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In a significant development, the Bombay High Court has granted relief to the owners of a dilapidated building, Hari Niwas, located at Opera House in South Mumbai, by lifting the Enforcement Directorate's (ED) attachment on two flats. Justices Sunil Shukre and Firdosh Pooniwalla of the division bench accepted the proposal from the building owners, Kirti Hansraj Kothari and other members of the Kothari family, to substitute the attachment with fixed deposit receipts. This decision has made way for the redevelopment of the five-story structure comprising 18 residential and three commercial units.
The ED's involvement dates back to June 2017 when the Ahmedabad unit booked two tenants of Hari Niwas based on a Central Bureau of Investigation (CBI) case against M/s ABC Cotspin Private Limited and others. The charges include offenses under section 120(B) r/w section 420 of the Indian Penal Code and section 13(2) r/w section 13(1)(d) of the Prevention of Corruption Act, linking the funds to proceeds of crime.
During its investigation, the ED provisionally attached the two flats in June 2022, contending that these flats were rented using funds constituting the proceeds of crime. The adjudicating authority under the Prevention of Money Laundering Act, 2002, confirmed this provisional attachment in October 2022.
Facing these challenges, the Kotharis approached the high court last month, arguing that Hari Niwas was in an extremely dilapidated state and urgently needed redevelopment. To address the ED's concerns, the family offered to furnish fixed deposit receipts of Rs 22 crore and Rs 22 crore for the two flats, respectively, replacing the attachment of transferable tenancy rights.
The family's legal representative emphasized that this approach was in line with precedents set by the Supreme Court in similar cases from the previous year. The high court bench, acknowledging the pressing need for redevelopment and the offered resolution, accepted the Kothari family's proposal. It permitted them to provide fixed deposit receipts from a nationalized bank with a lien in favour of the joint director of the ED's Ahmedabad zonal office. Upon furnishing these receipts, the attachment on the two flats would be lifted, clearing the way for the long-awaited redevelopment.
This legal development not only addresses the specific case of Hari Niwas but also sets a precedent for utilizing fixed deposit receipts as an alternative to physical attachment, recognizing the complexities of property ownership amid legal disputes. While highlighting the nuanced and evolving nature of legal mechanisms in India's real estate landscape, the decision underscores the court's pragmatism in balancing the interests of justice, property owners, and the need for urban redevelopment.
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