HC allows developer to register sale deed of auctioned Mazgaon plot

The EOW had instructed the sub-registrar of assurances not to register the sale deed of the property, as the developer had allegedly defrauded at least 90 flat buyers to the tune of ₹210 crore

MUMBAI: The Bombay High Court has struck down a communication issued by the Economic Offences Wing (EOW) of the Mumbai police, that had stalled the sale of a prime plot measuring 38,880 sq m in Mazgaon. The court has also allowed the property firm which had purchased the plot in auction to go ahead and register the sale deed.

HC allows developer to register sale deed of auctioned Mazgaon plot

The EOW had instructed the sub-registrar of assurances not to register the sale deed of the property, as Radius Sumer Developers Pvt Ltd – the developer of the project, Harbour Heights – had allegedly defrauded at least 90 flat buyers to the tune of ₹210 crore, and EOW’s proposal to attach the property under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999, was pending.

The high court, however, held that the EOW could not have prevented registration of the sale deed of the property, purchased by an auction purchaser, during pendency of such a proposal. The division bench of Justice RI Chagla and Justice Farhan Dubhash passed the order on a petition filed by CFM Asset Reconstruction Pvt Ltd.

In 2016, Punjab National Bank Housing Finance Limited and Standard Chartered Bank had extended credit facilities amounting to ₹600 crore to Radius Sumer Developers, which had mortgaged the 38,880-sq-mt plot against the loan.

When the developer defaulted on repayment in March 2020, the lenders initiated proceedings for recovery of the outstanding loan amount under the SARFAESI Act. Later, CFM Asset Reconstruction stepped into the shoes of the lenders, and took over the proceedings. After the property was put up for public auction, Shree Naman Estate Project Pvt Ltd submitted an offer of ₹430 crore.

As no other challenging bids were received, even after the property was put up for auction again and again, Shree Naman Estate Project was declared the successful bidder on August 19, 2025. The next day, the property firm deposited ₹107.50 crore, 25% of the purchase consideration, with CFM Asset Reconstruction.

However, when Shree Naman Estate Project sought to register the sale deed, they found that on June 16, 2025, the EOW had instructed the sub-registrar of assurances not to register any document creating any third-party rights in Harbour Heights property without prior intimation to them and without obtaining an order from the MPID Court.

In the high court, the government lawyer conceded that the EOW had submitted a proposal for attachment of the property two days after sending the communication to the sub-registrar, but the proposal had not yet been approved by the government.

The bench said the Supreme Court has held that the provisions of the MPID Act would override any claim for priority of interests by the secured creditors in respect of the properties attached under the MPID Act.

“Thus, it is clear that restrictions are imposed under the MPID Act, only after an order of attachment has been passed (under Section 4 thereof) and not in anticipation of any such order, as has been done in the present case,” the judges said.

“This is wholly impermissible,” they said, adding that “in these circumstances the EOW could not have taken law into their own hands” and issued the communication to the sub-registrar. “Such action on their part is contrary to the provisions of the MPID Act and could never have been done,” the bench said while striking down the communication.

The court has now allowed Shree Naman Estate Project to complete the transaction by January 31, 2026, and ordered the sub-registrar to register the sale certificate issued in favour of the property firm.