Rajasthan High Court - Jaipur
Union Of India vs M/S Udaipur Entertainment World Pvt. ... on 28 March, 2025
Bench: Manindra Mohan Shrivastava, Uma Shanker Vyas
[2025:RJ-JP:13115-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Special Appeal Writ No. 685/2024
Union Of India, Through Assistant Director, Directorate Of
Enforcement, Jaipur Zonal Office 2nd Floor, Jeevan Nidhi- II, LIC
Building, Bhawani Singh Road, Jaipur
----Appellant
Versus
1. M/s Udaipur Entertainment World Pvt. Ltd., Having Its
Registered Office At Shop No. 13, Mrud Kishore Bldg., Nr
Dattapada Subway Opposite S.V. Road, Borivali (West),
Mumbai, Maharashtra- 400092
2. Anup Jain S/o Not Known, Aged About 41 Years, Resident
Of 11, Keshav Nagar, Near Jain Temple, Udaipur,
Rajasthan
3. Balkrishan Upadhyay S/o Bhanwarlal Upadhyay, Aged
About 68 Years, Resident Of Flat No. 503, Royal Raj Vilas,
Shobhagpura Circle, Udaipur Rajasthan.
4. Akshay Kavdia S/o Rajendra Singh Kavdia, Aged About 43
Years, Resident Of 11 C Bhopalpura, Udaipur Rajasthan.
5. Alok Jain S/o Mahaveer Prasad Jain, Aged About 52 Years,
Resident Of 126, Ashok Nagar, Road No.02, Udaipur,
Rajasthan.
6. Ankit Laddha S/o Ramesh Laddha, Aged About 34 Years,
Resident Of 3, Techno Crate Society, Moti Magri Scheme,
Udaipur, Rajasthan.
7. Dr. A.R. Gupta S/o Om Prakash Gupta, Aged About 60
Years, Resident Of 203, Sun Rachna Avenue, Civil Lines,
Kota Rajasthan
8. Arti Singhvi W/o Nimish Singhvi, Aged About 45 Years,
Resident Of 15, New Glass Factory, Sundarwas, Udaipur,
Rajasthan
9. Ashok Jain S/o Roop Chand Shah, Aged About 56 Years,
Resident Of 302, Royal Palm, New Navratan Complex,
Fathepura, Udaipur, Rajasthan
10. Mahipal Singh Rao S/o Kalu Singh Rao, Aged About 39
Years, Resident Of 92, Alka Hotel Road, Shastri Circle,
Udaipur, Rajasthan.
11. Gourav Nalwaya S/o Vijay Kumar Nalwaya, Aged About
(Downloaded on 31/03/2025 at 10:03:31 PM)
[2025:RJ-JP:13115-DB] (2 of 19) [SAW-685/2024]
39 Years, Resident Of 20, Madhav Nagar, Near Govt.
School, Shobhagpura, Udaipur, Rajasthan
12. Himmat Mehta S/o Jaswant Singh Mehta, Aged About 67
Years, Resident Of Flat No. 303, Garnet Apartment, New
Fatehpura, Udaipur, Rajasthan.
13. Indu Arora W/o Sunil Arora, Aged About 47 Years,
Resident Of 44, Adarsh Nagar, E-Block Aishwariya
College, Udaipur Rajasthan.
14. Kamal Singhvi S/o Lt. Manchand Singhvi, Aged About 57
Years, Resident Of 248, Ashok Nagar, Road No. 18
Udaipur, Rajasthan
15. Kamla Jain W/o Shyamlal Jain, Aged About 56 Years,
Resident Of 11, Keshav Nagar, Near Jain Temple, Udaipur,
Rajasthan.
16. Mahendra Chand Singhvi S/o Padam Chand Singhvi, Aged
About 73 Years, Resident Of 106, Panchratan Complex,
Udaipur, Rajasthan.
17. Manju Sarupriya W/o Roop Singh Sarupriya, Aged About
56 Years, Resident Of R-1/2, Jai Shree Colony, Dhool Kot
Choraha, Udaipur, Rajasthan.
18. Nidhi Chittora D/o Vinod Kothari, Aged About 36 Years,
Resident Of Flat No. 201, Om Ananda House No. 181-182,
Bhopalpura, Udaipur, Rajasthan.
19. Preeti Mehta W/o Rakesh Mehta, Aged About 44 Years,
Resident Of 412, Road No. D-1, Bhopalpura, Udaipur,
Rajasthan.
20. Raj Kumar Choudhary S/o Lt. Jai Kumar Choudary, Aged
About 60 Years, Resident Of 121, Jk House, Kharol
Colony, Fatehpura, Udaipur, Rajasthan.
21. Roshan Ara Sheikh W/o Razzaq Hussain, Aged About 62
Years, Resident Of 1365/15, Ganesh Nagar, Pahada,
University Road, Udaipur Rajasthan
22. Sarita Rajdeo D/o Amar Singh Rajdeo, Aged About 42
Years, Resident Of 345, Hiran Magri, Sector 11, Udaipur,
Rajasthan.
23. Subhash Chandra Jain S/o Deep Chand Jain, Aged About
67 Years, Resident Of 17, New Ahinsapuri, Fatehpura,
Udaipur, Rajasthan.
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24. Sulabh Jain S/o Ashok Jain, Aged About 32 Years,
Resident Of 302, Royal Palm, B-2, New Navratan
Complex, Fatehpura, Udaipur, Rajasthan.
25. Suman Dwivedi W/o Praful Dwivedi, Aged About 47 Years,
Resident Of 7, Central Area, Udaipur, Rajasthan.
26. Nitin Dungarwal S/o Chandarlal Dungarwal, Aged About
35 Years, Resident Of Panchratan Complex, Bhilwara
Road, Kankroli, Rajasthan.
27. Neehal Mahamulal Pathan, Resolution Professional,
Resident Of Plot No. 27, R S No. 825, Sahjeevan Parisar,
Near Tpm Church, Behind Circuit House, Kolhapur,
Maharashtra-416003
----Respondents
For Appellant(s) : Mr. R.D. Rastogi, ASG assisted by Mr. Anand Sharma, Mr. Devesh Yadav, Mr. Akshay Bhardwaj, Mr. Chinmay Sharma, Mr. Vaibhav Bhansali, Mr. Rajat Sharma, Mr. C.S. Sinha For Respondent(s) : Mr. H.V. Nandwana with Mr. Y.V. Nandwana, Mr. Ashish Batra HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE UMA SHANKER VYAS Judgment Pronounced on 28/03/2025 (Per Hon'ble the Chief Justice):
1. Instant appeal is directed against the order dated 18.09.2024 passed by the learned Single Judge, whereby the interim order passed on 06.07.2023 in favour of the appellant/writ petitioner has been vacated at the instance of buyers of different flats constituting properties of a housing project developed by (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (4 of 19) [SAW-685/2024] respondent No.1 M/s. Udaipur Entertainment World Private Limited.
2. The petitioner Union of India has filed a petition under Article 227 of the Constitution of India with a prayer to quash and set aside an order dated 24.02.2022 passed by the National Company Law Tribunal, Mumbai (for short, hereinafter referred to as 'NCLT Mumbai'). The petitioner's case is that the properties in dispute, in the present case, were provisionally attached by the E.D. in exercise of powers under Section 5 of the Prevention of Money Laundering Act, 2002 (for short, hereinafter referred to as 'PMLA 2002') after a criminal motion was initiated under an FIR dated 07.03.2016 against certain persons who are accused of having committed offence under the PMLA 2002. The order of provisional attachment passed on 02.02.2019 was subsequently confirmed by the adjudicating authority by passing an order under Section 8 of the PMLA 2002 on 19.09.2019. Subsequently, the flat buyers of the Royal Raj Vilas Project initiated Corporate Insolvency Resolution Proceedings (for short, hereinafter referred to as 'CIRP') under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short, hereinafter referred to as 'IB Code 2016') against the respondent No.1-the builder-corporate debtor before the NCLT, Mumbai. The confirmation of attachment by adjudicating authority under the PMLA 2002 is in assail before the PMLA Tribunal. However, during the pendency of those proceedings, the NCLT, while granting approval of the resolution plan under Section 31 of the IB Code 2016 vide its final order dated 24.02.2022, vacated the attachment order of the subject property in purported exercise of powers under Section 238 of the IB Code 2016, (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (5 of 19) [SAW-685/2024] whereas the orders and proceedings under the PMLA 2002 shall have overriding effect over other Acts including IB Code 2016 by virtue of provisions contained under Section 71 of the PMLA 2002. Therefore, the order dated 24.02.2022 passed by the NCLT, Mumbai to the extent it vacates the attachment order is ex facie illegal and without jurisdiction. According to the petitioner, the NCLT does not have jurisdiction to nullify, sit over or set aside the orders and proceedings drawn under the PMLA 2002. Even though, there is an alternative remedy, as the order of NCLT is apparently without jurisdiction, the writ petition has been preferred.
3. On 06.07.2023, learned Single Judge passed an ex parte stay order staying the operation of the order dated 24.02.2022 passed by the NCLT, Mumbai and all further proceedings in pursuance to the said order.
4. Respondents No.2 to 26-buyers of different flats in the Royal Raj Vilas Project, on whose instance CIRP were initiated before the NCLT, moved an application for vacating ex parte stay order dated 06.07.2023 mainly on the submission that the NCLT is authorised under the provisions of the IB Code 2016 to grant approval of the resolution plan under Section 31 of the said Act and as in view of overriding clause contained under Section 238 of the IB Code 2016, the NCLT has the jurisdiction and authority vested in it under the law to vacate the interim order of attachment in respect of property, which is subject matter of property, included in the resolution plan approved under Section 31 of the IB Code 2016. (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (6 of 19) [SAW-685/2024] Learned Single Judge, upon consideration of the submissions of the respective parties, vacated the interim order by impugned order giving rise to instant appeal.
5. Learned Additional Solicitor General argued that the learned Single Judge, while vacating interim order, failed to appreciate that a serious issue of jurisdiction of the NCLT to vacate the order passed under the PMLA 2002 was raised before the Court. It is submitted that even though Section 238 of the IB Code 2016 provides that the provisions of the Code shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, in respect of those properties of the corporate debtor which were attached even prior to commencement of the resolution proceedings, it was not within jurisdiction of the NCLT to approve resolution plan including such property of the corporate debtor and the NCLT being Tribunal of the limited jurisdiction has no plenary jurisdiction to quash and set aside attachment orders. Learned Additional Solicitor General would also submit that once provisional attachment order passed under Section 5 is confirmed by the adjudicating authority by drawing proceedings under Section 8 of the PMLA 2002, the correctness and validity of the order could be assailed only by filing an appeal before the PMLA Tribunal. In fact, in the present case, it is contended that the confirmation order passed under Section 8 of the PMLA 2002 by the adjudicating authority is challenged in appeal before the PMLA Tribunal and the PMLA Tribunal passed a status quo order. The order of the NCLT is, therefore, clearly in excess of jurisdiction. He would further submit that the order passed by the Bombay High Court (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (7 of 19) [SAW-685/2024] dismissing writ petition filed by Naresh Sundar Lal Jain challenging the NCLT order dated 24.02.2022 does not, in any manner, affect maintainability of the petition filed by the petitioner before this Court as the writ petition filed by Naresh Sundar Lal Jain was dismissed on account of maintainability, he having failed to challenge the order by way of appeal within the period of limitation. Present petition has been filed by the petitioner on the ground that the NCLT had no jurisdiction to set aside the order passed by the adjudicating authority under Section 8 of the PMLA 2002 in view Hon'ble Supreme Court judgment in Embassy Property Developments Private Limited vs. State of Karnataka and Ors. [2020(13) SCC 308].
6. The next submission of learned Additional Solicitor General appearing for the appellant is that the learned Single Judge failed to appreciate that the NCLT passed impugned order dated 24.02.2022 without affording any opportunity of hearing to the petitioner. As the petitioner through his agency, E.D. had provisionally attached the property of the offender, against whom, offence under the PMLA 2002 has been registered and which order was subsequently confirmed by the adjudicating authority also, no proceedings could be drawn, much less order passed without impleading E.D. as a party in those proceedings. Therefore, for this reason also, the orders and proceedings of the NCLT to the extent it set aside the attachment order, are void ab initio. The order passed by the NCLT to the extent it set aside the attachment order confirmed under the PMLA is a nullity and non est in law.
7. He would lastly submit that if further proceedings pursuant to approval of the resolution plan in respect of the subject (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (8 of 19) [SAW-685/2024] property are allowed to continue, the property may be sold and disposed off, in which case, even if petition is allowed, relief sought in the petition would be frustrated.
8. Per contra, learned counsel for the respondents-home buyers would submit that the petition under Article 227 of the Constitution of India filed by the petitioner seeking to challenge an order passed by the NCLT, Mumbai, outside the territorial jurisdiction of this Court, itself is not maintainable. On merits, it is submitted that at the instance of respondents No.2 to 26 being home buyers/financial creditors invoked jurisdiction of the NCLT against the respondent No.1 corporate debtor leading to initiation of CIRP under Section 7 of the IB Code 2016 and NCLT, Mumbai after following the process of law duly approved the resolution plan under Section 31 of the IB Code 2016 on 24.02.2022. The petitioner had full notice and knowledge of the proceedings and orders passed by the NCLT, Mumbai as various notices were issued to the petitioner by NCLT, Mumbai from time to time, but the petitioner chose not to appear in those proceedings. Even though order was passed way-back on 24.02.2022, which was in full notice and knowledge of the petitioner, the petitioner failed to take recourse to the statutory remedy of appeal within the period of limitation before the National Company Law Appellate Tribunal as was available under the IB Code 2016 and allowed the period of limitation to expire. Long after the order attained finality, having not been challenged within the period of limitation, present petition has been filed after almost one year i.e. on 10.03.2023. Therefore, this writ petition, having failed to avail statutory remedy of appeal within the period of limitation prescribed under (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (9 of 19) [SAW-685/2024] the law, is not maintainable in view of Division Bench judgment of this Court in the case of Malik khan vs. Chief Commissioner GST and Central Excise (Jaipur Zone), Jaipur [2023 SCC (Online) Raj. 4342]. He would further submit that the NCLT has jurisdiction under the law to vacate and set aside the attachment order and its confirmation passed under the PMLA 2002 in view of overriding clause contained under Section 238 of the IB Code 2016. He would further submit that the petitioner could not raise a grievance of violation of principles of natural justice as the petitioner was given liberty to intervene in the proceedings before the NCLT vide order dated 27.07.2020 passed by this Court in D.B. Civil Writ Petition No.18091/2019. After CIRP proceedings were initiated by the NCLT at the instance of flat buyers, resolution professional sent number of communications to the petitioner before finalising resolution plan, but the petitioner did not appear before the resolution professional except sending certain communication. Therefore, the order passed by the NCLT, Mumbai could not be challenged on the ground of violation of principles of natural justice.
9. Learned counsel for the respondents places reliance upon order of the Hon'ble Supreme Court in Manish Kumar vs. Union of India & Anr. [2021(5) SCC 1] and order dated 17.02.2023 passed by the High Court of Gujarat at Ahmedabad in Welspun Steel Resources Private Limited vs. Union of India [R/Special Civil Application No.19387 of 2022].
10. Though the learned Single Judge initially granted ex parte interim order in favour of the appellant on 06.07.2023, by which the order passed by the NCLT, Mumbai on 24.02.2022 was stayed, (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (10 of 19) [SAW-685/2024] subsequently on the application for vacating stay filed by the home buyers, learned Single Judge has vacated the same.
11. Heard learned counsel for the parties and perused the relevant material placed on record.
12. There is considerable force in the submission of learned Additional Solicitor General that a very strong prima facie case in the matter of challenge to the NCLT order dated 24.02.2022 has been raised. We find that the learned Single Judge, though referred to detailed submissions of the learned counsel for the parties including specific ground challenging the very jurisdiction/authority of the NCLT to vacate the attachment orders issued by the E.D., which was earlier confirmed by the adjudicating authority and therefore, on appeal having been filed, status quo order was passed by the PMLA Appellate Tribunal, as would be clear from the contents of paragraph 27 of the impugned order, has recorded that the contention of the parties pertained to merit of the writ petition. All that has been said is that the Court refrains itself from giving such findings on merits at that stage, which may affect the merits of the case and it would be considered and decided whenever occasion arise to hear the writ petition on merits. Without recording any prime facie view on the serious issue of jurisdiction of the NCLT, learned Single Judge has exercised its discretion to vacate the interim order.
13. Present is not a case where the appellant Union of India (E.D.) has confined challenge only to the correctness and validity of the order of the NCLT on alleged violation of the provisions of law, but the appellant has called in question very jurisdiction of (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (11 of 19) [SAW-685/2024] the NCLT to assume jurisdiction to vacate the orders passed by the competent authorities under the provisions of the PMLA 2002.
14. The PMLA 2002 is a special enactment to prevent money laundering and to provide for confiscation of the property derived from, or involved in money laundering and for matters connected therewith or incidental thereto. The legislation is intended to prevent money laundering. As to what constitutes offence of money laundering, has been provided under Section 3 of the Act. A power of attachment of property allegedly involved in money laundering has been specifically conferred upon the competent authorities designated under the Act. Section 8 provides for adjudication by adjudicating authority. It inter alia provides for confirmation of provisional attachment order of the Enforcement Directorate by the Directorate of Enforcement. It also provides that where, on conclusion of a trial of a offence under the Act, the special court finds that the offence of money laundering has been committed, it shall order that such properly involved in the money laundering, or which has been used for commission of offence of money laundering, shall stand confiscated to the Central Government. Under Section 9 of the PMLA 2002, upon an order of confiscation passed, the property vests absolutely in the Central Government free from all encumbrances. The appellate tribunal constituted under Section 12(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 has been declared as the appellate authority for hearing appeals against the order of adjudicating authority and other authorities under the Act. Section 26 of the PMLA 2002 provides for appeals to (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (12 of 19) [SAW-685/2024] appellate tribunal, whereas Section 35 provides for procedure and powers of appellate tribunal.
Therefore, it is clear that against the orders passed by the tribunal, a further appeal is provided under Section 42 of the PMLA 2002 to the High Court on any question of law or fact arising out of such order. Section 43 provides for constitution of special courts and Section 44 declares that the offences are triable by special courts.
15. It is, thus, clear that attachment of any property, which is alleged to be involved in the offence of money laundering, is provided under Section 5 of the PMLA 2002, which is subject to confirmation of the adjudication authority under Section 8 and in the event of its confirmation by the adjudicating authority under the PMLA, a provision of appeal has also been made before the appellate tribunal. Therefore, an order of attachment, which has been confirmed by the adjudicating authority, could be subjected to challenge only before the appellate tribunal created under the PMLA 2002. If any party is aggrieved by the order passed by the PMLA Appellate Tribunal, the remedy is to file an appeal before the High Court. Thus, the orders and proceedings of attachment under the Act are subject to orders that may be passed by the appellate authority. Therefore, in case of attachment of any property, which is alleged to be involved in money laundering, PMLA 2002, is a self-contained Code.
16. The IB Code 2016 is an Act to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (13 of 19) [SAW-685/2024] persons, to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the priority of payment of government dues and to establish an insolvency and bankruptcy fund, and matters connected therewith or incidental thereto. The IB Code 2016 aims to regulate insolvency resolutions and liquidation for corporate persons. Resolution plans prepared by the resolution professional provided under the Act, are subject to approval by the adjudicating authority under Section 31. Section 32A of the IB Code 2016, which was inserted by Act 1 of 2020, Sec. 10 (w.r.e.f. 28.12.2019), provides for liability for prior offences of the corporate debtor, followed by provisions relating to liquidation contained in Chapter III of the IB Code 2016. Section 238 provides that the provisions of the IB Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
17. Thus, both the PMLA 2002 and IB Code 2016 are special enactments and both of them contain overriding clause. However, the two Acts operate in different fields.
18. Two different tribunals are created under the two Acts. The powers and functions of the adjudicating authority and the NCLT under the provisions of the IB Code 2016 are limited to the matter, in respect of which jurisdiction has been conferred under the provisions of the IB Code 2016. In other words, the NCLT does not exercise plenary jurisdiction as it is not a court, but a tribunal of limited jurisdiction to conduct proceedings and pass orders under the provisions of the IB Code 2016. A serious (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (14 of 19) [SAW-685/2024] question would arise for consideration in this case as to whether the NCLT, while trying proceedings and passing orders under the provisions of the IB Code 2016, even with the aid of overriding clause as contained in Section 238 and in the light of the provisions contained under Section 32A, would have jurisdiction to vacate, nullify, sit over or set aside orders passed by the authorities and Tribunal under another enactment. In the present case, orders were passed by the adjudicating authority and tribunal in exercise of powers conferred under the PMLA 2002. Against an order of provisional attachment, Section 9 of the PMLA 2002 provides for confirmation of the same by adjudicating authority. Special courts constituted under the PMLA 2002 have been empowered to confiscate those properties, which are found to be involved in commission of offence of money laundering. The orders of attachment confirmed by adjudicating authority are open to challenge by filing appeal before the PMLA Appellate Tribunal and further appeal before the High Court. On the face of such a self-contained Code, it is a serious question to be tried whether the NCLT has jurisdiction to vacate an order of attachment passed by the E.D., particularly when such order has been confirmed by the adjudicating authority under Section 8 and correctness and validity of that order is under challenge before the appellate tribunal, which has passed an order of status quo.
19. In the present case, it is admitted position that the order of provisional attachment passed under Section 3 of the Act was confirmed by the adjudicating authority by passing an order under Section 8 and that order is under challenge before the appellate tribunal and it is on record that appellate tribunal has passed an (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (15 of 19) [SAW-685/2024] order of status quo much before the order passed by the NCLT on 24.02.2022. Thus, the order of NCLT nullifies the order of confirmation of the attachment by the adjudicating authority and even the status quo order passed by the tribunal. In other words, the NCLT, vide order impugned in the writ petition, has brought the orders and proceedings under the PMLA 2002 to an end. The issue of jurisdiction of the NCLT, which is a tribunal of limited jurisdiction, indeed requires serious consideration. In our view, a serious question is to be tried in the writ petition and that too on the issue of very jurisdiction of the tribunal. There is considerable force in the submission of the learned Additional Solicitor General that the NCLT lacks inherent jurisdiction in sitting over the orders and proceedings passed by the various authorities under the PMLA 2002. This aspect has not been dealt with by the learned Single Judge, but left to be considered at the time of hearing on merits, whereas at the stage of considering application for stay, strong prima facie case is one of the most relevant consideration for exercise of discretion.
20. The learned Single Judge has observed in para 25 of its order that the appellant could not complain violation of principles of natural justice. Therefore, no prima facie case is made out. This finding proceeds on prima facie consideration that the appellant (E.D.) was aware of the proceedings pending before the NCLT as the resolution professional had issued various notices to the appellant while preparing a resolution plan.
21. It is not a case where the NCLT issued any notice to the appellant before passing of any order in the case and vacating attachment orders, thereby nullifying the orders passed by the (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (16 of 19) [SAW-685/2024] adjudicating authority as also the status quo order passed by the appellate tribunal. Even if it is assumed that resolution professional had issued certain notice to the appellant, the appellant could be non-suited on the ground that it did not participate in the resolution proceedings. The NCLT did not issue notice to the appellant, much less impleaded it as a party. Mere liberty granted in certain proceedings to intervene would not mean that the appellant could not raise a grievance against an order which was passed without affording opportunity of hearing. In any case, where an order is challenged on the ground of inherent lack of jurisdiction, it goes to the root of the matter as an order which suffers lack of inherent jurisdiction is a nullity and void ab initio. Irrespective of whether opportunity of hearing was granted or not, challenge to legality and validity of the order on the ground of inherent lack of jurisdiction is required to be decided on its own merits.
22. Another aspect which weighed the learned Single Judge to vacate the interim order is that the order passed by the NCLT was challenged before the Bombay High Court by one Naresh Sundar Lal Jain, who claims to be erstwhile Director of M/s. Udaipur Entertainment World Private Limited. The petition was dismissed mainly on the ground that the petitioner having failed to prefer an appeal within the period of limitation as provided under the law, could not maintain writ petition. Therefore, the basis for dismissal was failure to avail the statutory remedy of appeal. When the matter was taken up by the Bombay High Court, none of the parties informed that in a petition filed by Union of India wherein M/s. Udaipur Entertainment World Private Limited was impleaded (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (17 of 19) [SAW-685/2024] as party, an interim order has been passed on 06.07.2023 and operating. Though, M/s. Udaipur Entertainment World Private Limited (respondent therein) raised a strong objection to the maintainability of the petition on the ground that the statutory remedy available has not been availed within the period of limitation provided therefor, the factum of filing of pendency of petition before this Court wherein an interim order was passed on 06.07.2023, was suppressed when the case was heard by the Bombay High Court on 27.09.2023. The order passed by the Court on 22.08.2023 shows that the same counsel, who represented M/s. Udaipur Entertainment World Private Limited in the present case, had appeared for that party before the Bombay High Court on 27.09.2023. The fact that the matter was pending before the PMLA Appellate Tribunal and status quo order was passed and operating was also not brought to the notice of the Court. When we enquired from the learned Additional Solicitor General as to why the appellant did not bring it to the notice of the Court that petition was pending, interim order was passed and further that proceedings were pending and status quo orders were passed by the PMLA Appellate Tribunal, learned Additional Solicitor General referring to the records would submit that the case was listed in that Court on 26.09.2023 and was adjourned to the next date i.e. 27.09.2023 and, therefore, the counsel, who appeared for E.D. who was called and notices were served on him, could not seek detailed instructions in the matter and pendency of various proceedings, interim orders passed by this Court and the tribunal and PMLA Appellate Tribunal.
(Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (18 of 19) [SAW-685/2024] Learned Additional Solicitor General further submits that the E.D. has filed a review petition before the High court on 11.11.2024 against the order dated 27.09.2023.
23. Be that as it may, dismissal of petition filed by Naresh Sundar Lal Jain on the ground of he having failed to avail alternative remedy, at this stage, would not affect a strong prima facie case made out by the appellant when the order passed by the NCLT is under challenge on the ground that it lacks inherent jurisdiction.
24. The petitioner herein was not party to the proceedings before the NCLT. Challenge to the order is on the ground of lack of jurisdiction. On the aspect of jurisdiction, strong reliance has been placed by the appellant on the decision of Hon'ble Supreme Court in the case of Embassy Property Developments Private Limited (supra). Learned counsel for the respondents relied upon decision rendered by this Court in the case of Malik Khan (supra). On facts that was not a case where challenge was made on the ground of violation of principles of natural justice. Therefore, non- filing of appeal in such a situation would not come in the way of the appellant to challenge the order of the NCLT on the ground of inherent lack of jurisdiction. Decision in the case of Manish Kumar (supra) does not deal with interplay of IB Code 2016 and PMLA 2002 and the issue raised in this petition cannot be said to be concluded by the aforesaid decision.
25. In view of the above discussion, we find that the learned Single Judge, without taking into consideration serious issue of jurisdiction of the NCLT raised by the appellant and that appellant suffered order without being impleaded as a party in the (Downloaded on 31/03/2025 at 10:03:31 PM) [2025:RJ-JP:13115-DB] (19 of 19) [SAW-685/2024] proceedings before the NCLT and without properly appreciating that there was status quo order passed by the NCLT Appellate Tribunal operating, vacated the interim order.
26. Moreover, if the attachment is removed and the home buyers are allowed to take the property developed by the builder, which is alleged to be involved in the offence of money laundering, in the event of offence having been proved, the property is liable for confiscation and the disputed property is subjected to liquidation process under the resolution plan. It may frustrate not only the appeal pending before the PMLA Tribunal, but also it would amount to disposing off the property which is involved in the offence of money laundering even before the conclusion of trial. Therefore, the present was an appropriate case where status quo was required to be maintained, as has already been ordered by the PMLA Appellate Tribunal on 15.10.2019.
27. In view of the above consideration, the order passed by the learned Single Judge vacating interim order is set aside and the interim order passed on 06.07.2023 is confirmed.
28. The appeal is allowed accordingly.
29. The parties, however, may request the learned Single Judge for expeditious disposal of the petition itself on its own merits. (UMA SHANKER VYAS),J (MANINDRA MOHAN SHRIVASTAVA),CJ MohitTak/1 (Downloaded on 31/03/2025 at 10:03:31 PM) Powered by TCPDF (www.tcpdf.org)