Supreme Court Appreciates ED For Efforts To Restore Flats To Innocent Homebuyers Defrauded In Real Estate Scam

The Supreme Court has appreciated the Directorate of Enforcement (ED) for its efforts in restoring the properties attached in a money-laundering case to protect innocent homebuyers who had fallen victim to a real estate fraud.

A Bench comprising Justice Sanjay Kumar and Justice Alok Aradhe noted that the agency's initiative ensured the protection of innocent investors. “We record our appreciation for the efforts made by the Directorate of Enforcement in restoring the attached assets so as to protect the rights of genuine and innocent homebuyers,” the Court observed.

The case related to the Royal Rajvilas housing project in Udaipur, Rajasthan, which is under a Corporate Insolvency Resolution Process. A case under the Prevention of Money Laundering Act (PMLA) was also initiated, and several flats were provisionally attached by the ED. 

However, in order to grant relief to the innocent homebuyers, the ED agreed to restore the properties to to M/s Udaipur Entertainment World Pvt Ltd, the successful resolution applicant.

In view of this, the Court partially set aside the Provisional Attachment Order (PAO) No. 05/2019 issued by the ED under the Prevention of Money Laundering Act, 2002 (PMLA), and directed that the attached properties be handed over to the Udaipur Entertainment World Pvt. Ltd., which had stepped into the shoes of the corporate debtor solely to protect the interests of homebuyers. As per the ED, the attached properties have a present market value of about Rs. 175 Crore.

The order, passed under the second proviso to Section 8(8) of the PMLA, clarifies that the restitution was being made without adjudicating on the merits of the parties' contentions. However, attachment will continue in respect of 11 specific units in the Royal Rajvilas project identified in the ED's additional affidavit dated October 7, 2025. These units, valued at about ₹8.65 crore, were allegedly purchased using proceeds of crime.

Further, invoking Section 32A of the Insolvency and Bankruptcy Code (IBC), the Court directed that the name of the corporate debtor be removed from the list of accused in the third supplementary prosecution complaint filed by the ED in February 2025. It clarified that the prosecution and confiscation proceedings would continue against the erstwhile directors, conspirators, and abettors involved in the offence.

At the same time, the Bench left open the ED's right to take action if, during its ongoing probe into the Syndicate Bank fraud, any other units booked by homebuyers are found to be linked with tainted money.

The Court also stated that the benefit of Section 32A of the IBC would hold good only if the resolution applicant is not connected to the former promoters or beneficiaries of the alleged proceeds of crime. If any such link emerges during the investigation, the ED will be free to challenge the resolution plan.

With this order, the ED's challenge to the approval of the resolution plan by the National Company Law Tribunal (NCLT), Mumbai, was formally closed. The agency was also directed to withdraw its pending appeal before the PMLA Appellate Tribunal (FPA-PMLA-3275/JP/2019) and to inform authorities immediately to facilitate registration of sale deeds for the restored properties.

The Court made it clear that its directions were confined to the facts of the present case and would not operate as a precedent. It disposed of the connected writ petition pending before the Rajasthan High Court, Jaipur Bench.

Concluding the proceedings, the Bench recorded:

“We place on record our appreciation for the efforts made by the learned counsel for the parties and the Directorate of Enforcement in restoring the attached properties to secure the interests of genuine and innocent homebuyers.”

Case : Udaipur Entertainment World Private Ltd v. Union of India and others | SLP(C) No. 10734/2025

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