2021 (5) TMI 264 - HC - Money Laundering

Attachment of property under PMLA - Hospitality sector - Seeking permission for extra finance under the Emergency Credit Line Guarantee Scheme ( ECLGS ) due to covid pandemic - HELD THAT - A perusal of the valuation report of the property, which is confirmed by the Yes Bank, shows that the total value attributed to the property is to the tune of ₹ 342.40 crores, and the realisable value of the said property is ₹ 325.20 crores. The valuation report has been given by the CBRE, which is a valuation advisory services agency, and the said report has also been placed on record - Considering the fact that the Yes Bank s valuation of the property is to the tune of ₹ 342.40 crores which is accepted by the bank and the bank has approved the loan, and the attachment by the ED is to the tune of ₹ 120,20,46,000/- crores, this Court grants permission to availing of the loan under the ECLGS scheme. While maintaining the ED s attachment order to the tune of ₹ 120,20,46,000/- crores, and safeguarding the ED s rights in respect of the said attachment, permission is granted to the Petitioner to avail of the loan to the tune of ₹ 25 crores under the ECLGS scheme, by creating a second charge in respect of the subject property- Holiday INN, which is situated at Asset Area 12, Aero-city, Delhi International Airport, New Delhi- 110037 - Petition disposed off.

Issues:
1. Non-functionality of the Appellate Tribunal under the Prevention of Money Laundering Authority, 2002 due to vacancies.
2. Provisional attachment of a hotel property by the Enforcement Directorate.
3. Petitioner seeking permission to avail additional credit facility under the Emergency Credit Line Guarantee Scheme.
4. Requirement of approval from the Appellate Tribunal for the loan facility due to the property attachment.
5. Valuation of the property by Yes Bank and need for permission to create a second charge for the loan facility.
6. Granting permission for the loan facility considering the property valuation and ED's attachment.

Issue 1: Non-functionality of the Appellate Tribunal
The petitioner filed a writ petition under Article 227 due to the non-functionality of the Appellate Tribunal under the Prevention of Money Laundering Authority, 2002, caused by unfilled vacancies, hindering the processing of the petitioner's appeal against a provisional attachment order issued by the Enforcement Directorate.

Issue 2: Provisional attachment by Enforcement Directorate
The Enforcement Directorate provisionally attached a hotel property, Holiday Inn, due to money laundering allegations, with an attachment amount of ?120,20,46,003, confirmed by the Adjudicating Authority. The petitioner sought permission to avail of an additional credit facility under the Emergency Credit Line Guarantee Scheme, necessitating approval from the Appellate Tribunal due to the property's attachment.

Issue 3: Permission for additional credit facility
The petitioner requested direction for the Enforcement Directorate to allow them to avail of the additional credit facility sanctioned by Yes Bank under the Emergency Credit Line Guarantee Scheme, despite the property attachment, to mitigate the adverse impact of the COVID-19 pandemic on the hospitality sector.

Issue 4: Requirement of Appellate Tribunal approval
Due to the property attachment, the petitioner needed approval from the non-functional Appellate Tribunal to create a second charge for the loan facility sanctioned by Yes Bank, which valued the property at ?342.4 crores, significantly higher than the attachment amount.

Issue 5: Valuation and approval for loan facility
Yes Bank's valuation of the property at ?342.4 crores, acceptance of the loan, and the petitioner's urgency to secure the loan to ensure the hotel's operations led the Court to grant permission for availing the loan under the ECLGS scheme, safeguarding the Enforcement Directorate's attachment rights.

Issue 6: Granting permission for loan facility
Considering the urgency, property valuation, and potential threat to the hotel's operation, the Court granted permission for a ?25 crores loan under the ECLGS scheme, with a second charge on the property, while maintaining the Enforcement Directorate's attachment order and directing submission of relevant documents to the Appellate Tribunal for further consideration.

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