Supreme Court Praises ED for Protecting Homebuyers in ₹175-Crore Real Estate Scam
The Supreme Court has commended the Directorate of Enforcement (ED) for its proactive role in safeguarding the interests of innocent homebuyers in a major real estate scam linked to the Royal Rajvilas housing project in Udaipur, Rajasthan.
Real EstateSupreme CourtEdHomebuyersFraudReal Estate NewsOct 15, 2025
A Bench of Justice Sanjay Kumar and Justice Alok Aradhe observed that the agency’s initiative ensured justice for investors caught in the financial mismanagement of the corporate debtor.
“We record our appreciation for the efforts made by the Directorate of Enforcement in restoring the attached assets so as to protect the rights of genuine and innocent homebuyers,” the Court remarked.
The case stemmed from the insolvency of the Royal Rajvilas housing project, which is undergoing a Corporate Insolvency Resolution Process (CIRP). During the probe under the PMLA, several flats were provisionally attached by the ED. To secure relief for the affected buyers, the agency agreed to restore the attached properties to M/s Udaipur Entertainment World Pvt. Ltd., the successful resolution applicant under the Insolvency and Bankruptcy Code (IBC).
In its order passed under the second proviso to Section 8(8) of the PMLA, the Court partially set aside the Provisional Attachment Order (PAO) No. 05/2019, directing that the restored assets be handed over to Udaipur Entertainment World Pvt. Ltd., which had taken over the corporate debtor solely to protect homebuyers’ interests. The ED estimated the current market value of these restored properties at approximately ₹175 crore.
However, attachment will continue for 11 specific units in the project — valued at around ₹8.65 crore — which were allegedly purchased using proceeds of crime, as identified in the ED’s additional affidavit dated October 7, 2025. The Court clarified that the restitution was being granted without adjudicating on the merits of the parties’ claims.
Invoking Section 32A of the IBC, the Court directed that the corporate debtor’s name be removed from the list of accused in the third supplementary prosecution complaint filed by the ED in February 2025. It emphasized that criminal proceedings and confiscation actions would continue against the former directors, conspirators, and abettors of the offence.
The Bench further clarified that Section 32A immunity would apply only if the resolution applicant is not connected in any manner with the former promoters or beneficiaries of the laundered funds. Should any such link surface during the ongoing investigation into the Syndicate Bank fraud, the ED will retain the right to challenge the approved resolution plan.
The ruling effectively closed the ED’s challenge to the National Company Law Tribunal (NCLT), Mumbai order approving the resolution plan. The agency was directed to withdraw its pending appeal before the PMLA Appellate Tribunal (FPA-PMLA-3275/JP/2019) and immediately inform authorities to expedite the registration of sale deeds for the restored properties.
The Bench made it clear that these directions were limited to the facts of this case and should not be treated as a precedent. It also disposed of a connected writ petition pending before the Rajasthan High Court (Jaipur Bench).
Concluding the matter, the Court reiterated: “We place on record our appreciation for the efforts made by the learned counsel for the parties and the Directorate of Enforcement in restoring the attached properties to secure the interests of genuine and innocent homebuyers.”
Frequently Asked Questions
What is the Royal Rajvilas housing project?
The Royal Rajvilas housing project is a real estate development in Udaipur, Rajasthan, which became the center of a major real estate scam involving financial mismanagement and fraud.
What role did the Directorate of Enforcement (ED) play in this case?
The ED played a crucial role by attaching properties under the PMLA to prevent further fraud and by working to restore these properties to protect the interests of innocent homebuyers.
What is the Corporate Insolvency Resolution Process (CIRP)?
The CIRP is a process under the Insolvency and Bankruptcy Code (IBC) that aims to resolve insolvency issues of corporate debtors by finding a resolution plan that is fair to all stakeholders, including creditors and homebuyers.
How much is the estimated market value of the restored properties?
The estimated market value of the restored properties is approximately ₹175 crore.
What is the significance of the Court's decision in this case?
The Court's decision is significant as it provides a legal framework for protecting the rights of innocent homebuyers and sets a precedent for similar cases involving real estate fraud and insolvency.
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