Madras High Court

M/S.Suvi Emu Farms (India) Pvt. vs The Competent Authority And on 23 February, 2021

                                                                       C.M.A.No.4448 of 2019

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                               DATED : 23.02.2021

                                                     CORAM

                              THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM

                                              C.M.A.No.4448 of 2019
                                              C.M.P.No.25208 of 2019

                     1.M/s.Suvi Emu Farms (India) Pvt., Ltd.,
                       Rep.by its Managing Director,
                       C.Shankar,
                       S/o.N.Chenni,
                      1-B, Bungalow Street,
                      Opp:Anna Salai,
                      Bhavani Main Road,
                      Perundurai-638 052
                      Erode District.

                     2.C.Shankar

                     3.S.Indhumathi                                             .. Appellant
                                                        vs.

                     The Competent Authority and
                     District Revenue Officer,
                     Erode-638 001,
                     Erode District.                                         .. Respondent


                     PRAYER : Civil Miscellaneous Second Appeal filed under Section 11 of
                     the Tamil Nadu Protection of Interests of Depositors (In Financial
                     Establishments) Act, 1997, against the order dated 21.12.2015 made in

                     1/10


https://www.mhc.tn.gov.in/judis/
                                                                              C.M.A.No.4448 of 2019

                     O.A.No.11 of 2014 on the file of the learned Special Judge for TNPID Act
                     cases, Coimbatore.


                                     For Appellants             : Mr.N.Manokaran

                                     For Respondent             : Mr.Y.T.Aravind Gosh
                                                                Additional Government Pleader (CS)


                                                         ORDER

The Fair and Decreetal order dated 21.12.2015 passed in O.A.No.11

of 2014 is under challenge in the present civil miscellaneous appeal.

2. The Principal Secretary to Government passed G.O.Ms.No.178, Home

(Police XIX) Department dated 19.03.2013 stating that the complaints have

been received from a number of depositors that M/s.Suvi Emu Farms (India)

Private Limited, Erode District, a financial establishment has defaulted the

return of deposits made by the depositors after maturity. Thus, the

Government is satisfied that the said financial establishment is not likely to

return the depositors and initiated steps to protect the interest of such

depositors. Accordingly, the movable and immovable properties specified in

the Schedule to this order has been attached. Thereafter, the Competent

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Authority and District Revenue Officer, Erode District, Erode filed a

petition in O.A.No.11 of 2014 to make the interim attachment order passed

in G.O.Ms.No.178, Home (Police-XIX) Department, dated 19.03.2013,

absolute. The Special Court for TNPID adjudicated the issues with

reference to the documents and evidences. The Court made a categorical

finding that the collection of deposits from the public were established.

Further, the deposits collected were not returned to the depositors. When the

depositors made several complaints against the appellants Firm, the

Government took note of the situation and issued an order of attachment by

invoking the provision of TNPID Act. Though the appellant has made an

attempt to establish his case, the Special Court in its well considered order

made a finding that there is a prima facie case against the appellants

warranting further action by the competent authority. This apart, it was

established that the assets were created from the depositors money and

nearly 474 depositors have involved. Under these circumstances, the

Government thought fit to attach the properties to protect the interest of the

depositors. The findings of the Sub-Court are relevant and the same is read

as under:

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4) The petitioner has proved before this Court that the respondents have collected money from the public in the name of Emu Rearing Business. The amount collected is a fixed amount. Even though they have given various names for such amounts, it is nothing but deposit. For the said deposits, the respondents have assured to give monthly payments, yearly bonus and also refund of deposit after a fixed period. Even though the respondents have raised various contentions like the R-1 is not a financial establishment and the amount collected by the respondents were not deposits as defined under the TNPID Act, the petitioner and the Investigation Officer of the Criminal case has wrongly evoked the provision of TNPID Act and further, the Government without any material on record have attached the properties mechanically, but the respondents have not cross-examined in this aspect with P.W.1 and have not produced any documents or material evidence to substantiate their case. Hence, this Court found that the Government has rightly attached the properties as interim measure and the petitioner has proved that the respondents have not paid the deposit amount to the depositors and they are not likely to refund the amount and further he has proved that the properties were purchased from and out of the depositors money. Hence, the Interim Attachment Order

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passed by the Government in G.O.Ms.No.178 Home (Police- XIX) Department, dated 19.03.2013 is hereby made absolute and the petitioner is permitted to sell the properties in Public auction and appropriate the amount in the separate account maintained for R-1.

3. The appellants have raised a ground that the Appellants Firm is not a

Financial Establishment within the meaning of Section 2 of TNPID Act.

However, reading of the definition for financial establishment, it is clear

that the appellants/Private Firm is also falling under the definition of

financial establishment. The said legal position was settled by this Court in

the case of N.S.Agro Farm and Hatchery vs. Competent Authority and

District Revenue Officer, Erode District, Erode reported in 2014(5) CTC

452 and the relevant paragraph No.14 is extracted hereunder:

14. The contention of the learned counsel for the appellants is that the amounts were collected from the farmers under a joint venture agreement for rearing Emu birds and that the same cannot be projected as deposits received. It is his further contention that for the amounts collected from the farmers, they were given employment of keeping the Emu birds at their places

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for which they were paid by the appellants and that therefore, the amount collected from the farmers cannot be termed deposits and the first appellant firm cannot be termed as a financial establishment answering the description of the said term found in Section 2(3) of the Act. Section 2(3) defines Financial Establishment as follows: 17 "Financial Establishment means an individual or an association of individual, a firm or a company, registered under the Companies Act, 1956 (Central Act 1 of 1956) carrying on the business of receiving deposits under any scheme or arrangement or in any other manner, but does not include a Corporation or Corporative Society owned or controlled by any State Government or the Central Government or a banking company as defined in Section 5(c) of the Banking Regulation Act, 1949 (Central Act 10 of 1949)". In Section 2, the term "Deposit"

has been described as follows: "Deposit" means the deposit of money either in one lump sum or by installment made with the Financial Establishment for a fixed period, for interest or for return of any kind or for any service." In this case it is not in dispute that the first appellant firm received huge amounts from various persons under a scheme alleged to be a joint venture agreement for the rearing of Emu birds. A study of the said scheme will make it clear that the amount collected by the appellants would fall well within the definition of deposits found in 18 Section 2(2) of the Act. One of the agreements the appellants

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entered into with a person from whom the amount was received has been produced as Ex.B5 in O.A.No.25 of 2012. As per the said agreement, a sum of Rs.6,40,000/- had been received by the appellants from a customer by name Shanmugam, who was examined as RW1, in the above said application. As per the scheme provided in the said agreement, for a sum of Rs.6,40,000/- paid by Shanmugam, 16 grown up Emu birds had to be entrusted with the said Shanmugam for maintaining them. The feeds for the birds were agreed to be supplied by the appellants at their costs. At the end of the contract period, nearly three years, all the said Emu Birds were to be returned to the appellants and the investor, namely Shanmugam should get back the amount paid by him, namely 6,40,000/- without interest. Of course, the said Shanmugam gave evidence as RW1 stating that he had returned all the Emu birds and got back the amount paid by him. Besides incurring expenditure for putting up sheds and creating infrastructure at the place of the investor for keeping the Emu birds at the cost of the appellants, the appellants also undertook to supply the feeds at their cost. At the same time, the investor was to get Rs.28,000/- per month for the maintenance of the Emu birds. According to the submission made by the learned counsel for the 19 appellants, the said amount was paid as salary for keeping the Emu birds. It was also stated in the said agreement that the value of 16 Emu birds was Rs.6,40,000/-, which cannot

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even be imagined. The returns promised under the agreement will work out an interest at the rate of 52.5% per annum. For keeping 16 Emu birds no sane person will venture to pay a sum of Rs.28,000/- per month as salary.

4. The other ground raised that the Government issued an order under

misconception deserves no merit adjudication as the Special Court

adjudicated the issues with reference to the documents and evidences and

made a categorical finding that the collection of deposits from the public

were established and such deposits were not returned to the depositors.

Further, money collected from the depositors were invested for purchase of

property and those properties were attached.

5. This being the facts and circumstances established, this Court do not

find any infirmity or perversity in respect of the findings arrived by the

Special Court. Accordingly, the Judgment and Decree dated 21.12.2015

passed in O.A.No.11 of 2014 stands confirmed and consequently, Civil

Miscellaneous Appeal stands dismissed. No costs. Connected miscellaneous