 and the attachment under the provisions of PMLA was issued on 25.04.2024 when there was no resolution plan approved by the NCLT. Hence there is no doubt that the Enforcement Directorate was empowered by the law to attach the properties of the defendant " 11. To get over this problem, the Learned Counsel appearing on behalf of Respondent No. 1 brought to our attention, Paragraph 4 of the affidavit, which states that what has not been specifically admitted in the affidavit may kindly be deemed to have been traversed and denied. We are afraid that when such serious allegations are made in the Petition, they have to be specifically dealt with, and a party cannot be allowed to rely upon such vague statements for the purposes of denial. Be that as it may, we have only set out all these facts to merely opine that there is a serious doubt whether the Provisional Attachment Order dated 25th April 2024 was in fact passed on the said date or was passed subsequently....
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....or such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not-- (i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (ii) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court. Explanation.--For the purposes of this sub-section, it is hereby clarified that,-- ....
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....s who the investigating authority has reason to believe, based on material, had abetted or conspired for commission of the offense in question. Should the ingredients of Section 32A be met, an automatic discharge from prosecutions of the corporate debtor alone, follow. The provisions take care to ensure that the immunity is available only to the corporate debtor and not to any other person who was in management or control, or was in any manner, in charge of, or responsible to, the corporate debtor for conduct of its business, or was associated with the corporate debtor in any manner, and directly or indirectly involved in the commission of the offense being prosecuted. Such other persons who were charged for the offence, would continue to remain liable for prosecution. In other words, other than the corporate debtor who has undergone a successful CIRP, all other accused remain on the hook and it is the corporate debtor alone who gets the statutory stipulated immunity. 14. Additionally, once a resolution plan is approved under Section 31 of the IBC, 2016, keeping in line with the aforesaid immunity from prosecution, Section 32A(2) goes a step further and also protects the propert....
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....laid down in Section 32A of the IBC, 2016 as well as our decision in Shiv Charan & Ors. (Surpa) have till date not lifted the attachment. We, therefore, find that the argument of alternate remedy is stated only to be rejected. 17. In the peculiar facts of this case, there is one more facet which makes the order of the Adjudicating Authority dated 16th October 2024 confirming the Provisional Attachment Order of 25th April, 2024 unsustainable. As mentioned earlier, the Provisional Attachment Order was dated 25th April 2024. By that attachment Order, the immovable properties mentioned in the said Attachment Order (as reproduced by us hereinabove) were attached by Respondent No. 1 under the provisions of Section 5 of the PMLA, 2002. Such a provisional order thereafter has to be confirmed by the Adjudicating Authority and for which purpose the Directorate of Enforcement has to file a complaint under Section 5(5) of the PMLA, 2002. In the facts of the present case, the Directorate of Enforcement in fact filed that complaint on 22nd May 2024. However, what is interesting is that the Directorate of Enforcement, in its complaint [in Paragraphs 10.5 and 10.6] has stated that the proceeds ....
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....onstitute proceeds of crime in terms of section 2(1)(u) of the Prevention of Money Laundering Act, 2002. That, from the above-stated investigation made under PMLA, 2002 it is evident that V Hotels Ltd is in possession proceeds of crime generated by committing scheduled offences in form movable/immovable properties. The details of properties that have been identified are tabulated as under: Sr.No. Name of the owner/ Company Property Address Current value Remarks 1 M/s. V-Hotels Ltd. (formerly known as M/s. Tulip Hospitality Services Ltd.) 1. Parcel of land together with building and structure including hotel structures made thereon situated at CTS-561/5 fore-shore S.No.69/112-T.S.No.859/1 to 21 at V Hotel Juhu Beach, Juhu Tara Road, Vile Parle (West), Mumbai. As per the balance sheet of M/s. V. Hotes Ltd. As at 31^st March, 2023, the value of Property, Plant and Equipment of the company as on 31^st March, 2023 were Rs. 281.95 Cr. Value of assets is Rs.281.95 Cr. (attached as Equivalent Value). The POC in question has changed form to the sale proceeds of M/s. V Hotels Pvt. Ltd. since V. Hotels Pvt. Ltd. was taken over by M/s. Macrotech Developers Limited....