NCLT Bar Condemns ED Search at Lawyers' Residence In Probe Into Allegedly Undervalued Land Sale

The National Company Law Tribunal Bar Association (NCLTBA) has condemned the Enforcement Directorate's search at the residence of two members of their bar, conducted as part of an investigation into an allegedly undervalued land sale during the CIRP of Universal Buildwell.

In a resolution issued on November 25, the Bar Association said the search was without due compliance of the law and violated procedural safeguards.

"NCLTBA affirms that such acts amount to an affront to the dignity of the legal profession and pose a grave threat to the independence of advocates, who are officers of the court and integral to the administration of justice", the resolution read.

The ED had announced on November 21 that it carried out searches the previous day at six locations in Delhi and Gurugram. These searches were part of a probe into suspected misuse of the Insolvency and Bankruptcy Code (IBC) in the sale of a land parcel connected to Universal Buildwell Pvt. Ltd.

According to the agency, the investigation stems from more than 30 FIRs against Universal Buildwell and its promoters for allegedly cheating homebuyers. The company went through CIRP, and a resolution plan approved by the National Company Law Tribunal transferred some assets to homebuyers and liquidated the rest. The ED alleges that one parcel of land was sold at a price far below market value, enabling unlawful gains.

The searches targeted middlemen, the Resolution Professional, NCLT practitioners, and the buyer RDB Infrastructure and Power Ltd. The ED stated that it recovered Rs 50 lakh in unexplained cash from the residence of two intermediaries including an advocate practicing before NCLT, Delhi. It also said digital data extracted from mobile phones showed draft invoices for illegal payments, signs of bid rigging, and collusion with a private bank official who facilitated the sale despite appreciation in the property's value. The agency further claimed that homebuyers were kept in the dark and that the Resolution Professional failed to act with due care. The investigation is ongoing.

In its resolution, signed by President and Senior Advocate U.K. Chaudhary, the NCLTBA said it stands in solidarity with its member and urged all advocates to remain united in defending the dignity of the profession. It also called for full support to the affected member and expressed hope that those responsible for the incident will be held accountable.

The search comes in the background of a recent Supreme Court ruling in which a Bench led by Chief Justice B R Gavai, along with Justices K V Chandran and NV Anjaria, held that investigating officers cannot compel advocates to disclose case-related information under Section 132 of the Bharatiya Sakshya Adhiniyam, 2023.

In the suo motu proceedings, the apex court had taken up concerns arising from summons issued by the Enforcement Directorate to two senior advocates merely for providing professional advice to their client.

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