Delhi High Court
Frost International Ltd & Ors. vs Directorate Of Enforcement & Anr. on 23 May, 2023
2023:DHC:3616
$~42
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 23rd May, 2023
+ W.P.(C) 3852/2022 & CM APPL. 27740/2023
FROST INTERNATIONAL LTD & ORS. ..... Petitioners
Through: Mr Shahan Ulla & Mr. Krishan
Kumar, Advs. (M:9871452750)
versus
DIRECTORATE OF ENFORCEMENT & ANR...... Respondents
Through: Mr. Zoheb Hossain, Counsel for the
ED with Mr. Vivek Gurnani, Mr.
Kavish Garach and Mr. Vivek
Gaurav, Advs. (M: 9769842146)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. The present petition has been filed challenging the impugned
judgment dated 28th February 2022 passed by the Adjudicating Authority in
Original Complaint No. 1503 of 2021 and the impugned Provisional
Attachment Order No. 09 of 2021 (hereinafter 'PAO') dated 28th June, 2021
whereby certain assets of the Petitioners have been attached under Section 8
of the Prevention of Money Laundering Act, 2002 (hereinafter 'PMLA').
The details of the properties are as under-
Sr. Property Description of Property Value in Rs.
No. Holder (in Crores)
1. M/s Frost 402, Kalpana Plaza, 24/147 B, 0.90
International Birhana Road, Kanpur
Limited
2. M/s Frost Half office accommodation 0.41
International no.403, Kalpana Plaza, 24/147
Limited B, Birhana Road, Kanpur
3. M/s Frost Half office accommodation 0.41
International no.403, Kalpana Plaza, 24/147
Limited B, Birhana Road, Kanpur
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
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4. M/s Frost 410, Kalpana Plaza, 24/147 B, 0.33
International Birhana Road, Kanpur
Limited
(earlier known
as Meta Cam)
5. M/s Frost 411, Kalpana Plaza, 24/147- B, 0.29
International Birhana Road, Kanpur
Limited
6. M/s. R.S. One Part of 114/107, 1.76
Builders Pvt. Lakhanpur, Kanpur.
Ltd.
7. Smt. Suman One Part of 114/107, 1.76
Jayant Desai Lakhanpur, Kanpur.
(since expired
on
06.01.2019)
and Mr. Uday
Jayant Desai
8. M/s Frost Property C-69, Okhla Industrial 11.13
International Area, Phase-I, New Delhi.
Limited
9. M/s Frost S-279, Panchsheel Park, New 13.61
International Delhi.
Limited
10. Mr. Sunil 510-511, B-Wing, Crystal Plaza, 1.54
Lalchand Andheri West, Mumbai.
Verma
11. Smt. Nilima D-954, 3rd Floor, New Friends 8.90
Uday Desai Colony, New Delhi.
and Rita Sunil
Verma
12. Mr. Anoop T-18/1, DLF City Phase3, 5.92
Kumar Gurgaon, Haryana
Baldevraj
Wadhera and
Smt. Poonam
Anoop Kumar
Wadhera
13. Mr. Anoop T-18/2, DLF City Phase3, 4.12
Kumar Gurgaon, Haryana
Baldevraj
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
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Wadhera and
Smt. Poonam
Anoop Kumar
Wadhera
14. M/s Frost C-70, Okhla Ind. Estate, Phase- 11.13
International I, New Delhi.
Limited
15. M/s Frost 907-908, 9th Floor, The 6.75
International Meadows Tower, Sahar Plaza,
Limited Kondvita Village, J.B. Nagar,
Andheri (East), Mumbai 400059
16. M/s Frost 909-910, 9th Floor, The 7.59
International Meadows Tower, Sahar Plaza,
Limited Kondvita Village, J.B. Nagar,
Andheri (East), Mumbai 400059
17. M/s Frost Office Space 4, 4A, 4B, 4C, 4D 10.09
International on the third floor at SB Tower
Limited premises no.37, Shakespeare
Sarani, Ward 63 of KMC
Kolkata
18. M/S Globiz Shop No.1 to 4, Oberoi 18.36
Exim Pvt. Ltd. Chambers-1, CTS No.645,
Village Oshiwara, Andheri
West, Mumbai.
19. M/s NSD Shop 101 to 108, 1st Floor, 23.69
Nirman Pvt. Oberoi Chambers 1, Plot
Ltd. bearing CTS No.645 and 646,
Off Link Road, Village
Oshiwara, Andheri West,
Mumbai-40058
20. M/s Frost Apartment No.T-22, 401, Tower 7.02
International 22, Apt. No.401, third Floor,
Limited admeasuring 2830.04 sq. ft.,
Commonwealth Games Village,
National Highway-24, Adjacent
to Akshardham Temple, Noida
Crossing, Delhi-110092.
21. M/s Frost Office Unit No. 709, 7th Floor, C 44.45
International Wing bldg.. One-BKC, Bandra
Limited Kurla Complex, G Block Plot
No. C-66, Bandra (E), Distt.
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
2023:DHC:3616
Mumbai-40051 in the name of
Frost International Limited
22. M/s Frost Residential Flat on Ground 5.14
International Floor of Plot No. 38 Block-E,
Limited Greater Kailash Part-1, New
Delhi.
23. M/s Frost Land at SF No 188/3A, Village 0.026
International KalanagaRajpatti, Tuticorin,
Limited Tamilnadu.
24. M/s Frost Land at S.F. No 338/8A, 0.0325
International Sayamalai, Tirunelveli,
Limited Tamilnadu.
25. M/s Frost Land at S.F. No 22/1 0.0375
International Chittikalam Tirunelveli,
Limited Tamilnadu.
26. M/s Frost Land at S.F. No 96/1A & 96/1B, 0.03
International Village Mahendravadi,
Limited Tirunelveli, Tamilnadu.
27. M/s Frost Land at S.F. No 100/2 & 100/3, 0.028
International Village KalanagaRaipatti,
Limited Tuticorin, Tamilnadu.
28. M/s Frost Office No. 406 Shail's Mall 0.19
International Changispur, Taluka City,
Limited Ahmedabad, in name of FIL
29. M/s Frost 516, Kalpana Plaza, 24/147-B, 0.2085
International Birhana Road, Kanpur.
Limited
Total Rs.185.85
Crores.
3. The case of the Petitioners was that the 180 days period after the PAO
was passed, as prescribed under the PMLA, has expired. Thus, the
confirmation of the same is contrary to law.
4. Initially, vide order dated 7th March, 2022, the present petition had
been dismissed on the ground of forum non-conveniens.
5. This order was challenged in a Letters Patent Appeal being LPA
No.262/2022 wherein the matter was remanded to this Court.
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
2023:DHC:3616
6. On 19th April, 2022, after considering the submissions made, the
following interim order was passed the operative portion of which is
extracted hereunder.
"2. The challenge in the present petition is to an order
passed by the Adjudicating Authority confirming a
provisional attachment order in terms of Section 8 of
the Prevention of Money Laundering Act, 2002
(PMLA).
3. The Court is apprised that the appellate authority is
yet to be constituted and consequently, the petitioner
is constrained to invoke the jurisdiction of this Court
under Article 226 of the Constitution of India.
Attention of the Court has further been invited to
orders of final disposal passed by the Court on
numerous other writ petitions raising identical
challenges. For the purpose of evaluating, prima
facie, the merits of the challenge raised, the Court
takes note of the submission that the Adjudicating
Authority proceeded to confirm the order of
provisional attachment after the expiry of a period of
180 days. It is in that context reliance is placed on the
decision rendered by a learned judge of the Court in
the case of Vikas WSP and Others Vs. Directorate
Enforcement and Another, 2020 SCC Online Del.
1732. The Court also notes that an LPA has been
preferred against the said decision and on which on
08.01.2021, directions were framed for parties to
maintain status quo with regard to ownership,
possession and encumbrance upon the attached
properties.
4. Matter requires consideration. Till the next date of
listing, the respondent shall stand restrained from
taking further steps as contemplated under Section 8
of the PMLA. The petitioner shall also stand
restrained from disposing of or creating any third
party rights or encumbering the properties which
form subject matter of the provisional order of
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
2023:DHC:3616
attachment."
7. The matter has since then been pending and the interim order is
continuing.
8. Today, an application has been moved on behalf of the Petitioner
No.1 Company-Frost International Limited through the Resolution
Professional (hereinafter 'RP') as the company has now gone into
insolvency proceedings. Proceedings have commenced in the National
Company Law Tribunal ('NCLT'). Further, vide order dated 9th February,
2023, the NCLT has declared a moratorium under Section 14 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter 'IBC').
9. In addition, the RP- Mr. Amit Chandrakant Shah has been appointed
to handle the day to day affairs of the company and to carry out the mandate
as directed by the NCLT.
10. The submissions on behalf of the company by ld. Counsel
representing the RP is that since a large number of assets of the company
have been attached, the resolution process itself has been adversely affected.
Accordingly, he prays that the interim order granted ought to be vacated.
11. Mr. Zoheb Hussain, ld. Counsel appearing for the Directorate of
Enforcement (hereinafter 'ED') submits that the attachment is prior to the
declaration of moratorium under Section 14 of the IBC and would,
therefore, not be affected by the moratorium. However, he further submits
that the present writ petition was filed primarily on the ground that at the
relevant point in time, the Appellate Tribunal was not functioning. The
relevant portion of the writ petition is extracted below:
"2. It is pertinent to note that the Petitioners are
constrained to approach this Hon'ble Court since the
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
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Appellate Tribunal for PMLA has been non-functional
since the year 2020, as the seat of the Ld.
Chairperson is lying vacant and no effective hearing
of any Appeal is taking place. As such, the only
efficacious remedy available with the Petitioners is
vide the present Writ Petition. Although the
Petitioners are in the process of preparing and filing
their respective appeals within the statutory limitation
period of the PMLA, the Petitioners apprehend that
the Respondent No. 1 may take coercive steps against
the Petitioners and their statutory right to Appeal may
get frustrated due to the non-functioning of the
Appellate Tribunal, PMLA."
12. The above submission is without prejudice to the argument that the
attachment is in accordance with law and Section 14 does not bar the
attachment by the ED.
13. Having considered the submissions made on behalf of the RP as also
the ED, there is no doubt that the issue relating to the expiry of 180 days and
the manner in which the same would affect the PAO, is pending in Vikas
WSP and Others Vs. Directorate Enforcement and Another, 2020 SCC
Online Del. 1732. However, the same being a legal issue, there are various
other submissions also which may have to be considered in the present
matter, bearing in mind that the Petitioner Company has gone into
insolvency and moratorium has been declared.
14. Admittedly, the Tribunal under the PMLA is functioning and the
Petitioner is free to approach the Tribunal under Section 26 of the PMLA.
15. The Petitioner has already filed an appeal before the Appellate
Tribunal, which is stated to have been dismissed for non-prosecution.
16. However, since the Petitioner was already before this Court and was
granted interim protection, it is deemed appropriate to permit the Petitioner
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
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Company through the RP to approach the Appellate Tribunal for restoration
of its appeal within the next two weeks. The Appellate Tribunal would
proceed to hear the appeal in accordance with law.
17. The Petitioner, if it has not already filed, is also permitted to file the
stay application before the Appellate Tribunal, which shall be considered by
the Appellate Tribunal and the orders shall be passed on the same.
18. Till the said orders are passed in the stay application of the Petitioner,
the interim order dated 19th April, 2022 already granted by this Court, shall
continue and the same shall be subject to the further orders of the Appellate
Tribunal.
19. Insofar as the issue of lapsing of 180 days is concerned, if any
decision is rendered by the ld. Division Bench of this Court in Vikas WSP
(supra) or any other binding decisions are rendered, the same shall be
applicable to the present proceedings as well.
20. The contentions of the RP, who is representing the Petitioner in
respect of the applicability of the IBC and its effect thereof, shall also be
considered by the Appellate Tribunal.
21. The present petition along with all pending applications, if any, is
disposed of in these terms.
22. It is clarified that this Court has not expressed any view on the merits
of the case.
23. The next date of hearing stands cancelled.
PRATHIBA M. SINGH
JUDGE
MAY 23, 2023/dk/rp
Signature Not Verified
Digitally Signed
By:RAHUL
Signing Date:24.05.2023
17:56:33
