Bombay High Court Paves Way For Redevelopment Of Building Stalled Because Of ED Attaching A Flat; Orders Agency To Give NOC

The Bombay High Court on Wednesday (October 15) ordered the Enforcement Directorate (ED) to grant a No-Objection Certificate (NOC) to a housing society so that it could proceed with its redevelopment, which was stuck because one of the flats among the total 10 flats in the 44-year-old building was attached under the Prevention of Money Laundering Act (PMLA).

A division bench of Justice Bharati Dangre and Justice Ashish Chavan ordered the ED to issue a NOC after the society filed an affidavit undertaking to transfer the attached flat when it is ready, to the ED and also to mention in the redevelopment agreement with the developer about the said flat being attached on orders of a special court in Ranchi, Jharkhand. 

"We direct the Enforcement Directorate to issue a No- Objection Certificate in favour of the Petitioner-society within a period of six (6) weeks from today. We also make it clear that No-Objection Certificate shall be subject to the compliance of the stipulations stated in the affidavit fled by the Petitioner- society," the bench said. 

The bench noted that the society - Antaral Co-operative Housing Society in Mumbai, was under difficulty as its building was more than 44 years old and it lacked modern safety amenities as well as a lift facility and that it had become unsafe and unsuitable for occupation and thus, with a specific plea that large number of the members of the society are senior citizens and directly affected by the deteriorating condition of the building, the society sought to redevelop the building

"In the wake of the attachment of Flat No.4 by ED, the communication was addressed by the society to it for securing a NOC, as if the building has to be demolished and redeveloped, it would also involve Flat No.4. However, on September 2, 2025, the request was rejected by informing the Petitioner-society that the flat is under attachment and was in custody of the Special Court and, therefore, the appropriate forum shall be approached," the bench noted. 

The judges, therefore indicated that the society should file an affidavit, which shall ensure that upon redevelopment, the flat in lieu of Flat No.4 shall come to the ED, as presently it is under attachment and not only this, but the accruals due to the flat shall be preserved in a separate account and the PAAA to be executed, shall clearly reflect such attachment and the necessary covenants ensuring that upon redevelopment of the whole society, the flat in lieu of Flat No.4 shall be handed over to ED.

In compliance to the court's directions, the Secretary of the society filed an affidavit in which it made clear that the society raises no challenge or in no way seek to dilute in any manner, the provisional attachment and its confirmation or even the possession taken by the ED in the wake of the provisions under the PML Act. It is clarified that the only object of the society is to seek permission to carry out the redevelopment of its building, which is more than 44 year old, while preserving the rights of the ED over the substituted asset, to be created in lieu of Flat No.4

"In addition, it is also stated that the new flat shall be identified in the PAAA by its number, floor, wing and carpet area and a specific statement to the effect that it shall be allotted in lieu of Flat No.4, which is presently under attachment of the ED and that the flat shall be delivered to ED, as and when the redevelopment work is complete and the flats are ready to be handed over to the original members. It is also undertaken to include a clause in the PAAA, indicating that the accruals in respect of Flat No.4 shall be deposited by the Developer/society in a separate account designated by ED with the description to be set out therein and shall be at the exclusive disposal of the ED," the judges noted. 

Apart from this, the society also undertook that a condition shall be imposed that the carpet area of the replacement flat shall not be less than the carpet area of the existing Flat No.4, including the entitlement to the additional area as well as parking and every other appurtenance and amenities which shall be provided. It is also further stated that yet a Developer is not appointed and and what is expected is that every undertaking in regards the Development Agreement to be entered with Developer upon he being selected by the society, shall be placed before the Court.

"We must observe that the apprehensions expressed by ED in its affidavit are largely taken care of by the affidavit submitted by the society. If certain factors cannot be contemplated today, we do not expect the society as well as the Developer to be bound by them. However, we make it clear that Flat No.4, which is under attachment, will definitely ensure to the same benefits, which other members of the society shall be entitled to and the Development Agreement as well as PAAA shall contain a specific mention of the aspect that the flat is under attachment," the judges said. 

The bench, however, rejected the condition of the Assistant Director of ED, who insisted furnishing of a bank guarantee before the existing flat is handed over for demolition and that the bank guarantee shall be renewed from time to time, at the cost of the developer until the replacement flat is actually delivered to ED and that it shall be liable to be invoked in the event that the replacement flat is not delivered within the outer time limit.

"We do not agree to the suggestion that a Bank guarantee shall be furnished by the society, as we must note that it is only one flat in the society which is under attachment and we do not intent to put the society under a financial pressure and particularly when the Developer and the terms of development are not yet finalised," the judges observed. 

With these observations, the bench disposed of the petition. 

Appearance:

Advocates Abhay Anturkar and Yatin Malvankar appeared for the Petitioner.

Special Retainer Counsel Ashish Mehta represented the ED.