HC stays ED’s attachment of V Hotels’ city properties
The Bombay High Court stayed the ED's attachment of V Hotels properties, allowing the company to proceed with its restructuring plan amid legal disputes.
MUMBAI: The Bombay high court recently stayed the provisional attachment by the Enforcement Directorate (ED) on several city properties belonging to V Hotels Limited, including their hotel near Juhu beach.
The ED’s provisional attachment order, issued on April 25, 2024, impacted V Hotels Limited and multiple other properties across Mumbai and residential units in Malad. This attachment was based on allegations of financial irregularities before the restructuring.
The National Company Law Tribunal (NCLT) approved V Hotels’ restructuring plan on April 26, 2024, just a day after the attachment order. With Supreme court backing, this plan gives the company’s new management control and legal rights to move forward free from past liabilities.
To whether a hospitality company, after completing a court-approved restructuring, was entitled to immunity from enforcement actions related to alleged pre-restructuring financial irregularities, V Hotels argued that it was legally protected from attachment of asset. Representing V Hotels, advocate Janak Dwarkadas argued that under section 32A of the Insolvency and Bankruptcy Code (IBC), once a restructuring plan is approved, a corporate debtor and its assets are protected from further legal actions for pre-restructuring issues. This section ensures a “clean slate” for companies that have been restructured, and both Dwarkadas and senior Advocate Cyrus Ardeshir, representing a respondent, cited Supreme court and Bombay high court rulings to support this interpretation.
Representing the ED, advocate Aayush Kedia sought time to respond, stating that the agency believes the attachment remains valid, as it pertains to alleged pre-restructuring offenses. The court acknowledged V Hotels’ strong prima facie case, and the judges emphasized the substantial investments of over ₹100 crore made by V Hotels’ new management toward the resolution plan. The court further observed that continuing the ED’s attachment could disrupt this financial plan.
A division bench of justice BP Colabawalla and justice Somasekhar Sundaresan granted an interim stay on the ED’s attachment order, scheduled the next hearing for November 21, and indicated a possible final resolution then. This ruling provides temporary relief to V Hotels, allowing it to proceed with its restructuring efforts without enforcement impediments.