Madras High Court
The Competent Authority And vs K.V.Dasarathan on 23 February, 2021
C.M.A.No.832 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.02.2021
CORAM
THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
C.M.A.No.832 of 2020
and
C.M.P.No.5351 of 2020
1.The Competent Authority and
District Revenue Officer,
Tiruvannamalai District,
Tiruvannamalai.
2.The Inspector of Police,
Economic Offence Wing-II,
Vellore, Vellore District. ..Appellants
Vs.
K.V.Dasarathan ..Respondent
Prayer : Civil Miscellaneous Appeal filed under Section 11 of TNPID
Act, against the Judgment and Decree dated 30.05.2013 made in
O.A.No.19 of 2010, passed by the Special Judge under TNPID Act,
Chennai.
For Appellants : Mr.Y.T.Aravind Gosh
Additional Government Pleader
For Respondent : Mr.T.Muruganantham
1/12
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C.M.A.No.832 of 2020
JUDGMENT
The Fair and Decreetal order dated 30.05.2013 passed in
O.A.No.19 of 2010 is under challenge in the present Civil
Miscellaneous Appeal.
2. The authority competent under the Tamil Nadu Protection of
Interests of Depositors [In Financial Establishments Act] 1997, ['TNPID
Act] is the appellant, questioned raising of the attachment passed by the
Government in G.O.Ms.No.585, Home (Police XIX) Department dated
27.07.2009.
3. The learned Additional Government Pleader appearing on
behalf of the appellants contended that one M/s.Sri Dhanalakshmi
Finance, consisting of 15 partners, collected huge amount of deposits
from various depositors, who all are public in general. On demand, the
said M/s.Sri Dhanalakshmi Finance was unable to return the matured
deposits to the depositors and the amount of deposit collected is running
more than a sum of Rs.15 Crores. During the year 2006, the bonafide
depositors preferred a complaint before the District Crime Branch,
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C.M.A.No.832 of 2020
Thiruvannamalai and the case was registered in Crime No.5 of 2007 and
subsequently, it was transferred to the Economic Finances Wing-II,
Vellore. The Inspector of Police, Economic Offence Wing-II, identified
the movable and immovable properties belongs to the financier and
based on the investigation, the Government invoking the powers under
Section 3 of the TNPID Act, issued Government Order in
G.O.Ms.No.585, Home (Police XIX) Department dated 27.07.2009.
Accordingly, several items of properties were attached as detailed in the
Government order.
4. The respondent / Financier / 3rd Accused filed an application for
raising the attachment issued in G.O.Ms.No.585, Home (Police XIX)
Department dated 27.07.2009.
5. The Special Court adjudicated the issues. The Special Court
made a finding that Item Nos.1 and 3 in Ex.P7 and Ex.P6 stands in the
name of the Financier and the attachment cannot be raised as far as those
items of properties are concerned. In respect of Item Nos.2, 4 and 5 in
Ex.P5 & Ex.P3, the attachment was raised on the ground that those
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C.M.A.No.832 of 2020
items are joint family properties. The said assets were created much
prior to the establishment of the Finance Company by the Accused
persons.
6. However, it is contended by the learned Additional
Government Pleader that there was no adjudication at all with reference
to these findings. Documents were not verified. The Financiers were not
produced. Witnesses were not examined and therefore, such a finding
arrived by the Special Court is untenable and not in consonance with the
very purpose and object of the Act. Further, if such attachments are
raised without proper adjudication, the interest of the depositors would
be in peril. It is contended that based on the improper and insufficient
enquiry, the Special Court raised the attachment in respect of the
properties in Item Nos.2, 4 and 5 in Ex.P5 & Ex.P3. Therefore, the order
is liable to be scrapped.
7. The learned counsel appearing on behalf of the respondent
made a submission that the attachment was raised only in respect of
three properties and those properties are no way connected with the
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C.M.A.No.832 of 2020
depositors or the money collected from the depositors Those properties
were not purchased from and out of the amount collected from the
depositors and therefore, the Special Court is right in raising the
attachment.
8. This Court is of the considered opinion that the very Enactment
namely Tamil Nadu Protection of Interests of Depositors [In Financial
Establishments Act] 1997, speaks about Statement of objects and
reasons. The said statement of objects and reasons reveals that the Act
was enacted by the Government of Tamil Nadu to protect the interests of
the depositors, who have lost their hard-earned money in the Financial
institutions. At present, there is no provision in the said Act for
attaching the properties of the persons, who borrowed money from the
Financial Establishments and for the sale of attached property, public
auction and for the equitable distribution of the sale provides to the
depositors. In order to overcome the shortcomings and to make the
Tamil Nadu Act 44 of 1997 more effective, the Government have
decided to amend the Act.
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C.M.A.No.832 of 2020
9. With this purpose and object, the provisions of the TNPID Act
defines the Financial Establishment. Section 3 denotes Attachment of
properties on default of return of deposits. Various circumstances are
provided under Section 3, empowering the Government to attach the
properties in order to protect the interests of the depositors and their
hard-earned money. Even the interests of the Financier in the family
property is also to be considered as a property, which an be attached
under Section 3 of the Act. Section 3 of the Act provides wider scope to
attach the properties belong to the Financial Company or the properties
in the name of the Financier or their family members or if the properties,
if sold to third party and other circumstances. Thus, once the
Investigating Authority arrived a conclusion that the properties, which
all are the subject matter for the attachment directly or indirectly
connected with the amounts collected from the depositors, then they are
empowered to attach the property and then adjudicate the issues on
merits and in accordance with law. Section 9 of the Act provides that
Security in lieu of attachment. If any party claims that he is a third party
to the Finance Company and his purchase of property is no way
connected with the money collected from the depositors, then such third
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C.M.A.No.832 of 2020
parties have got remedy to produce security in lieu of attachment and
release the property by obtaining permission from the Special Court in
the manner known to law. Such a provision is made available even for
the financiers also.
10. In this context, this Court is of the considered opinion that in
the present case, the Special Court has not adjudicated the issue
regarding the properties, which all are now raised from attachment. In
the absence of any proper adjudication, the properties attached cannot be
raised and further, the interests of the depositors are also to be looked
into and such a consideration was not shown by the Special Court in its
findings.
11. Though the Act was enacted in the interests of the depositors
and to protect their hard-earned money, the same is not done in a speedy
manner. Many cases are pending for years together. The competent
authorities are not active enough to dispose of the cases, release the
deposit money collected and return back to the depositors in order to
fulfill the objects and purpose of the Act. The poor state of affairs in this
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C.M.A.No.832 of 2020
regard with reference to the manner in which the competent authorities
are acting, deserves to be reviewed by the Government. Effective steps
are to be taken by the State Government to ensure all such investigations
and trials before the Special Court are conducted in a speedy manner, so
as to protect the interests of the depositors and extend the meaning for
the provisions for the TNPID Act. Contrarily, many cases are pending
for years together. Once an attachment is passed, thereafter, no progress
is made. The investigations are conducted in lackadaisical manner and
further, the investigating officers are colluding with the parties, which
are to be enquired into by the higher authorities. There are complaints
that, to slow down the investigations, corrupt activities are dominating.
All these aspects are to be looked into and steps are to be taken to ensure
that the interests of the depositors are protected.
12. In most of the cases, the authorities competent are not
efficiently initiating action or proceeding with the matter to conclude the
same. Therefore, the Principal Secretary to Government, Home
Department as well as the Principal Secretary to Government, Revenue
Department are bound to issue suitable directions to all the competent
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C.M.A.No.832 of 2020
authorities to ensure that the cases registered under the provisions of the
TNPID Act are progressed as quick as possible and to be concluded
within a reasonable period of time. All old cases are to be disposed of
expeditiously. If the Government fails to initiate such an action,
undoubtedly, the very purpose and object of the Act is defeated and it
may not be possible for the depositors to release the money as efflux of
time, will not only loose interest, but they may not be in a position to
collect their deposit even if it is made available with the Special Court.
13. As far as the present case is concerned, the case was registered
in the year 2007. The properties were attached in the year 2009. The
Special Court passed an order in the year 2013. Even after a lapse of 13
years, no progress has been made and the depositors are unable to get
back their money. Most of the cases are pending in this manner. Thus,
urgent actions are just and necessary in the interest of justice.
14. The Special Courts are also bound to act swiftly. Unnecessary
adjournments should never be granted. Adjournments cannot be granted
in a casual manner by the Courts. Even on genuine grounds,
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C.M.A.No.832 of 2020
adjournments are to be granted only by recording reasons. If the practice
of granting adjournments in a casual manner is adopted, then the parties
would be tempted to sought for such adjournments in order to prolong
and protract the matter, which would defeat the purpose of the
Registration of the cases under the TNPID Act.
15. As far as the present appeal is concerned, the grounds raised
mainly are that the property attached by the Government is very much
connected with the accused persons and they have got a share in the said
property. Thus, the attachment cannot be raised without complete
adjudication. If at all, the respondent / Financier want to raise the
attachment, it is left open to him to approach the Special Court under
Section 9 of the TNPID Act by producing security to the satisfaction of
the Court. Contrarily, the attachment cannot be raised without proper
adjudication of the issues raised and therefore, this Court is inclined to
consider the appeal.
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C.M.A.No.832 of 2020
16. Thus, the order of attachment passed by the Government in
G.O.Ms.No.585, Home (Police XIX) Department dated 27.07.2009
stands confirmed in respect of all the properties attached.
17. Accordingly, the Fair and Decreetal order dated 30.05.2013
passed in O.A.No.19 of 2010 is set aside and the Civil Miscellaneous
Appeal in C.M.A.No.832 of 2020 stands allowed. No costs.
Consequently, connected miscellaneous petition is closed.
23.02.2021
kak
Index: Yes/No
Internet:Yes/Non-Speaking order
Note: Registry is directed to communicate the copy of this judgment to
the Secretary, Home Department, Fort St.George, Chennai – 600 009
and the Secretary, Revenue Department, Fort St.George, Chennai – 600
S.M.SUBRAMANIAM, J.
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C.M.A.No.832 of 2020
kak
To
1. The Special Judge under TNPID Act,
Chennai.
2.The Principal Secretary to Government,
Home Department,
Fort St.George,
Chennai – 600 009.
3.The Principal Secretary to Government,
Revenue Department,
Fort St.George,
Chennai – 600 009.
C.M.A.No.832 of 2020
23.02.2021
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