The Supreme Court has reaffirmed that the core objective of Section 8(8) of the Prevention of Money Laundering Act (PMLA) is to ensure that properties attached under the Act are ultimately restored to bonafide successful resolution applicants (SRAs) who have a legitimate claim over them.

Section 8(8) empowers the Special Court to direct the Central Government to return confiscated property to a person with a bona fide interest upon the conclusion of a trial. The second proviso to this section permits restoration even during the pendency of the trial.

Invoking this second proviso, the Court allowed the properties of V Hotels Limited (corporate debtor), attached by the Enforcement Directorate (ED), to be restored to Macrotech Developers Limited (SRA), considering the unique facts of the case, the consent of the parties, and without delving into the merits. The Court clarified that the order is strictly case-specific and shall not serve as precedent.

Case Background: V Hotels Limited entered corporate insolvency under the Insolvency and Bankruptcy Code (IBC) and filed for resolution before the National Company Law Tribunal (NCLT), Mumbai. Simultaneously, the ED initiated a PMLA investigation and issued a provisional attachment order on the properties of V Hotels, alleging them to be proceeds of crime.

During this period, the NCLT approved a resolution plan submitted by Macrotech Developers Limited, which the Supreme Court upheld on April 26, 2024. Due to the provisional attachment, the SRA approached the Bombay High Court, which set aside the ED’s order. The ED then filed an appeal before the Supreme Court.

A Bench of Justices MM Sundresh and Satish Chandra Sharma observed that the attached properties had already been substituted with a monetary deposit as per the Court’s earlier order dated July 2, 2025. Relying on Section 8(8) of the PMLA and precedents like Directorate of Enforcement v. JSW Steel Ltd. & Ors. (2024) and Udaipur Entertainment World Pvt. Ltd. v. Union of India & Ors. (2025), the Court directed that the properties be restored to the SRA.

“The attached properties, substituted with a deposit per this Court’s order dated 02.07.2025, are restored to the SRA, who has stepped into the shoes of the Corporate Debtor following successful resolution. This order is passed without addressing the merits of the parties’ rival contentions, and all questions of law remain open,” the Court stated.

Further, under Section 32A (Liability for prior offences) of the IBC, the Court ordered that the corporate debtor be removed from the list of accused, while prosecution of its former directors and promoters continues. The benefit of Section 32A, however, is conditional on the SRA not being linked to the alleged offences or deriving benefit from the proceeds of crime.

“If the foundation of the SRA’s bona fide status is undermined during the ongoing investigation, the ED may take lawful action, including scrutinizing the resolution plan,” the Court clarified.

Consequently, the Court held that the ED’s challenge to the resolution plan is closed. The ED has no claim or lien over V Hotels’ properties or any other assets included in the plan.

“The Resolution Plan has been substantially implemented in accordance with law. The deposit amounts held by the ED, along with accrued interest, shall be released to the SRA within two weeks,” the Court directed.

The order emphasizes that it is based on the specific facts of the case, with the consent of the parties, under the second proviso to Section 8(8) of the PMLA, and does not establish a precedent; broader legal questions remain open for future adjudication.

Case Details: Directorate of Enforcement v. V Hotels Limited & Ors., Criminal Appeal No. 2925/2025