When Projects Freeze, So Do Jobs: Why Real Estate Requires Sensible Enforcement under the PMLA

India’s legal architecture for combating economic offences has grown sharper, more sophisticated, and rightfully uncompromising. The Prevention of Money-Laundering Act, 2002¹ (PMLA) is central to this framework. Yet, the increasing use of provisional attachment powers by the Enforcement Directorate (ED), particularly against large-scale real estate projects, raises critical questions about collateral consequences. One of the most underdiscussed among them is the loss of employment and economic disruption caused by prematurely freezing ongoing infrastructure developments.

This is where legal professionals such as experienced PMLA lawyers become vital, helping ensure compliance while protecting economic interests.

The recent Supreme Court order in M3M India (P) Ltd.², allowing substitution of provisionally attached land with commercial units of equal value, offers a moment of recalibration, a recognition that enforcement cannot be allowed to function in a vacuum, particularly in a sector that supports millions of livelihoods.

PMLA enforcement: A powerful tool, not a blunt instrument

Section 5³ of the PMLA empowers the ED to attach properties suspected to be linked to proceeds of crime, even before a trial or conviction. While this tool is indispensable in tracking financial wrongdoing, the manner and timing of its application, especially in asset-heavy sectors like real estate, must be carefully weighed.

Real estate projects, unlike liquid assets or offshore accounts, are complex entities bound to public infrastructure, loan obligations, environmental clearances and employment contracts. A single attachment order can halt an entire ecosystem. When land or commercial units under development are frozen, contractors, suppliers, daily-wage workers, and homebuyers often become unintended casualties. For real estate stakeholders, consulting a skilled real estate lawyer can be key to navigating such scenarios and safeguarding ongoing development.

M3M case: Judicial discretion as a safety valve

In July 2025, the Supreme Court permitted M3M India Pvt. Ltd. to substitute a provisionally attached Rs 317 crores land parcel under the PMLA with built-up commercial units of matching value. This was not a dilution of anti-money laundering law, but a nuanced response to balance enforcement with economic continuity.

The Court did not overturn the ED’s powers but acknowledged that the PMLA does not expressly prohibit substitution. It filled the gap through judicial discretion, preserving both the attachment’s intent and the economic life of the affected project. Legal commentators widely hailed the ruling as a sign of “economic pragmatism” and procedural fairness. The recent Supreme Court order⁴ provides clarity not a precedent, but the way this is conducted shows a broad mindset.

The employment cost of frozen projects

The real estate sector is India’s second-largest employer, directly and indirectly supporting over 50 million jobs. M3M India Pvt. Ltd., one of the major real estate players in the National Capital Region (NCR), claims to have created over 1 lakh jobs and positively impacted 5 lakh lives through its infrastructure initiatives.

When projects stall due to attachment orders:

(i) On-site workers lose wages.

(ii) Vendors and small & medium enterprises (SMEs) face payment delays.

(iii) Homebuyers are left in limbo.

(iv) State Governments lose potential stamp duties and registrations.

In short, the economic loss transcends the accused entity.

The courts are now beginning to recognise this ripple effect. In M3M matter⁵, substitution allowed the project to move forward, thus preserving jobs and ensuring continued delivery to stakeholders, without compromising the ED’s investigation.

Legislative silence and judicial innovation

The PMLA, despite its sweeping powers, remains silent on substitution mechanisms. It neither permits nor denies them. This creates a grey zone, which, until M3M case⁶, was largely unexplored. The Supreme Court’s order⁷ did not establish a binding precedent, but it demonstrated how judicial intervention can protect constitutional and commercial interests without undermining regulatory oversight.

This opens the door to policy innovation:

(i) Can the PMLA be amended to codify property substitution under strict conditions?

(ii) Should ED release operational assets for limited use under escrow?

(iii) Can a tribunal or fast-track mechanism assess economic impact before confirming attachment?

These are no longer academic questions, they are existential for sectors like real estate, where every project is part business, part public utility.

Towards sensible enforcement: A framework for balance

The answer lies not in softening the law, but in sensitising its enforcement. A framework that allows:

(i) Asset substitution where value equivalence is proven.

(ii) Controlled use of operational assets during the trial phase.

(iii) Periodic judicial review of attachments impacting public interest projects.

Such reforms would not favour wrongdoers, they will protect innocent stakeholders and preserve economic momentum while due process unfolds.

Conclusion: Enforcement that safeguards, not stifles

The Supreme Court’s handling of M3M matter⁸ signals a subtle but vital evolution in the Indian judicial approach. It acknowledges that justice, especially in economic offences, must balance punitive rigour with economic realism.

When projects freeze, so do jobs. And when livelihoods hang in the balance, the law must not just uphold enforcement, it must also enable enterprise. The challenge before us is to ensure that in chasing accountability, we do not choke the very engines of employment and growth.

M3M order⁹ may not yet be law of the land, but it is, unmistakably, a signal. One that says: enforcement is strongest when it is also sensible.