Court Allows Redevelopment of 44-Year-Old Building with Safeguards Preserving ED's Rights under PMLA; Rejects Bank Guarantee Demand
In a significant ruling on October 13, 2026, the Bombay High Court (Division Bench comprising Justices Bharati Dangre and Ashish S. Chavan) directed the Enforcement Directorate (ED) to issue a No-Objection Certificate (NOC) for the redevelopment of a co-operative housing society building, despite one flat (Flat No.4) being under attachment in a money laundering case.
The case arose from Antaral Co-Operative Housing Society's plea to redevelop its over 44-year-old building which has become unsafe for occupation due to lack of safety amenities and lift facilities. Flat No.4 in the society was attached by the ED under the Prevention of Money Laundering Act, 2002 (PMLA), as it was allegedly purchased through laundered money. The society's redevelopment plans were stalled because the ED refused to grant NOC citing the attachment.
The society approached the High Court seeking a writ of mandamus directing the ED to issue the NOC, subject to preserving the attachment on the flat. The Court, while acknowledging the society's predicament, mandated detailed safeguards to protect the ED's interest in the substituted flat post redevelopment. These include:
- - The new flat allotted in lieu of the attached Flat No.4, including additional area and parking, shall remain under attachment and in possession of the ED until final disposal of PMLA proceedings.
- - The possession of the redeveloped flat shall be handed over only to the authorised officer of the ED under an official panchnama.
- - The society will record the attachment and related orders in its official records and disclose the attachment in all redevelopment agreements and power of attorney documents.
- - All monetary benefits accruing from redevelopment related to the attached flat (such as transit rent, corpus fund, shifting charges, brokerage, and compensation) will be deposited in a separate account designated by the ED, with no part payable to the accused or persons claiming through him.
- - The society will keep the ED involved while drafting the Development Agreement and the Permanent Alternate Accommodation Agreement (PAAA), with the ED vetting drafts related to the attached flat.
The ED had insisted on furnishing a bank guarantee before demolition of the existing flat to safeguard its interests. However, the Court rejected this demand, observing that imposing such financial burden on the society was unnecessary given the detailed safeguards already undertaken by the society and the fact that only one flat out of ten was under attachment.
Further, the Court directed the ED to place the society's affidavit and the Court's order before the Special Court (PMLA) in Ranchi where the proceedings are pending, ensuring all relevant authorities remain informed about the unique arrangement allowing redevelopment with preservation of ED's rights.
The judgment balances the competing interests of law enforcement and the rights of innocent co-owners in a cooperative housing society, paving the way for redevelopment of aging buildings while protecting the enforcement agency's stake in attached properties under the PMLA.
Bottom Line:
Prevention of Money Laundering Act, 2002 - Flat under attachment by Enforcement Directorate in a co-operative housing society - Society seeking NOC for redevelopment of old and unsafe building - NOC can be directed to be issued when attachment over original flat is preserved over substituted flat and all monetary accruals are protected in favour of ED - Bank guarantee demanded by ED not necessary in facts of case.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 8(3), 8(4), 8(5), 8(6), 9
