Supreme Court orders restitution of ₹520.80 crore to Macrotech Developers; Key recovery achieved in ₹4,100-crore fraud
Mumbai/New Delhi – The Directorate of Enforcement (ED), Mumbai Zonal Office has achieved a significant breakthrough in the ongoing Cox & Kings Ltd. (CKL) money laundering investigation by ensuring the release of attached properties to the legitimate claimant. The high-value fraud, one of the largest in the travel and tourism sector, involves Proceeds of Crime (PoC) worth nearly ₹4,100 crore.
According to ED, its investigation revealed that ₹1,066 crore out of the total PoC had been diverted to M/s V Hotels Ltd. through complex financial layering. Of this, ₹520.80 crore remained outstanding and was subsequently attached under the Prevention of Money Laundering Act (PMLA), 2002. The Adjudicating Authority later confirmed the attachment after reviewing the evidence submitted by the agency.
V Hotels underwent CIRP; Macrotech Developers emerged as SRA
During the course of the investigation, M/s V Hotels Ltd. was admitted into the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). Following a competitive bidding process, Macrotech Developers Ltd. (formerly Lodha Developers) was selected as the Successful Resolution Applicant (SRA).
Subsequently, in proceedings before the Supreme Court, initiated through a Special Leave Petition (SLP) filed by ED, the Court directed that the SRA deposit the substituted value of the attached assets—₹520.80 crore—as an interest-bearing fixed deposit with State Bank of India (SBI).
Macrotech Developers complied in full, depositing the amount as mandated.
The deposited sum represented the fair financial value of the assets previously attached from V Hotels.
ED gives consent for restitution under PMLA and IBC provisions
During arguments before the Supreme Court, ED reiterated its consistent legal position based on:
- Section 8(8) of PMLA, which allows restoration of attached assets to legitimate stakeholders under specific conditions; and
- Section 32A of IBC, which protects bona fide resolution applicants from liabilities of past management.
ED submitted that it had no objection to the restitution of the deposited amount to the SRA, provided:
- The SRA had no link with the previous management of V Hotels or CKL, and
- Had no connection to beneficiaries of the Proceeds of Crime.
This stance aligns with ED’s approach in similar insolvency-linked financial crime cases, where lawful claimants have been prioritised in asset restoration.
Supreme Court orders full restoration of deposits with accumulated interest
In a detailed order, the Supreme Court directed that the entire amount of ₹520.80 crore, along with accrued interest, be restored to Macrotech Developers Ltd. under the provisions of Section 8(8) of PMLA.
Importantly, the Court placed on record its appreciation of ED’s efforts, observing:
“We place on record our appreciation for the earnest efforts made by the officers of the Directorate of Enforcement in restoring the attached properties to secure the interests of justice.”
The remark underscores the agency’s proactive role in enabling recovery while safeguarding the rights of legitimate stakeholders involved in insolvency proceedings.
ED reaffirms commitment to tackling financial crime
The ED stated that it remains firmly committed to:
- Identifying and confiscating Proceeds of Crime,
- Ensuring stringent prosecution of those involved in money laundering, and
- Protecting the interests of lawful stakeholders through restitution mechanisms provided under the law.
The Cox & Kings case, involving intricate fund diversion, cross-entity transactions, and multiple insolvency proceedings, stands as a notable example of how:
- Forensic financial investigation,
- Inter-agency coordination,
- Judicial oversight, and
- Statutory provisions of PMLA and IBC
can together facilitate meaningful recovery in large-scale economic offences.
