The story
At seven in the morning the corporate office of a mid-sized residential developer was not yet fully staffed. The Enforcement Directorate arrived anyway, and at the same hour officers reached two of the company's project sites. The searches were simultaneous by design. In parallel, the Income-Tax department mounted its own search, alleging suppressed receipts.
The trigger was a predicate cheating complaint by homebuyers, on which the ED had opened an ECIR. The allegation was blunt: money collected for delivering flats was being diverted elsewhere. For a developer that is not an abstract accusation. It reaches the RERA escrow, the certifications that release funds from it, and the promoters personally.
Personal exposure sat with two promoter-directors and the CFO, under PMLA section 70 and section 50 summons. In the first hour of an enforcement visit the greatest risks are the ordinary ones: a site engineer answering questions he does not understand, a finance clerk deleting a file to be helpful, a promoter volunteering an explanation that becomes a statement.
The company had one thing many businesses do not have on the morning of an enforcement visit. Six months earlier, a crisis protocol had been drafted for exactly this situation. As the officers presented their warrants, the protocol was activated and the call tree began to ring.
How we approached it
- 1
Activated the protocol
The crisis protocol drafted six months earlier was activated at once; counsel reached each site within the hour.
- 2
Preserved the evidence
IT forensically imaged the Tally/ERP system, the project MIS and key custodians' devices under chain of custody, so that what existed on the morning of the search could later be shown to be exactly what existed.
- 3
Reconstructed the escrow position
Escrow inflows were reconstructed against the certified drawdowns, and the diversion between promoter-controlled SPVs was traced.
- 4
Protected privilege
Working alongside counsel, privileged tax opinions were segregated before seizure.
- 5
Prepared the officers
The promoter-directors and the CFO were prepared for their s.50 PMLA and s.131 Income-Tax summons.
The reconstruction confirmed that the company had genuine exposure. Bookings carried a cash 'on-money' component, tracked on an off-system MIS at both sites. The RERA escrow (70%) had been breached: withdrawals exceeded what the architect, engineer and chartered accountant had certified as construction cost. Collections from one project had been routed to promoter-controlled SPVs that were aggregating land for a future project.
Land parcels were held benami through employees and farmers, and 'brokerage' had been paid to two shell entities.
No statements were extracted from unprepared staff. The genuinely exposed transactions were ring-fenced, the escrow shortfall was voluntarily corrected under counsel, and the promoters had their anticipatory-bail materials ready. The company avoided the panicked, self-incriminating disclosures that usually follow an unannounced enforcement visit.
Illustrative composite built from sector-typical fact patterns encountered in practice. Names, figures and timelines are indicative; no client is identifiable.