Supreme Court Allows Substitution Of M3M India Property Provisionally Attached By ED

The Supreme Court recently allowed real estate company M3M Group's plea for substitution of the provisionally attached property by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002, subject to stringent safeguards.The Court, however, clarified that the substitution of provisional attached property was allowed in the facts and circumstances of the case and shall not be treated as a precedent. The partial court working days bench comprising Justices PS Narasimha and R Mahadevan heard the Petitioners India Pvt. Ltd. and M3M India Infrastructure Pvt. Ltd's plea for substitution of their provisionally attached property by ED with their M3M Broadway project in Gurugram, valued at ₹317 crores as per an independent valuation by CSV Techno Solutions LLP. Petitioners moved the Supreme Court against the Punjab & Haryana High Court's order refusing to substitute their provisionally attached property. The High Court ruled that PMLA does not provide any mechanism to allow substitution of provisionally attached properties before confirmation by the Adjudicating Authority under Section 8 of the PMLA. Upon being informed by the Counsel for the ED, Zoheb Hossain, that the department agrees to the substitution of the property, but subject to certain conditions. The Court allowed the substitution of the provisionally attached property with the petitioners' M3M Broadway project in Gurugram. Further, the substitution was subject to the nine conditions imposed by the ED, which was approved by the Court. These were: “i. Submission of No Encumbrance Certificate: The petitioner shall establish clear and marketable title along with undisputed ownership of the assets proposed for substitution, supported by verifiable documentary evidence, to the satisfaction of the Hon'ble Court. The substituted assets must be free from all encumbrances, including mortgages, liens, pledges or any third-party claims or security interests and a certificate to this effect must be submitted by the petitioner. ii. Undertaking not to alienate: The petitioner must provide a notarized undertaking that the substituted property will not be sold, transferred, or otherwise alienated during the pendency of proceedings. iii. Submission of Title Documents: Original title documents of the substituted property must be deposited with the ED or the court, with a formal acknowledgment. iv. Indemnity Bond: The defendant must furnish an indemnity bond to indemnify the ED/government in case of any loss or legal deficiency arising from the substitution. v. Undertaking to safeguard the third-party rights created for other commercial units of the project: Transactions involving third-party retail buyers/investors for other commercial units in the project (MЗM Broadway) shall remain unaffected by the present enforcement proceedings. The petitioner shall not rely on the pendency of such proceedings to obstruct or delay legitimate transactions, registrations, or project progress. This is to safeguard the interests of genuine purchasers and uphold the commercial viability of the overall project. vi. Consent to hand over possession of alternate assets in the event of confirmation of attachment by Ld. Adjudicating Authority: In the event of confirmation of attachment with respect to the alternate assets by Ld. Adjudicating Authority, the petitioner shall hand over possession of alternate assets to ED. vii. Disclosure of Source of Acquisition Funds: The petitioner shall provide a complete and transparent disclosure of the source of funds used to acquire the substituted assets, with supporting financial records, to ensure the substituted assets are untainted and not derived from proceeds of crime. viii. Cooperation with Investigation: The petitioner shall continue to fully cooperate with the investigation by the ED or any other authority under the PMLA and shall produce any documents or appear for inquiry when required. ix. No Prejudice to Ongoing Investigation or Trial: Substitution of properties shall be without prejudice to the rights of the Directorate of Enforcement and shall 5 not be construed as an acknowledgment of the legality of the source or legitimacy of the attached properties. It shall not affect the merits of the ongoing investigation or trial.” Case Title: M/S M3M INDIA PVT. LTD. & ANR. VS. UNION OF INDIA & ORS., SLP(C) No. 4027/2025Click here to read/download the order

Supreme Court Allows Substitution Of M3M India Property Provisionally Attached By ED

Yash Mittal

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Supreme Court Allows Substitution Of M3M India Property Provisionally Attached By ED

Yash Mittal

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