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IN THE HIGH COURT OF DELHI
Prathiba M. Singh, J.
Wave Hospitality Pvt. Ltd. - Appellant
Versus
Union of India - Respondent
W.P.(C) 5082 of 2021
Decided On : 05-05-2021
The court allowed permission for the petitioner to avail of a loan despite an existing ED attachment, prioritizing operational continuity amidst the tribunal's non-functionality.
Headnote:(A) Prevention of Money Laundering Act, 2002 - Section 5(1) - Provisional Attachment Order - Petitioner seeks permission to access additional credit facility under the Emergency Credit Line Guarantee Scheme due to attachment by ED - Approval granted under specific conditions despite tribunal's non-functionality. (Paras 5-17)
(B) Judicial Discretion - Considerations surrounding granting loans under statutory delays due to apparatus non-functionality, emphasizing time sensitivity in economic distress during COVID-19. (Paras 16-17)
Facts of the case:
Petitioner, a hotel operator, seeks to avail additional credit amidst an existing ED attachment amounting to over Rs.120 crores, confirmed despite the Appellate Tribunal’s operational delays due to vacancies.
Findings of Court:
Consent granted for additional loan of Rs.25 crores under ECLGS, maintaining the ED’s attachment rights.
Issues: Whether the Court can authorize a loan under existing attachments when the Appellate Tribunal is non-functional.
Ratio Decidendi: Court emphasized the urgency due to economic distress and upheld attachment, allowing the loan to safeguard operational continuity.
Result: Petition disposed of accordingly.
| Table of Content |
|---|
| 1. writ petition under article 227 regarding tribunal's functionality. (Para 2 , 3 , 4 , 5) |
| 2. ed seeks assurance regarding attachment while loan is sought. (Para 6 , 7) |
| 3. loan approved by yes bank subject to appellate tribunal's permission. (Para 9 , 13 , 14) |
| 4. court grants permission for loan while maintaining attachment. (Para 10 , 11 , 12 , 15 , 16 , 17) |
| 5. petition disposed of with outlined terms. (Para 18) |
JUDGMENT
Prathiba M. Singh, J. (Oral)--This hearing has been done through video conferencing.
2. The present writ petition has been filed by the Petitioner, under Article 227 of the Constitution, in view of the Appellate Tribunal under the Prevention of Money Laundering Authority, 2002, not being currently functional due to non-filling of vacancies in the Tribunal.
3. The Enforcement Directorate had issued a Provisional Attachment Order PAO 1/2019 dated 28th March 2019 vide which the hotel Holiday Inn located at Aerocity was provisionally attached to the tune of Rs.120,20,46,003/-. The said attachment was confirmed by the Adjudicating Authority vide its order dated 19th September 2019. The Petitioner has already preferred an Appeal under Section 26 of the PMLA before the Appellate Tribunal for PMLA. Vide order dated 4th October 2019, status quo was granted by the Tribunal in the following terms:
"The appellant undertakes that he will serve the notice to the R-5 at the earliest. Till the next date status quo shall be maintained as on today by both the parties till the next date. However, the attachment shall continue.
Legal and constructive possession of the ED shall remain over the property in question. Appellant shall not transfer the property in question in any manner directly or indirectly"
4. It is the case of the Petitioner that post the outbreak of the COVID-19 pandemic, considering the adverse effect of the same on the hospitality sector, the Ministry of Finance, GOI launched the Emergency Credit Line Guarantee Scheme (`ECLGS'). As per the said Scheme, companies in this sector could avail an additional credit facilities which would be fully guaranteed by the National Credit Guarantee Trustee Company Limited (NCGTC). The Petitioner approached Yes Bank for availing of this credit facility which got an independent valuation of the property concerned. For the facility to be released, since the property was already attached by the ED, approval of the Appellate Tribunal was required to be taken. For the said purpose an application was moved before the appellate tribunal. However, due to lack of quorum the application could not be taken up for hearing.
5. The limited prayer of the Petitioner in the present petition is for a direction to the Respondent- Enforcement Directorate ("ED") to allow the Petitioner for permission, to avail of the additional credit facility which has been sanctioned by the Respondent No. 3- Yes Bank, to the tune of the amount which the Petitioner is eligible to avail of under the Emergency Credit Line Guarantee Scheme launched by the Government of India, in respect of the Hotel Property (Holiday INN), which is situated at Asset Area 12, Aero-city, Delhi International Airport, New Delhi-110037.
6. On 30th April, 2021, when the matter was listed before this Court, the counsel for the ED had sought time to seek instructions in the matter. On the said date, ld. Counsel appearing for the Bank submitted that since there is already an attachment order, permission would be required from the Appellate Authority under the PMLA, in spite of the loan having been sanctioned.
7. Today, Mr. Mahajan, ld. counsel, appears for the ED and submits that so long as the interest of the ED and the priority accorded to its interest, to the extent of the attachment of Rs.120,20,46,000/-, is not disturbed and is safeguarded, the ED would have no objection if a further loan facility of Rs.25 crores, is extended to the Petitioner in respect of the subject property.
8. Mr. Tanveer Ahmed, ld. Counse
