Bombay High Court
Deepak Premji Gogri (Since Deseased ... vs The State Of Maharashtra on 15 December, 2023
Author: Gauri Godse
Bench: Revati Mohite Dere, Gauri Godse
2023:BHC-AS:37778-DB
901.491.03 apeal.doc
Iresh
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 491 OF 2003
1. Smt. Madhu Deepak Gogri
Age 53 years, Occ. Housewife,
R/at: B/107, Raj Crystal C.H.S.
Ltd. Royal Complex, Eksar
Road, Borivali, Mumbai.
2. Mayank Deepak Gogri
Age: 30 years, Occ. Business,
R/at: Door No. 40-25-43,
Flat No. 9, 5th floor, Hemlatha
Enclave, K Chenna Kesvavrao
Street, Petamatalanka Vijaywada
- 520010 A.P. ....Appellants
Versus
1. The State of Maharashtra
(At the instance of GBCD)
CID, Mumbai.
2. Joseph D. Vaz
3, Vaz Bungalow, J.C. Colony,
Boriwali (W), Mumbai 400103
(At present in custody)
Yerwada Central Prison Pune
3. The Competent Authority
Administrative Building near
Chetana College, Government
Colony, Bandra (East),
1/20
901.491.03 apeal.doc
Mumbai - 400 051 ...Respondents
Mr. Sandeep R. Karnik a/w Mr. Rohan Bhosale for appellants
Mrs. P. P. Shinde, APP for the State
CORAM : REVATI MOHITE DERE &
GAURI GODSE, JJ.
RESERVED ON : 25th OCTOBER 2023
FURTHER HEARING ON : 8th NOVEMBER 2023
PRONOUNCED ON: 15th DECEMBER 2023
JUDGMENT:
(PER: GAURI GODSE, J.)
1. This appeal is preferred by the owners of the property, as their
property is attached pursuant to the orders passed by the learned
Special Judge, designated under The Maharashtra Protection of Interest
of Depositors (In Financial Establishments) Act, 1999 ('MPID' Act),
making the show cause notice of attachment absolute by exercising
powers under Section 8 of the MPID Act.
Brief Facts:
2. The appellants are the owners of the property in question, i.e.
Shop Nos. 1 and 2 in the building known as Prem Bhanu Apartment,
IC Colony, Borivali (West) ('said shops'). FIR came to be registered on
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15th February 2000 against M/s Technology Connection and M/s.
Techcons Shelterettes Ltd. The allegation was that one Mr Joseph
Dennis Vaz, his wife and his son were running the said alleged financial
establishments. The case of the prosecution is that there was a scheme
of recruiting candidates to the Gulf countries, but later on, the accused
set up a scheme for giving homes to the aged and homeless senior
citizens. The appellants are not arraigned as accused in the case. During
the investigation, the police sealed the said shops and took possession
of them as per directions of the designated court, on the ground that
the accused was in possession of the said shops pursuant to a leave and
licence agreement executed by the owner.
CASE OF APPELLANTS:
3. The appellants' case is that the said shops were initially standing
in the name of M/s. Deepak Constructions, which was a partnership
firm. Subsequently, the partnership firm was dissolved and said shops
were handed over to Deepak Gogri ("original owner"), the partner of
the said partnership firm. The present appellants are brought on record
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of the appeal as the heirs and legal representatives of the said Deepak
Gogri after his demise pending the appeal. The said shops were given
on leave and licence basis to the accused by executing an agreement for
leave and licence on 26th June 1991, which was renewed up to the year
1999. Since there was default in payment of rent, possession of the said
shops was taken over by the owner in March 2000.
4. Said shops were attached pursuant to the orders passed by the
Special Judge, MPID Court, as the said shops were given on leave and
licence basis to the accused. The original owner was served with a
show cause notice dated 11 th November 2002 for attachment of the
said shops under section 8 of the MPID Act. Hence, the original owner
had raised his objections opposing the attachment by filing an
application numbered as MA No. 622 of 2002. In the said application,
the original owner contended that the said shops were initially owned
by M/s. Deepak Constructions and requisite share certificates bearing
nos. 19 and 20 were issued in the name of M/s. Deepak Constructions.
The said M/s. Deepak Constructions had entered into a leave and
licence agreement on or about 26 th June 1991 with Mr Joseph Vaz for
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two years, and the said agreement was renewed for a further period up
to 25th June 1999. It was the contention of the original owner that
after the expiry of said leave and licence agreement, the licensee did
not vacate the said shops; however, finally, in March 2000, possession
of the said shops was handed over to the original owner. Thus, the
original owner contended that he was the owner of the said shops and
was a member of the registered cooperative society with respect to the
said shops. The original owner contended that there was no other
transaction with respect to the said shops either by the original owner
or M/s. Deepak Constructions in favour of the accused.
5. It was the contention of the original owner that he was a partner
of M/s. Deepak Constructions who had constructed 18 flats and 5
shops. The original owner, being a partner of the said construction
company, retained the said shops, a garage and a flat on the first floor.
Thus, the original owner contended that there was no malafide
transaction with respect to the said shops and that the accused had no
right, title or interest in the said shops. The accused was occupying the
said shops only as a licensee, and after the expiry of the licence period,
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he handed over possession of the said shops to the original owner. The
original owner had also produced copies of the leave and licence
agreement as well as share certificates in support of his objections.
6. By the impugned order dated 26 th November 2002, the learned
Special Judge of the MPID Court rejected the objections raised on
behalf of the original owner and the show cause notice was made
absolute.
CASE OF RESPONDENT NO. 1:
7. In the present appeal, an affidavit is filed on behalf of the
respondent no. 1-State. It is stated in the said affidavit that after
registration of the FIR, the prime accused Mr Joe Vaz-respondent no.
2, was arrested and is still in jail custody. It is further stated that during
the investigation, the police had sealed and taken possession of four
properties of the accused, which included the said shops. It is further
stated that during the investigation, the police sealed and took over
possession of the said shops as per the directions of the Court. It is
submitted that the contention of the appellant that the accused had
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handed over possession of the said shops is not tenable, in as much as
after registration of offence on 15 th February 2000, all the accused
were absconding and, therefore, there was no question of handing over
of possession of the said shops. It is thus submitted that the impugned
order is rightly passed to protect the interest of the investors.
STATUS PENDING APPEAL:
8. This appeal was admitted, and by way of interim relief,
respondent no. 1 was directed to remove the seal of the said shops and
the original owner was directed to file an undertaking stating that he
would not create third-party rights in the said shops nor part with
possession. Accordingly, the original owner filed an undertaking, and
the seal of the said shops was removed, and possession was handed
over to the original owner. Appellants are brought on record in this
appeal as heirs and legal representatives of the deceased original owner.
By way of amendment, the accused was made party respondent no. 2.
It appears that the notice issued to respondent no. 2 was returned
unserved; however, the order dated 27th November 2013 records that
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it was submitted on behalf of the appellant that he could not trace the
address of respondent no. 2; hence, the learned APP submitted that he
would direct the nearest police station to locate the address. Office
remarks show that as per the report received from Yerawada Central
Prison, respondent no. 2 is not confined in the said prison. Office
remarks further indicate that as per the order dated 27 th November
2013, information regarding the address of respondent no. 2 is not
been received from the PP office and that as per the order dated 25 th
June 2013, learned APP had submitted that the State would initiate
proceedings under section 82 of CrPC within two weeks from date of
the Order. However, we have not been shown any compliance with the
said order. Pending this appeal, the State Government issued a
notification dated 29th March 2016 under section 4 of the MPID Act.
By way of amendment, Competent Authority is added as party
respondent no. 3, and the appellants have also challenged the
notification qua the said shops. Office remark shows that the Appeal
was ready for final hearing. Hence, we heard Mr. Sandeep Karnik for
the appellants and Mrs. Shinde for respondent no. 1 - State and
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respondent no. 3 - the Competent Authority. None appeared for
respondent no. 2.
SUBMISSIONS ON BEHALF OF APPELLANTS:
9. The learned counsel for the appellants submitted that the entire
case of the prosecution with respect to the said shops is only based on
the ground that the accused had possession of the said shops. He
submitted that the prosecution does not dispute the ownership of the
original owner and the present appellants. He submitted that it is not
even the prosecution case that any right, title or interest was ever
created in favour of the accused regarding the said shops. Even
otherwise, the accused had handed possession of the said shops to the
original owner after the leave and licence period expired.
10. Learned counsel further submitted that the attachment notice is
made absolute by the learned Special Judge on an erroneous ground.
He submitted that the finding recorded by the learned Judge
disbelieving the handing over of the possession is baseless and
erroneous. It is not disputed by the accused that the possession of the
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said shops was handed over by the accused to the original owner.
Learned counsel submitted that during the pendency of this appeal, the
State Government issued a notification dated 29 th March 2016 under
section 4 of the MPID Act for attaching the properties of the accused,
including the said shops. He submitted that perusal of the notification
indicates that the State Government has not recorded any reasons for
the attachment of the said shops. He submitted that despite an interim
relief granted in the present appeal, the State Government, by ignoring
the same, has included the said shops in the said notification. He,
therefore, submitted that the present appeal be allowed by quashing
and setting aside the impugned order, and the notification dated 29 th
March 2016 be quashed and set aside qua the said shops.
SUBMISSIONS ON BEHALF OF RESPONDENTS 1 AND 3:
11. Learned APP supported the impugned order and the impugned
notification. She submitted that the said shops were included in the
notification as the same are attached pursuant to the impugned order.
Learned APP submitted that it is not disputed that the accused was in
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possession of the said shops. She thus submitted that the attachment
notice is rightly made absolute by the impugned order, and thus, the
notification issued with respect to the said shops is also valid and legal.
She submitted that during the investigation, it was revealed that the
possession of the said shops was continued with the accused, and thus,
possession is deemed to have been continued until shown otherwise.
She submitted that the case of the original owner, that the possession
was handed over without any consideration, is not believable. She,
therefore, submitted that there is no substance in the grounds raised on
behalf of the appellants.
CONSIDERATION OF SUBMISSIONS AND FINDINGS:
12. We have considered the submissions made by both parties. A
perusal of the impugned order indicates that the learned Judge has
rejected the objections raised on behalf of the original owner on an
unfounded ground that surrender of a commercial premises in Mumbai
merely upon default on payment of licence fees for nine months is
unheard of. Learned Judge has further recorded that no notice was
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produced showing that the accused was called upon to hand over
possession and that no suit was filed for recovery of possession.
Learned Judge, thus, disbelieved the case of the original owner that the
possession of the said shops was handed over by the accused. The
learned Judge further observed that the case of the original owner was
impossible to accept that it was a gratuitous abandonment of
possession. The learned Judge observed that in the absence of any
proof of handing over possession on payment of any compensation to
the accused or upon some settlement of accounts or adjustment of the
deposit amount being produced by the original owner, the handing
over of the possession by the accused to the original owner was not
believable. The learned Judge, therefore, recorded a finding that
transfer by way of surrender by handing over peaceful possession
without the payment of consideration is malafide and hit by section 8
of the MPID Act. Thus, with these observations, the learned Judge
rejected the objections raised on behalf of the original owner and the
notice for attachment was made absolute.
13. Perusal of the leave and licence agreement and the share
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certificate indicates that no right, title or interest was created in favour
of the accused. It is not disputed that the accused was in possession of
the said shops only pursuant to the leave and licence agreement. It is a
specific case of the original owner that the possession was handed over
by the accused after the expiry of the leave and licence period. No
document on record shows that the license period was extended. The
accused has nowhere placed on record any claim on the said shops.
The accused has further not disputed the fact of handing over
possession to the original owner. Even otherwise, the execution of the
leave and licence agreement and the possession of the accused pursuant
to the leave and licence agreement does not amount to creation of any
right, title and interest in favour of the accused. It is not even the case
of the prosecution that any right, title, or interest was at any time
created in favour of the accused with respect to the said shops. Thus, in
our view, the reasons recorded by the learned Trial Judge being
unfounded and imaginary, cannot be sustained.
14. In the present case, the learned Trial Judge, exercising the powers
conferred under sub-section (1) of Section 8 of the MPID Act, issued a
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show cause notice to the original appellant, calling upon him to show
cause as to why the said shops should not be attached as malafide
transfer. As stated in the above paragraphs, the original appellant, in
response to the show cause notice, filed objections stating that he is the
original owner of the said shops. It is neither the case of the
prosecution that the original appellant is the transferee of the said
shops nor it is their case that the said shops were the property of the
financial establishment and were transferred otherwise than in good
faith and for consideration. The only case made out by the
prosecution is that the accused was in possession of the said shops; the
same were sealed, and possession was taken over as per the court's
directions. Thus, we see no reason for holding that there was any
malafide transfer as contemplated by Section 8; hence, there is no
question of invoking powers under Section 8 for the attachment of the
said shops.
15. The leave and licence agreement does not create any right, title or
interest in favour of the alleged financial establishments or the accused
person who was occupying the said shops pursuant to a leave and
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licence agreement. There is no reason to disbelieve the appellants' case
that on the expiry of the leave and licence agreement period, the
accused have handed possession to the original owner. The present
appellants, being heirs and legal representatives of the original owner,
are in possession of the said shops. We do not see any reason to
connect the said shops with the accused or the financial establishments
except the accused being in possession as licensee. Thus, there is no
question of any malafide transfer. Admittedly, neither the original
owner nor the present appellants are arraigned as accused in the MPID
case. In such circumstances, we see no reason to attach the said shops
by exercising powers under section 8 of the MPID Act. Thus, we find
that the findings recorded by the learned Trial Judge in the impugned
order cannot be legally sustained.
16. So far as the notification under section 4 is concerned the same
was issued by the State Government on 29 th March 2016; however, a
show cause notice under section 8 of the MPID Act was issued in 2002.
In the present case, when show cause notice was served upon the
original owner, and even when the attachment notice was made
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absolute under section 8 of the MPID Act, there was neither any order
issued by the State Government by exercising powers under section 4
of the MPID Act nor there was any competent authority appointed.
The State Government has issued orders under section 4 (1) of the
MPID Act only during the pendency of the present appeal. Perusal of
the notification shows that the same is bereft of any reasons to believe
that the said shops were required to be attached. The affidavit filed on
behalf of the State Government is also bereft of any reasons for
attaching the said shops. The State Government, in its affidavit, has
stated that the said shops were sealed and possession was taken over
pursuant to the directions issued by the Court. The State Government
has failed to show any reasons to believe that the said shops were
acquired by the accused/financial establishments, either in the name of
financial establishments or in the name of any other person out of the
deposits of the investors collected by the financial establishments.
There is nothing shown to us as to in what manner the accused is
concerned with the said shops for including them in the properties
attached under Section 4(1) of the MPID Act.
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17. So far as the challenge to the notification under section 4 of the
MPID Act is concerned, we had called upon the learned APP to place
on record the further steps taken by the Competent Authority pursuant
to the Notification issued under section 4 (1). The learned APP has
placed on record a copy of the notification under section 4(1), and a
copy of an affidavit dated 1st June 2016 of the Competent Authority
submitted before the MPID Court. A perusal of the said affidavit
reveals that the Competent Authority was appointed by notification
dated 17th April 2014. However, a copy of the said notification is not
placed on record for our perusal. The said affidavit further makes a
request to make the attached property absolute. The learned APP, on
instructions of the Competent Authority, submitted that neither any
further steps are taken nor the MPID Court has passed any further
order and that the proceedings before the MPID Court are still
pending. The learned APP, on instructions of the Competent Authority,
submitted that in the event this appeal is allowed and the impugned
order is quashed and set aside, the Competent Authority shall take
steps for deleting the said shops from the notification dated 29 th March
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2016 issued under section 4(1) of the MPID Act and release it from the
attachment made under the notification dated 29 th March 2016.
18. The designated court, i.e. the MPID Court, is empowered to
make the attachment absolute or vary it by releasing a portion of the
property from attachment or cancelling the order of attachment of the
properties notified under sub-section (1) of Section 4 of the MPID Act,
by exercising powers under section 7 of the MPID Act. Since, during
the pendency of the appeal, the State Government has appointed the
Competent Authority and also issued a notification under Section 4(1)
of the MPID Act, ordering the attachment of the said shops along with
other properties, the said shops vest in the Competent Authority in
view of sub-section (2) of section 4 of the MPID Act. Such vesting is
subject to further orders by the designated court.
19. In the present case, the Designated Court, i.e. the MPID Court,
by the impugned order, has made the attachment absolute by exercising
powers under section 8. However, we have already held for the
aforesaid reasons that the impugned order passed in the exercise of the
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powers under section 8 is not sustainable. Hence, we are inclined to
allow the appeal and quash and set aside the impugned order. So far as
the challenge to the notification under section 4(1) is concerned, it
cannot be quashed and set aside in this appeal, which is filed under
Section 11 of the MPID Act. Section 11 of the MPID Act provides for
an appeal against any order passed by the designated court, i.e. the
MPID Court. However, the learned APP, on instructions of the
Competent Authority, has made a statement that the Competent
Authority shall take steps for deleting the said shops from the
notification dated 29th March 2016 issued under section 4(1) of the
MPID Act in the event this appeal is allowed and the impugned order
is quashed and set aside. The statement made by the learned APP on
the instructions of the Competent Authority is accepted.
20. Hence, for the reasons recorded above, the following order is
passed:
(i) The impugned order dated 26 th November 2002, passed by the
learned Special Judge of the MPID Court, in MA No. 622 of
2002 in CR No. 14 of 2000, is quashed and set aside;
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(ii) The attachment of the said shops being, Shop Nos. 1 and 2 in the
building known as Prem Bhanu Apartment, IC Colony, Borivali
(West) pursuant to the said order dated 26 th November 2002
stands cancelled and the said shops are released from the said
attachment.
(iii) The Competent Authority to take steps within a period of four
weeks from today to comply with the statement made by them,
for deleting the said shops from the notification dated 29 th
March 2016 and releasing the said shops from the attachment
made under the notification dated 29th March 2016.
(iv) Appeal is partly allowed in the above terms and is disposed of.
(v) List the Appeal on 19th January 2024 for recording compliance
of the statement made by the Competent Authority.
All parties to act on the authenticated copy of this order.
GAURI GODSE, J. REVATI MOHITE DERE, J.
Signed by: Iresh S. Mashal
Designation: PS To Honourable Judge
Date: 15/12/2023 14:15:40
