Relief for Lodha Developers: SC orders release of Mumbai’s Centaur Hotel attached by ED

The apex court recently granted major relief to the Sandesara brothers, promoters of Sterling Biotech, by permitting a settlement of about Rs 5,100 crore to resolve Rs 16,000-crore bank fraud proceedings and allowing the quashing of all FIRs against them. Together, the two orders underline the court’s approach of balancing strict enforcement of economic offences with pragmatic resolution and recovery in financial crime cases.

The ED had attached several properties of V Hotels Ltd, including the prime beachfront Centaur Hotel (Tulip Star) at Juhu, in connection with an alleged money laundering probe into the company’s former promoters. The agency has been investigating a transaction of approximately Rs 520 crore that was allegedly routed through V Hotels and deemed to be “proceeds of crime”. While the probe into the former promoters continues, the hotel assets remained under attachment even after the company changed hands through insolvency.

The Bombay High Court had in November 2024 vacated the ED attachment but the agency challenged the ruling in the Supreme Court. During earlier hearings, the SC had directed Lodha Developers to deposit Rs 520 crore as security to temporarily safeguard the agency’s interests pending adjudication.

In its operative directions, the Supreme Court said: “The attached properties, which stand substituted with a deposit in terms of this Court’s order dated 02.07.2025, are directed to be restored to the SRA… The amounts deposited by the Respondent No. 2 with the Directorate of Enforcement… shall be released to the Respondent No. 2 along-with accrued interest, if any, within a period of two weeks from the date of this order.”

The Bench made it clear that the relief flows from Section 32A of the IBC and Section 8(8) of the Prevention of Money Laundering Act (PMLA), both of which aim to protect bona fide purchasers and ensure that insolvency resolution is not frustrated by legacy criminal attachments. At the same time, it drew a sharp line between the corporate debtor and its former management. The court directed that the name of the corporate debtor be deleted from the ED’s prosecution complaint, while prosecution against erstwhile promoters, directors and alleged conspirators will continue.

The court, however, cautioned that the immunity granted to the successful resolution applicant is conditional. If it is later found that the new owner is connected with the former promoters or is a beneficiary of proceeds of crime, the ED would be free to reopen action and even question the resolution plan, it said. The SC said the order was on the “peculiar facts” of the case and “shall not be treated as a precedent”.