Ramesh Viswanathan vs State Of Kerala
2026 Latest Caselaw 1441 Ker

Kerala High Court

Ramesh Viswanathan vs State Of Kerala on 11 February, 2026

                                                         2026:KER:12790

              IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                 PRESENT

             THE HONOURABLE MR. JUSTICE A. BADHARUDEEN

     WEDNESDAY, THE 11TH DAY OF FEBRUARY 2026 / 22ND MAGHA, 1947

                        CRL.A NO. 2025 OF 2025

AGAINST THE ORDER DATED 14.08.2025 IN CRMP 1995/2025 IN S.C. NO.1379

    OF 2024 OF ADDITIONAL DISTRICT COURT & SESSIONS COURT - VII,

                                ERNAKULAM


APPELLANT/RESPONDENT:

           RAMESH VISWANATHAN,
           AGED 60 YEARS
           S/O VISWANATHAN (LATE), DVRA-12, 'BANSURI', 1ST AVENUE,
           DIVINE VILLAGE, IMG JUNCTION, KAKKANAD PO, ERNAKULAM
           DISTRICT, PIN - 682030

           BY ADVS.
           SHRI.T.K.AJITH KUMAR
           SMT.AISWARYA RAMESAN
           SMT.REMYA VARMA N.K
           SMT.VARNIBHA.T


RESPONDENTS/STATE/PETITIONER:

     1     STATE OF KERALA
           REPRESENTED BY, PIN - 682031

     2     KRISHNAN GOPINATH
           AGED 78 YEARS
           S/O KRISHNAKURUP, 1586/A, GANDHI JAYANTHI ROAD, THAMMANAM
           PO, ERNAKULAM DISTRICT, PIN - 682032

           BY ADVS.
           SHRI.BIJU K.C.
           SMT.LEENA JOSEPH


     THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 11.02.2026,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
                                                           2026:KER:12790
Crl.A. No. 2025 of 2025
                                    2


                                                               "C.R"
                               JUDGMENT

Dated this the 11th day of February, 2026

The order in Crl.M.P. No.1995/2025 in S.C.

No.1379/2024 dated 14.08.2025 on the files of the Additional

District and Sessions Court-VII, Ernakulam (the Designated

Court) under the Banning of Unregulated Deposit Schemes

Act, 2019 [hereafter referred as 'BUDS Act, 2019' for short] is

under challenge in this appeal filed under Section 19 of the

BUDS Act, 2019, at the instance of the respondent in the

above petition. As per the order impugned, after adjudicating

a petition filed by the 2nd respondent herein, who is the

petitioner in the above case, the Designated Court directed

the competent authority to take possession of the assets

mentioned in C.M.P. No.3234/2023, within one month from

the date of receipt of the order.

2. Heard the learned counsel for the appellant, the

learned Public Prosecutor and the learned counsel appearing

for the 2nd respondent. Perused the order under challenge

and relevant materials available.

2026:KER:12790

3. The genesis of the case to be discernible is that,

the 2nd respondent initially approached the competent

authority to exercise its powers under Sections 12 and 13 of

the BUDS Act, 2019. But the competent authority was not

inclined to pass any order and accordingly, the 2 nd

respondent lodged C.M.P. No.1891/2023 as a private

complaint before the Designated Court and after complying

the procedure, the Designated Court took cognizance of the

matter and accordingly, case as S.C. No.1379/2024 has been

registered, alleging that the appellant herein committed

offences under Sections 21 and 22 of the BUDS Act, 2019.

While the said case has been pending before the Court,

C.M.P. No.3234/2023 has been filed by the 2 nd respondent

before the Designated Court and on issuing notice to the

respondent therein, an order was passed on 25.08.2023 by

the Designated Court directing the competent authority to

attach the property in terms of Section 18(c) of the BUDS

Act, 2019. Thereafter, even though the competent authority

is empowered to file an application within 60 days before the

Designated Court, seeking confirmation of the attachment

and sale of the property, invoking power under Section 15 of 2026:KER:12790

the BUDS Act, 2019, by the Designated Court, no action

taken at the helm of the competent authority. Accordingly,

again in the year 2025, the 2 nd respondent filed Crl.M.P.

No.1995/2025 seeking interference of the Designated Court

by exercising power provided under Section 18(c) of the

BUDS Act, 2019 and the impugned order has been passed in

exercise of the power given to the Designated Court under

Section 18(c) of the BUDS Act, 2019.

4. The learned counsel for the appellant argued that,

the power of the Designated Court under Section 18(c) of the

BUDS Act, 2019, is not fully independent and as per Section

13 of the BUDS Act, 2019, though the competent authority is

empowered to pass provisional attachment in order to

protect priority of depositors' claim, the authority failed to

pass any order, when the 2nd respondent approached the

authority with prayer to do the said exercise. So, according

to the learned counsel for the appellant, even though the

order in C.M.P. No.3234/2023 was passed by the Designated

Court, directing the competent authority to effect

attachment, then the competent authority, after the

attachment should have exercised powers under Section 14 2026:KER:12790

of the BUDS Act, 2019. When the competent authority files

an application with such particulars as may be prescribed

before the Designated Court for making the provisional

attachment absolute and for permission to sell the property

so attached by public auction or if necessary, by private sale,

the Designated Court shall issue notice to (a) the deposit

taker and (b) any person whose property is attached under

Section 14. According to the learned counsel for the

appellant, the said procedure was not followed in this case

and notice was not served upon the deposit taker (the

appellant) in terms of Section 15(1)(b) of the BUDS Act,

2019. Thus, procedure violation is the trump card on which

the learned counsel for the appellant sought interference in

the order impugned.

5. Countering this argument, the learned counsel for

the 2nd respondent narrated the case history and submitted

that, initially the order of attachment was issued by the

competent authority to make attachment and thereafter no

steps were taken by the authority to put up an application

for confirmation of the attachment and sale of the property.

It is at this juncture, the present petition viz. Crl.M.P. 2026:KER:12790

No.1995/2025 has been filed by the 2 nd respondent to take

possession of the attached property and to sell the same to

realize the amount due to him.

6. The learned Public Prosecutor also supported the

contentions raised by the 2nd respondent.

7. While addressing the issues raised herein,

Sections 12 to 15 as well as 18 of the BUDS Act, 2019 are

relevant. The same are extracted hereunder:

"12. Priority of depositors' claim. -- Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount due to depositors from a deposit taker shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.

13. Precedence of attachment. -- (1) Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), an order of provisional attachment passed by the Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors, over any other attachment by any authority competent to attach property for repayment of any debts, revenues, 2026:KER:12790

taxes, cesses and other rates payable to the appropriate Government or the local authority.

(2) Where an order of provisional attachment has been passed by the Competent Authority--

(a) such attachment shall continue until an order is passed under sub-section (3) or sub-section (5) of section 15 by the Designated Court;

(b) all the attached money or property of the deposit taker and the persons mentioned therein shall vest in the Competent Authority and shall remain so vested till further order of the Designated Court.

(3) The Competent Authority shall open an account in a scheduled bank for the purpose of crediting and dealing with the money realised under this Act, which shall not be utilised except under the instructions of the Designated Court.

(4) The Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15.

(5) Notwithstanding anything contained in sub-

section (4), the Competent Authority may, if it thinks it expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be utilised in the same manner as provided for other property.

14. Application for confirmation of attachment and sale of property.--(1) The Competent Authority shall, within a period of thirty days, which may extend up to sixty days, for reasons to be recorded in writing, from the date of the order of provisional attachment, file an application with such 2026:KER:12790

particulars as may be prescribed, before the Designated Court for making the provisional attachment absolute, and for permission to sell the property so attached by public auction or, if necessary, by private sale.

(2) In case where the money or property has been attached on the permission granted by a Designated Court in another State or Union territory, the application for confirmation of such attachment shall be filed in that Court.

15. Confirmation of attachment by Designated Court. -- (1) Upon receipt of an application under section 14, the Designated Court shall issue notice to--

(a) the deposit taker; and

(b) any person whose property is attached under section 14, to show cause, within a period of thirty days from the date of issue of notice, as to why the order of attachment should not be made absolute and the properties so attached be sold.

(2) The Designated Court shall also issue notice to all other persons represented to it as having or being likely to claim any interest or title in the property, to appear on the same date as persons referred to in sub- section (1) to raise objections, if they so desire, to the attachment of the property.

(3) The Designated Court shall, after adopting such procedure as may be prescribed, pass an order--

(a) making the provisional order of attachment absolute; or

(b) varying it by releasing a portion of the property 2026:KER:12790

from attachment; or

(c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause (b), direct the Competent Authority to sell the property so attached by public auction or, if necessary, by private sale and realise the sale proceeds.

(4) The Designated Court shall not, in varying or cancelling the provisional order of attachment, release any property from attachment, unless it is satisfied that--

(a) the deposit taker or the person referred to in sub-section (1) has interest in such property; and

(b) there shall remain an amount or property sufficient for repayment to the depositors of such deposit taker.

(5) The Designated Court shall pass such order or issue such direction as may be necessary for the equitable distribution among the depositors of the money attached or realised out of the sale.

(6) The Designated Court shall endeavour to complete the proceedings under this section within a period of one hundred and eighty days from the date of receipt of the application referred to in sub-section (1).

xxx xxx xxx

18. Powers of Designated Court. -- (1) The Designated Court shall exercise the following powers, namely:--

(a) power to approve the statement of dues of the deposit taker due from various debtors;

(b) power to assess the value of the assets of the deposit taker and finalise the list of the depositors and 2026:KER:12790

their respective dues;

(c) power to direct the Competent Authority to take possession of any assets belonging to or in the control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof to its bank account;

(d) power to approve the necessary expenditure to be incurred by the Competent Authority for taking possession and realisation of the assets of the deposit taker;

(e) power to pass an order for full payment to the depositors by the Competent Authority or an order for proportionate payment to the depositors in the event, the money so realised is not sufficient to meet the entire deposit liability;

(f) power to direct any person, who has made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention; and

(g) power to pass any other order which the Designated Court deems fit for realisation of assets of the deposit taker and for repayment of the same to the depositors of such deposit taker or on any other matter or issue incidental thereto.

(2) On the application of any person interested in any property attached and vested in the Competent Authority under this Act and after giving such Competent Authority an opportunity of being heard, 2026:KER:12790

make such order as the Designated Court considers just and reasonable for--

(a) providing from such of the property attached and vested in the Competent Authority as the applicant claims an interest in, such sums as may be reasonably necessary for the maintenance of the applicant and of his family, and for expenses connected with the defence of the applicant where criminal proceedings have been initiated against him in the Designated Court under this Act; or

(b) safeguarding, so far as may be practicable, the interest of any business affected by the attachment.

Explanation.--For the purposes of this section, the expression "deposit taker" includes the directors, promoters, managers or members of said establishment or any other person whose property or assets have been attached under this Act. "

8. On reading the provision of Section 12 of the

BUDS Act, 2019, any amount due to depositors from a

deposit taker shall be paid in priority over all other debts and

all revenues, taxes, cesses and other rates payable to the

appropriate Government or the local authority, save as

otherwise provided in the Securitisation and Reconstruction

of Financial Assets and Enforcement of Security Interest Act,

2002 (54 of 2002) or the Insolvency and Bankruptcy Code,

2016 (31 of 2016).

2026:KER:12790

9. Section 13 of the BUDS Act, 2019, provides that,

attachment under the BUDS Act is having precedence and

Section 13 is so titled as precedence of attachment. Thus, an

order of provisional attachment passed by the Competent

Authority, shall have precedence and priority, to the extent

of the claims of the depositors, over any other attachment

by any authority competent to attach property for

repayment of any debts, revenues, taxes, cesses and other

rates payable to the appropriate Government or the local

authority as regards to an order of provisional attachment

passed by the competent authority. Such attachment shall

continue until an order is passed under sub-clause (3) or sub-

clause (5) of Section 15 by the Designated Court in terms of

Section 13(2)(a) of the BUDS Act, 2019. As per Section

13(2)(b), all the attached money or property of the deposit

taker and the persons mentioned therein shall vest in the

Competent Authority and shall remain so vested till further

order of the Designated Court. Section 13(3) of the BUDS

Act, 2019, provides that, the Competent Authority shall open

an account in a scheduled bank for the purpose of crediting

and dealing with the money realised under this Act, which 2026:KER:12790

shall not be utilised except under the instructions of the

Designated Court. Section 13(4) of the BUDS Act, 2019

provides that, the Competent Authority shall not dispose of

or alienate the property or money attached, except in

accordance with the order of the Designated Court under

sub-section (3) or sub-section (5) of section 15. Section 13(5)

provides that, notwithstanding anything contained in sub-

section (4), the Competent Authority may, if it thinks it

expedient, order the immediate sale of perishable items or

assets, and the proceeds of the sale shall be utilised in the

same manner as provided for other property.

10. Section 14 of the BUDS Act, 2019, mandates that,

the Competent Authority shall, within a period of thirty days,

which may extend up to sixty days, for reasons to be

recorded in writing, from the date of the order of provisional

attachment, file an application with such particulars as may

be prescribed, before the Designated Court for making the

provisional attachment absolute, and for permission to sell

the property so attached by public auction or, if necessary,

by private sale.

11. Section 15 of the BUDS Act, 2019, deals with the 2026:KER:12790

procedure for confirmation of the attachment by the

Designated Court. Thus, upon receipt of an application under

Section 14, the Designated Court shall issue notice to (a) the

deposit taker and (b) any person whose property is attached

under Section 14, to show cause, within a period of thirty

days from the date of issue of notice, as to why the order of

attachment should not be made absolute and the properties

so attached be sold. Further, in the said proceedings, the

Designated Court shall also issue notice to all other persons

represented to it as having or being likely to claim any

interest or title in the property.

12. As per Section 15(3) of the BUDS Act, 2019, the

Designated Court shall, after adopting such procedure as

may be prescribed, pass an order (a) making the provisional

order of attachment absolute or (b) varying it by releasing a

portion of the property from attachment or (c) cancelling the

provisional order of attachment, and in case of an order

under clause (a) or clause (b), the Designated Court can

direct the Competent Authority to sell the property so

attached by public auction or, if necessary, by private sale

and realise the sale proceeds.

2026:KER:12790

13. In the instant case, no provisional attachment

order passed, within the meaning of Section 13(1) or 13(2) of

the BUDS Act, 2019, by the competent authority and on

noticing the reluctance on the part of the competent

authority to pass such an order, the 2 nd respondent filed

petition before the Designated Court and the Court directed

the competent authority to attach the property and the

property was attached on 25.08.2023 as per the order in

C.M.P. No.3234/2023. No challenge has been raised

regarding the procedure adopted by the Designated Court in

the matter of attachment and the impugned order would

suggest the same as an order of attachment and the same is

not in the form of a provisional attachment.

14. As regards to the legality of the order of

attachment as per the order in C.M.P. No.3234/2023, this

Court cannot dwell upon, since no challenge raised as much

as the attachment ordered on 25.08.2023. Therefore, the

legality of the order of attachment is not a matter of

consideration before this Court.

15. Coming to the impugned order, the same has

been passed in Crl.M.P. No.1995/2025, when the 2 nd 2026:KER:12790

respondent filed an application under Section 18 of the BUDS

Act, with prayer to direct the competent authority to take

possession of the assets mentioned in C.M.P. No.3234/2023,

within one month and to sell the same at the earliest and

disburse the sale proceeds to the 2 nd respondent. Such an

application was considered by the Special Court and the

impugned order has been passed.

16. According to the learned counsel for the appellant,

while considering Crl.M.P. No.1995/2025, the Designated

Court not issued show cause notice contemplated under

Section 15 of the BUDS Act, 2019 with opportunity to the

appellant to show cause, within a period of thirty days as to

why the order of attachment should not be made absolute

and the properties so attached be sold. In fact, the procedure

as per Section 15 was not opted by the Designated Court in

the present case and the Court directly invoked the power

under Section 18(c) of the BUDS Act, 2019. The order passed

by the Designated Court as could be seen from the last

paragraph of the order impugned is extracted hereunder:

"The competent authority is directed to take possession of the asset mentioned in CMP No. 3234/2023, within one month from the date of receipt 2026:KER:12790

of this order and to take further steps to sell the property at the earliest and inform the court regarding the steps taken to sell the property on or before 18.09.2025."

17. On perusal of Section 18(c) of the BUDS Act, 2019,

the Designated Court should exercise the powers mentioned

in Section 18(1)(a) to (g) and Section 18(c) provides that,

power to direct the Competent Authority to take possession

of any assets belonging to or in the control of the deposit

taker and to sell, transfer or realise the attached assets,

either by public auction or by private sale as it deems fit

depending upon the nature of assets and credit the sale

proceeds thereof to its bank account.

18. Going through the order impugned, it is

discernible that, the order passed by the Designated Court,

now under challenge before this Court, is directing the

competent authority to take possession of the asset

mentioned in C.M.P. No.3234/2023, within one month from

the date of receipt of the order and make further steps to sell

the property at the earliest and inform the court regarding

the steps taken to sell the property on or before 18.09.2025.

2026:KER:12790

In fact, the order was not implemented by the competent

authority because of the interim stay granted by this Court in

this appeal.

19. When addressing the legality of the order

impugned, another contention raised by the learned counsel

for the appellant is that, even admitting that the power under

Section 18 exercised by the Designated Court is independent,

then also no notice was issued to the appellant, though notice

has been served upon the counsel appearing for the appellant

in the Sessions case and he failed to appear before the Court.

In this regard, the learned counsel for the appellant relied on

the observation of the Designated Court in paragraph No.4 of

the order to the effect that "though notice of application was

served to the Advocate for the accused, he did not appear or

any objection filed".

20. When in one main proceeding, an advocate files

vakkalath for a party, for each and every applications filed

thereafter, there is no necessity for the Court to issue notice

to be served directly to the party/parties concerned and

service of notice to the counsel, who has been legally

authorized by the party by executing vakkalthnama would 2026:KER:12790

suffice the purpose of issuance of notice. That apart, Section

18 of the BUDS Act, 2019, does not provide any form or

procedure for notice. In such event also, in order to address

the objection of the otherside and to ensure hearing of the

otherside, in view of principles of natural justice, the Court is

obliged to issue notice to the otherside. When such a notice

would be served to the advocate appearing for the appellant

herein, the same would be sufficient notice to the party

himself in its full vigor. Therefore, the contention raised by the

learned counsel for the appellant that, notice was not served

to the appellant could not be countenanced.

21. However, the fact remains is that, the impugned

order was passed without getting the objection and without

hearing the appellant, since the appellant failed to make use

of the opportunity provided by the Court. Therefore, in the

interest of justice, one more opportunity is liable to be

provided to the appellant to file objection and to make his

submissions regarding the prayers sought for in Crl.M.P.

No.1995/2025 by the 2nd respondent, since the learned

counsel for the appellant pressed for such relief and he

voluntarily submitted that in order to get such an 2026:KER:12790

opportunity, as a bona fide person, the appellant is ready to

deposit Rs.2,00,000/- in cash before the Designated Court

and the amount shall be dealt with by the Designated Court,

in accordance with law, after hearing both sides.

22. In the result, this appeal stands allowed and the

order impugned is set aside on deposit of Rs.2,00,000/-

(Rupees Two Lakh Only) as agreed by the learned counsel for

the appellant, within ten days from the date of appearance

of the parties before the Designated Court.

23. It is specifically ordered that, the amount of

Rs.2,00,000/- voluntarily agreed to be deposited by the

learned counsel for the appellant failed to be deposited

within time, the order impugned shall stand confirmed and

the Designated Court shall go with the proceedings to

implement the order impugned, without fail. On deposit of

the amount, the Designated Court (Additional District and

Sessions Court-VII, Ernakulam) is directed to consider Crl.M.P.

No.1995/2025 afresh, after providing an opportunity to the

appellant herein to file objection, within a period of seven

days from the date of deposit of the amount of Rs.2,00,000/-

before the Court and hear the matter in detail and pass 2026:KER:12790

orders therein, within a period of two weeks thereafter.

24. The parties are directed to appear before the

Designated Court at about 11.00 a.m. on 25.02.2026,

without fail.

Registry is directed to forward a copy of this judgment

to the Designated Court, forthwith, for information and

compliance.

Sd/-

A. BADHARUDEEN SK JUDGE