lril/s Kraft Alloy Private Limited v. Union of lndia

...Proposed lmplead RespondenUDefendant No.5 AND 1 M/s Kraft Al oy Private Limited, A Company registered under the Companies Act, 1956, Having its registered office at 35, Rowland Road, Trishul, Ground Floor. Kolkata - 700020, Represented by its Authorized Signatory, Mr. Divyam Agarwal S/c. Chandra Prakash Agarwal, Aged about 28 years, R/o Alwar, Rajasthan. Union of lndia, Represented by its Secretary, Ministry of Home Affairs, New Delhi. 2 3 4 5 Adjudicating Authority, Under the PMLA, 2002, Jeevan DeBp Building, 4th Floor, Sansad Marg, New-Delhi - 110001. Deputy Director, Enforcement Directorate, Hyderabad Zonal Office, 3rd Floor, Shakar Bhavan. Basheerbagh, Hyderabad. The Sub-Registrar, Ranga Reddy District, District Registrar Oflice, Prashant Nagar, Kukatpally, Hyderabad, Telangana 500072. ...PETITIONERS/RESPONDt:NTS/DEFENDANT Petition undr:r Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit the proposed implead respondenUdefendant no 5 to contest the W.P.No.31 1O9 of 2025 and in person. Counsel for the Petitioner: SRI MAYUR REDDY, SR. COUNSEL REP. FOR SRI SAINI ARAVIND Counsel for the Respondent No.1 & 2: SRI N. BHUJANGA RAO Deputy Solicitor General of lndia Counsel for the Respondent No.3: SRI D. NARENDER NAIK, SC FOR ENFORCEMENT Counsel for the Respondent No.4: GP FOR REVENUE Counsel for the Respondent No.5: SRI S.M. MOIZUDDIN, PARTY lN PERSON The Court made the following: ORDER - ^c HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITION No. 311O9 OF 2025 ORDER: l{eard Sri Mayur Reddy, learned Senior Counsel on behalf of Sri Saini Aravind, learned counsel for petitioner, Sri D. Narender Nzrik, learned Standing Counsel for Dnforcement Directorate and Sri S.M. Moizuddin, part5r-in-person.

2. Petitioner-M/s Kraft Alloy Pvt. Ltd. filed this Writ Petition seeking three reliefs against Respondent Nos. 3 and 4 viz., Deputy Director, Enforcement Directorate, Hyderabad and the Sub-Registrar, District Registrar Officer, Ranga Reddy District. Thcy are a) to decl:rre the action of Respondents 2 and 3 in passing the attachment orders dated 26.08.2O2 i and 18.08.2022 as illeg.rl and void in respect of petitioner's property which was purchased under the SARFAESI Act prioi to the said attachmenl orders; b) quash the provisional and final attachment orders dated 26.O8 .2O2I and la.O8.2022 relating to the lands mentioned as items 22 and 23 in the list of immovable properties covered by the attachment orders and declare all corrcspondence sent to the Sub-Registrar, Ranga Reddy in connection with these attachment orders as non-opt:rative and void; _) I ,i c) to direct the Sub-Registrar, RR District to register all deeds of sale ald transaction documents relating to petitioner's property without reference to or obstruction from the attachment orders dated 26.O8.2021 and 18.O8.2022.

3. The brief case of Petitioner is that: M/s Aashi Realtors and *1" Neeharika lnfrastructure Pvt Ltd. were the absolute owners of the land ardmeasrrring Acs.4.O7 gts. and Acs.4.O0, totally Acs. B-O7 gts, in Sun,ey No. 78, Hafeezpet Village, Seriiingampally Mandal, RR District, Hyderabad. They availed Rs. 11O crores financial facility liom M/s SREI Equipment Finance Ltd. and mortgaged the properry in question in their favour. Since M/s Aashi Realtors defaulted in repayment, the Creditor-M/ s SREI Equipmcnt Finance Ltd., invoked the provisions of SARFAESI Acti loan accounts were declared as Non-Performing Assets (NPA) on 16.01.2019; thereafter, the Authorized Officer under the SARFAESI Act brought the property in question to public auction on 3O. 12.2019. Petitioner emerged as tlre successful bidder. After receiving the entire sale consideration, a sale ce rtificatc dated l4.O 1.2020 was issued in favour of petitioner in accordance u,ith the SARFAESI Act, thus, petitioner has become -) the absolute owner and lawful possessor of the property in question with elfect from the said date.

3. 1 . On issuance of Sale Certificate dated |4.OL.2O2O, petitioner approached the Sub-Registrar concerned seeking registration ol' Sale Certificate, however, registration was denied on the grouncl that the Tahsildar stated that lands situated in Survey No. 78 of Hafeezpet are prohibited kom registratior-r under Section 22 A of the Registration Act. Hence, petitioner filed Writ Petition No. 24348 of 2O2O, wherein this Court, bt- order dated O4.O2.2O21, directed the Sub-Registrar to register the documents submittcd by petitioner. Since the said orders were not implemented, petitioner filed Contempt Case No. 262 of 2O2l .

3.2. It is stated, to circumvent the contempt proceedings, the State authorities preferred SLP No. 2844 of 202 1 challenging the order of this Court dated 04.02.202 1. The Hon'ble Supreme Court rvhile admitting the SLP, had not granted any interim stay or interim suspension. Meahtime, the Hon'ble Supreme Court in SLP No. 2844 of 2021 and other tagged SLPs filed b_v the State, by order dated 13.O3.2O23 granted leave and directed that the existing orders of status quo + I I would continue to operate. Petitioner contends that no status quo was ordered in SLP and only a direction not to take coercive sLeps \r'as ordered. Thereafter, on 13.03.2023, the contempt procecdings were closed with liberfy to petitioner to approach the appropriate forum if grievance subsists.

3.3. It is stated, the sale certilicate under the SARFAESI Act ra'as duly issued in favour of petitioner on 14.01.2020 and on the same date, the secured creditor delivered vacant and pcerccful possession of the property to petitioner along with all original title deeds, documents and keys, etcetera. In view of thc scttlecl legal position that registration of sale certihcate is not requircd, being absolutely vested with the title and possession of thc auction-purchased property, has divided the Iand into smaller plots of various extents. It is further stated, u'hcn pctitioner approached the 4s respondent for registration of thc plots, they were informed that the 3.d respondent forwarded the letter dated 28.09.2022, directing not to create any encumbrance or register any conveyance deed in respect of the land purchased by petitioner in the gublic auction. Challenging the said letter, petitioner filed Writ Petition No. 29O88 of 2O25. Subsequent to liling the above Writ Petition, J- i petitioner came to know about certain attachment orders passed by the Enforcement Directorate relating to petitioner's properties in a distinct Enforccment Case Information Report (ECIR) namellz ECIR/05/HYZOl2014. lt is further stated that upon enquiry, petitioner ascertained that the attachment orders pertain to a separate ECIR and are distinct and independent lrom the facts and ECIR involved in the Writ Pbtition already f,rled and the present Writ Pctition.

3.4. Petitioner contends that the 3rd respondent in ECIR/05/[{YZO l2Ol4 pe nriing against M/s Aashi Realtors, the borrower of the secured creditor, passed provisional attachment order dated 26.08.2021 attaching the propertlr which petitioner herein had purchased under a sale certificate dated 14.01.2O20. The statement of Encumbrancc dated 28.04.2021 obtained by the Enforcement Directorate clearly demonstrates e*ecution of the MODT deed dated 2o.l2.2ola by M/s Aashi Realtors in favour of M/ s SREI Equipment Finance Ltd., the secured creditor. After noticing the Encumbrance in the name of M/ s SREI Equipment Finance Ltd., the 3'd respondent ought not to have passed the provisional attachment order. It is alleged that neither the secured creditor or peririoner was served rvith notice 6 I I l nor opportuniqr of hearing was given prior to passing the provisional attachment order, thereby violating the principles of natural justice. Based on the said provisional attachment order, petitioner came to know that the 2"d respondent passed final attachment order dated 18.O8.2O22, inc]uding petitioner's property as ltem Nos. 22 ar.d 23 in the list of immovable propertics subject to attachment. Despite receiving and perusing thc Statement of Encumbrance submitted by the llra respondent, the 2"d respondent neither took any steps to exclude the said properties from attachment nor afforded notice or an opportunity of hearing to the secured creditor or the petitioner, but instead mechanically passed the final attachment order.

3.5. Pctitioner contends that as held by the Hon'ble Supreme Court in The Inspector General o;f Regfs*ation o. G. Madhurannball, a Saie Certihcate does not require registration undcr Section 1 7(2)(xii) of the Registration Act. Existence of a predicate offence is an essential and indispensable condition lor continuation of any proceedings under the Prevention of Money Laundering Act, 2002. This y '2022 Live Lau, (SC) 969 a-' _l 1 principle extends to continuance and validity of ECIR. Without a valid underlying FIR for the scheduled offence, the very foundation upon which PMLA proceedings rest becomes untenable. In the absence of such a predicate olfence or a valid FIR, the ECIR which is ancillary and dependent on the schedule offence, loses its legal sanctity and cannot be continued, is the other contention.

4. The 3'd respondent- Enforcement Directorate filed the memo stating that PAO No. 7 of '2021 dated 26.O8.2021 was issued strictly in accordance with the information and material that was available on record at the relevant time. AL the time of passing the said order, they had no knowledge or intimation whatsoever that properties referred to in Writ Petition had been sold or transferred to any third party under proceedings initiated by the secured creditor under the SARFAESI Act,2OO2. It is further stated, no communication or disclosure was made by the borrower, the secured crcditor or petitioner company regarding the alleged sale or transfer of the said properties prior to issuance of the attachment orders. The information regarding transfer of properties attached in the attachment order was not known to this respondent until flling of afl-rdavit filed by IJ I I I I petitioner or1 10. lO.2O25 in this Writ Petition. It is further stated, this respondent acted bono ftde and in the normal course of official duty, rclying solely upon the documents, reports and rccords available in connection with ECIRIOSIHYZO /2014 and the corresponding investigation under the Prevention of Money Laundering Act, 2OO2; the attachment was made in good faith in furtherance of statutory obligations and u,ithout .rny intent to prejudice the rights of any third party purchaser who r.r,'as not known to them at that time. However, upon subsequent perusal of the affidavit and documents filed by pctitioner and upon being apprised of the fact that subject properties 'were reportedly sold by the secured creditor in a pubiic auction on l4.Ol.2O2O, i.e. prior to the date of attachment order dated 26.O8.2021, it is stated they have no ]petitioner's objection for release of properties mentioned in aflidavit dated 1O. 1O.2025 subject to verification of the authenticity of the sale certificate, conformation of payment of consideration and compliance with applicable legal.procedures.

5. While things stood thus, one Mr. Sahebzada Mohammed Moizuddin S/o late Mohammed Ghouse Mohiuddin Khan, an Advocate by profession, filed I.A. No.2 of 2025, () seeking permission to come on record as RespondL'nt No.5, on the ground that he has rights and interest in the lands in Survey No. 78, Hafeezpet Village, Balanagar Manclal, Medchal Malkajgiri District ie. lands in question. He also fik:d I.A. No. 3 of 2025 seeking permission to contest the writ petition in person. Writ petitioner's preliminary objection is that Mr. Sahebzada Mohammed Moizuddin S/o late Mohammed Ghouse Mohiuddin Khan has been declared as Vexatious Litigant in OSA No. 3 of 2022 and the same was uphcld b1' the Hon'blc Supreme Court, hence he does not have any right to interfere with the present Writ Petition. However, the said Applications were ordered by this Court on 03.11.2025.

6. Be that as it may. Admittedly sincc M/s Aashi Realtors and M/s Neeharika Infrastructure Pvt Ltd., 'a'ho have availed financial facility of Rs. I 1O crores from) M / s SREI Equipment Finance Ltd., delaulted in repa-1 menr .)f the same , the mortgaged property i.e. land in question was sold in public auction to the highest bidder i.e. petitioner and a Sale Certilicate dated 14.O 1 .2O2O 'a,as issued duly confirming the sale. When writ petitioner approached the 3rd respondent for registration of Sale Certihcate the same u'as den icd . at the first l0 instance, on the ground that lands in question are prohibited lands under Section 22-A of the Rcgistration Act. Against this rejection, petitioner filed Writ Petition No. 24348 of 2O2O and this Court by order dated O4.02.2O2 1, directed the registration authorities to register the Sale Certificate. Later the matter was carried to the Hon'ble Supreme Court, where no order adverse to petitioner was passed. When petitioner approached the 4th respondent for registration of Sale Certificate, it was rejected on the ground that Enforcement Directorate addressed the letter dated 28.O9.2022 not to creatc zrny encumbrance or register any conveyance deed for the lands in qucstion. Challenging the said letter, petitioner hled Writ Petition No. 29088 of 2025. Subsequent to hling the above Writ Petition, petitioner came to know about certain attachment orders passed by the Enforcement Directorate relating to pctitioner's projerties in a distinct Enforcement Case I nf<rrmation Report (ECIR) namely ECIR/05/ HYZO /2014. It is further stated that upon enquiry, petitioner ascertained that the attachment orders. pertain to a separate ECIR and are distinct and independent from the facts and ECIR involved in the Writ Petition already filed and the present Writ Petition. \ t..\ Petitioner contends that the 3'd respondent in ECIR/05/HYZO /2014 pending against M/s Aashi Realtors, thc borrower of the secured creditor, passed provisional attachmenl order dated 26.08.2021 attaching the propert5r whicl-r petitione r herein had purchased under a sale certihcate dated l4.Ol.2O2O. The statement of Encumbrance dated 28.04.2O2 i obtained by the Enforcement Directorate clearly demonstrates cxecution of the MODT deed dated 2O.t2.2O18 by M/s Aashi Realtors in favour of M/s SREI Equipment Finance Ltd., thc secured creditor. After noticing the Encumbrance in the nzrme of M/s SREI Equipment Finance Ltd., the 4th respondent ()Llght not to have passed the provisional attachment order. It is alleged that neither the secured creditor nor petitioner was st:rved u'ith notice or opportunity of hearing was given prior to passing thc provisional attachment order, thereby viotating the plinciptes of natural justice. Based on the said provisional attachment order, petitioner carne to know that the 2nd responclt'nt passed final attachment order dated 18.O8.2022, inclucling their property as Item Nos. 22 and 23 in the list of immovable properties subject to attachment. Despite receiving and perusing the Statement of Encumbrance submitted bv the 4rh l i respondent, the 3'd respondent neither took any steps to exclude the said properties lrom attachment nor afforded notice or an opportunity of hearing to thc securcd creditor or the petitioner, but instead mechanically passed thc fina1 attachment order. 7 Nor,r. the 3'd respondent-Enforcement Directorate in their memo has categorically statcd rhat it has no objection for release of the properties in question subject to verification of the authenticity of the Sale Certificate , Conlirmation of payment of sale consideration and complia nce u'ith applicable legai procedures. As rightly contcndcd b1, pctitioncr, rcgistration of Sale Certificate is not mandatory as held by the Hon'ble Apex Court irr The Inspector Generq.I of Registration o. G Madhuram-bal (supra/. [n an-r, czrsc. tl.ris proposirion is not disputed in this Writ Petition.

8. In vieu, of the unequivocal and categorical assertion of the 3rd respondent-Enforcement Directorate in their memo that in view of the fact that subject properties were reportedly sold by the secured creditor in a public auction on I4.OI.2O2O i.e. prior to the date of the attachment order dated 26.08.2021, they have no objection for release of the properties mentioned in \ ,l' petitioner's affidavit dated 10. 1O.2025, subject to vcrification of the authentic:iq,of the Sale Ccrtificate, conl-rrmation of par.'ment of sale consideration and compliance with applicablc Icgal procedures and it is for petitioner to approach thc 3rd respondent with all the requisite documenLs. On suctr approach, the 3.d respondent is directed to verify the same an(l if they are inlact, release the properties () 'l'he Writ Petition is disposed of rvith thc abour dircction. No costs The miscellaneous Applications, if anl sh:rll stanrl l0 closcd \ To, //TRUE COPY// Sd/.P.PONNA KRISHNA TANT REGISTRAR 1: l\ SECTION OFFICER 1 The Secretary, Union of lndia, Ministry of Home Affairs, New Delhi. 2. Adjudicating Authority, Under the PMLA, 2002, Jeevan Deep Building, 4th Floor, Sansad lt/arg, New-Delhi -- 1 10001 .

3. Deputy Director, Enforcement Directorate, Hyderabad Zonal Office, 3rd Floor, Shakar Bhavan, Basheerbagh, Hyderabad.

4. The Sub-Registrar, Ranga Reddy District, District Registrar Office, Prashant Nagar, Kukatpally, Hyderabad, Telangana 5OOO72, 5. One CC to SRI SAINI ARAVIND, Advocate IOPUC] 6. One CC to SRI S.M. MOIZUDDIN, PARTY lN PERSON IOPUC] 7 One CC to SRI D NARENDER NAIK, SC for ENFORCEIT/ENT [OPUC] 8. One CC to SRI N. BHUJANGA RAO, Deputy Solicitor General of lndia Advocate [OPUC]

9. Two CCs to GP FOR REVENUE, High Court for the State of Telangana. Iour]

10. Two CD Copies BN PNI K W HIGH COURT DATED:2011112025 CC TODAY ORDER WP.No.31109 of 2025 h L \ c\J' .-1C () O * 21N ?06 .q, -tl .// v:'$/ DISPOSING OF THE WRIT PETITION WITHOUT COSTS 1 Vr