Madras High Court
G.Ramdoss vs Competent Authority / on 8 June, 2023
CRP(MD)No.169 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 08.06.2023
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
CRP(MD)No.169 of 2022
and
CMP(MD)Nos.734, 4587 of 2022
G.Ramdoss : Petitioner
Vs.
1.Competent Authority /
District Revenue Officer,
O/o.the District Revenue Officer,
Madurai.
2.Global Capital Trading Services,
Rep. by its Managing Partner,
K.S.Palanichamy
3.K.S.Palanichamy
4.P.Packia Lakshmi
5.Ganesh Kumar : Respondents
PRAYER: Civil Revision Petition filed under Article 227 of the Constitution of
India to call for the records relating to the order passed by the learned Judge,
Special Court under Tamil Nadu Protection of Interest of Depositors (F & E) Act,
1/23
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CRP(MD)No.169 of 2022
1997, Madurai, in I.A.No.62 of 2021 in unnumbered O.A.No. - of 2021, dated
20.12.2021 and set aside the same.
For Petitioner : Mr.Sricharan Rangarajan,
Senior Counsel
Assisted by
Mr.S.Ram Sundar Vijayaraj
For Respondents : Mr.R.Baskaran,
Additional Advocate General
Assisted by
Mr.G.V.Vairam Santhosh,
Additional Government Pleader
for R.1
No appearance for R.2 to R.5
*****
ORDER
This revision petition is arising out of an order passed by the Special Court
under the Tamil Nadu Protection of Interest of Depositors (In Financial
Establishment) Act, 1997, Madurai in I.A.No.62 of 2021 dated 20.12.2021. This
interlocutory application was filed by the first respondent herein under Section 5 of
the Limitation Act to condone the delay of 1537 days in filing an application under
Section 4(3) of the Tamil Nadu Protection of Interest of Depositors (In Financial
Establishment) Act, 1997 (hereinafter referred to as “TNPID Act”). The trial Court,
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CRP(MD)No.169 of 2022
by order dated 20.12.2021, condoned the delay and allowed the interlocutory
application. Aggrieved over the same, the petitioner has filed the present revision.
2.The brief facts of the case is that the revision petitioner and respondents 3
to 5 herein started the second respondent Company, namely, Global Capital
Trading Services which is a financial establishment as defined under Section 2(3)
of the TNPID Act. On 02.11.2010, the Deputy Superintendent of Police, Economic
Offences Wing, Madurai, registered an FIR in Crime No.6 of 2010 against them for
the offences under Sections 406, 420 of the Indian Penal Code and Section 5 of the
TNPID Act, based on a complaint given by one Nattarayan that the money taken
from him as deposits were not returned by the Company. After the completion of
the investigation, a final report was also filed in CC.No.11 of 2013 before the
Special Court in which this petitioner was arrayed as the accused no. 5.
3.If any Financial Establishment defrauds its depositors and if the
Government is satisfied that this establishment is not likely to return the deposits,
the Government may in order to protect the interest of the depositors, pass an ad-
interim order attaching the money or other property alleged to have been procured
either in the name of the Financial Establishment or in the name of any other
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person from and out of the deposits collected by the Financial Establishment, or if
it transpires that such money or other property is not available for attachment or
not sufficient for repayment of the deposits, such other property of the said
Financial Establishment or the Promoter, Partner, Director, Manager or member of
the said Financial Establishment or a person who has borrowed money from the
Financial Establishment to the extent of his default or, such other properties of that
person in whose name properties were purchased from and out of the deposits
collected by the Financial Establishment, as the Government may think fit, and
transfer the control over the said money or property to the Competent Authority.
The ad-interim order of attachment passed by the Government has to be made
absolute by the Special Court constituted under the TNPID Act on an application
filed by the Competent Authority within a period of thirty days as per Section 4(3)
of the TNPID Act. The District Revenue Officers (hereinafter referred to as
“DRO”) of respective Districts are appointed as Competent Authority under the
TNPID Act vide G.O.Ms.No.1049, Home Department, dated 26.08.2004.
4.In the case on hand, the Government, on being satisfied that the accused
Company is not likely to return the deposits to the depositors, invoked Section 3 of
the TNPID Act and passed G.O.Ms.No.989, Home (Police XIX) Department, dated
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24.12.2012, ordering interim attachment of the properties of the accused nos.2 and
3 in CC.No.11 of 2013. The control over those properties were also transferred to
the District Revenue Officer, Madurai i.e., the first respondent herein.
5.The ad-interim order of attachment passed by the Government in
G.O.Ms.No.989, Home (Police XIX) Department, dated 24.12.2012, was
challenged by the accused nos.2 & 3 before this Court under Section 482 of the
Code of Civil Procedure in Crl.OP.(MD)No.6607 of 2013. This Court, by order
dated 19.03.2014, allowed the application on the ground that the procedure under
Section 4 of the TNPID Act was not initiated. This order in Crl.OP(MD).No.6607
of 2013 was challenged by the Principal Secretary, Home (Police XIX) Department
in Crl.A.No.933 of 2017 before the Hon’ble Supreme Court. The Hon'ble Supreme
Court by its order dated 09.05.2017 set aside the order passed by this Court in
Crl.OP(MD).No.6607 of 2013, holding that the order passed by the State
Government under Section 3 of the TNPID Act attaching the immovable properties
and directing the Competent Authority, namely, DRO, Madurai, to take recourse to
the procedure contemplated under Section 4(3) as valid and is very much in
consonance with the provisions of the TNPID Act.
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6.Thereafter, the Competent Authority has filed an application as required
under Section 4(3) of the TNPID Act on 16.09.2021 along with an application
under Section 5 of the Limitation Act in IA.No.62 of 2021 to condone the delay of
1537 days in filing the application under Section 4(3) of the TNPID Act. The
condone delay application was allowed by the special Court by order dated
20.12.2021. As against the same, the present revision petition is filed.
7.Learned Counsel appearing for the petitioner submitted that the
Government has passed the order of attachment under Section 3 of the TNPID Act
in the year 2012, attaching the properties of the accused no.2 / K.S.Palanichamy
and accused no.3 / P. Packia Lakshmi. The petitioner is not a party to the above
proceedings and his properties were not attached. However, in the application filed
under Section 4 of the TNPID Act, the petitioner is also added as a party after the
lapse of 9 years from the original Government Order, which is illegal and also
beyond the scope of G.O.Ms.No.989, Home (Police XIX) Department, dated
24.12.2012.
8.By referring to the decision of the Hon'ble Supreme Court in Office of the
Chief Postmaster General and Ors. v. Living Media India [(2012) 3 SCC 563]
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and other judgments of the Hon’ble Supreme Court, the learned Counsel submitted
that the application was filed with a delay of 1537 days and the Competent
Authority has not offered any explanation for this huge delay. As per the dictum
laid down by the Hon’ble Supreme Court, each and every day delay needs to be
accounted for. In this case, the first respondent has filed the application in a vague
manner and the Special Court, without considering the principles laid down by the
Hon’ble Supreme Court, has erroneously allowed the application.
9.Learned Additional Advocate General appearing for the first respondent
submitted that the District Revenue Officer is designated as Competent Authority
under Section 4(1) of the TNPID Act and the first respondent, as a DRO, is having
several works such as,
i. Assisting the District Collector in discharging their duties.
These functions include District Administration ranging from
maintaining Law and Order, Planning and Development, General
Elections, Arms licensing and etc.
ii. The District Revenue Officer looks after all the branches of
the Collectorate which mainly deals with general administration and is
also vested with supervision of day-to-day functions of the Collectorate.
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iii. The District Revenue Officer runs the Revenue
Administration under various enactments in a district.
iv. The District Revenue Officer is also designated as
Additional District Magistrate.
v. The District Revenue Officer mainly deals with civil
supplies, land matters, mines and minerals, village officers etc.
10.Learned Additional Advocate General further submitted that apart from
this day-to-day work, the DRO was also working as the Returning Officer for the
Lok Sabha elections conducted in 2019. Since the Competent Authority was busy
with the election work, he could not file the petition under Section 4(3) of the
TNPID Act in time.
11.Learned Additional Advocate General has also referred to the order of the
Hon’ble Supreme Court In Re: Cognizance for Extention of Limitation [2022
LiveLaw (SC) 31], that the period from 15.03.2020 to 28.02.2022 during the Covid
period was rightly excluded by the Special Court. Therefore, the first respondent
has accounted for the delay and it was rightly considered by the Special Court.
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12.This Court considered the rival submissions made and perused the
materials placed on the record.
13.The petitioner is one of the accused in a criminal case registered under
the TNPID Act. The petitioner along with the other accused started a Financial
Establishment in the name of “Global Capital Trading Services” and have collected
money from the general public. The depositors, with a grievance that the deposited
amount was not returned, lodged a complaint in the year 2010 and an FIR was
registered in Crime No.6 of 2010 on the file of the Economic Offences Wing,
Madurai. The investigating agency also filed a final report in CC.No.11 of 2013
before the Special Court constituted under the TNPID Act.
14.The TNPID Act enables the Government to attach the properties of the
Company, Director, Promoter and the properties which were purchased from the
deposits collected. Accordingly, an ad-interim order in G.O.Ms.No.989, Home
(Police XIX) Department, dated 24.12.2012, attaching the properties of the
accused was passed by the Government invoking Section 3 of the TNPID Act. The
ad-interim order needs to be made absolute by filing an application before the
Special Court within a period of 30 days. In this case, the ad-interim order of
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attachment passed on 24.12.2012 was challenged in Crl.OP(MD).No.6607 of 2013.
This Court has also allowed the original petition by order dated 19.03.2014 which
was challenged before the Hon’ble Supreme Court in Crl.A.No.933 of 2017. The
Hon’ble Supreme Court set aside the order passed by this Court in Crl.OP.No.6607
of 2013, thereby, upheld G.O.Ms.No.989, Home (Police XIX) Department, dated
24.12.2012.
15.Thereafter, on 16.09.2021, the original application was filed by the
Competent Authority as required under Section 4(3) before the Special Court under
the TNPID Act. However, since there is a delay of 1537 days in filing, an
application under Section 5 of the Limitation Act was also filed. The first
respondent / DRO, as the Competent Authority, has assigned the reasons for the
delay that on receipt of G.O.Ms.No.989, Home (Police XIX) Department, dated
24.12.2012, he intended to conduct an enquiry with the investigation officer and
the complainants. But the accused nos.2 and 3 have filed the above
Crl.OP(MD).No.6607 of 2013 before this Court and therefore, they could not
proceed further. After the order of this Court dated 19.03.2014 in Crl.OP.No.6607
of 2013, the State preferred an SLP which was allowed and disposed only on
19.05.2017. The first respondent also adduced reasons that he was busy in duty in
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conducting the election and the application could be filed only after the Covid
period on 16.09.2021.
16.The Hon’ble Supreme Court in Postmaster General's case (supra) has
held as follows:-
“28. Though we are conscious of the fact that in a matter of
condonation of delay when there was no gross negligence or deliberate
inaction or lack of bona fides, a liberal concession has to be adopted to
advance substantial justice, we are of the view that in the facts and
circumstances, the Department cannot take advantage of various earlier
decisions. The claim on account of impersonal machinery and inherited
bureaucratic methodology of making several notes cannot be accepted
in view of the modern technologies being used and available. The law of
limitation undoubtedly binds everybody, including the Government.
29. In our view, it is the right time to inform all the government
bodies, their agencies and instrumentalities that unless they have
reasonable and acceptable explanation for the delay and there was bona
fide effort, there is no need to accept the usual explanation that the file
was kept pending for several months/years due to considerable degree of
procedural red tape in the process. The government departments are
under a special obligation to ensure that they perform their duties with
diligence and commitment. Condonation of delay is an exception and
should not be used as an anticipated benefit for the government
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departments. The law shelters everyone under the same light and should
not be swirled for the benefit of a few.”
17.Section 4(3) of the TNPID Act provides 30 days for the Competent
Authority to file necessary application before the Special Court to make the ad-
interim order passed under Section 3 as absolute. In Section 4(3) of the TNPID
Act, the legislature has used the word “shall” before mentioning the thirty days.
However, this is not determinative of the fact that the limitation given here is
mandatory or directory. The Hon’ble Supreme Court in Raza Buland Sugar Co.
Ltd. v. Municipal Board [AIR 1965 SC 895] per majority has held as follows:-
“8. The question whether a particular provision of a statute which
on the face of it appears mandatory, inasmuch as it uses the word
“shall” as in the present case — is merely directory cannot be resolved
by laying down any general rule and depends upon the facts of each
case and for that purpose the object of the statute in making the
provision is the determining factor. The purpose for which the provision
has been made and its nature, the intention of the legislature in making
the provision, the serious general inconvenience or injustice to persons
resulting from whether the provision is read one way or the other, the
relation of the particular provision to other provisions dealing with the
same subject and other considerations which may arise on the facts of a
particular case including the language of the provision, have all to be
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taken into account in arriving at the conclusion whether a particular
provision is mandatory or directory.”
18.This Court in Antony v. Competent Authority [Crl.A.No.504 of 2005,
dated 01.04.2008], held that under the provisions of TNPID Act, even though the
word “shall” is used in Section 4(3) of the TNPID Act, such provision is directory
in nature and not mandatory. It was also held that the provisions of the TNPID Act
should be given a literal interpretation, otherwise, public interest would be
affected. The Court further held that considering the beneficial special statute and
the injustice that may be occasioned to the innocent depositors, who lost their
hard-earned money, the time frame prescribed under Section 4(3) of the TNPID
Act will have to be construed only as directory in nature and not mandatory.
19.The objective of the TNPID Act is to protect the deposits made by the
public in the Financial Establishments and matters relating thereto. The
Government Order in G.O.Ms.No.989, Home (Police XIX) Department, dated
24.12.2012, was an interim order attaching the properties of the accused financial
establishment in order to secure the interest of the deposits made by the public. If
the time limit of thirty days under Section 4(3) of the TNPID Act is held to be
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mandatory, the Competent Authority cannot proceed with the application to
auction the properties and realize the sale proceeds of the property, thereby, the
entire purpose of the TNPID Act fails.
20.Though the Hon'ble Supreme Court upheld the Government Order in
G.O.Ms.No.989, Home (Police XIX) Department, dated 24.12.2012, as early as on
09.05.2017, the Competent Authority filed the original Application for making the
interim order of attachment absolute only in September, 2021. The ones who are
getting affected by this torpid attitude of the Competent Authority are the innocent
public who have invested money in this financial establishment. Therefore,
considering the purpose of the legislation and the injustice it may cause to the
depositors, this Court arrives at the conclusion that these thirty days’ time period is
only directory.
21.Also, this Court in K. Veerasamy v. Secretary to Government [(2012) 3
Mad LJ 630] has held that Section 5 of the Limitation Act is applicable in
considering the application of the Competent Authority seeking to condone the
delay in filing the application to make the interim attachment absolute
under Sections 4(3) and 4(4) of the TNPID Act, by virtue of Section 29 of the
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Limitation Act. From Section 5 of the Limitation Act, it can be seen that at the
discretion of the Court, any application can be admitted after the prescribed period,
if there is sufficient cause. In view of the same, the Hon'ble Supreme Court in
Ramlal, Motilal and Chhotelal v. Rewa Coalfields Ltd. [AIR 1962 SC 361] held
that Section 5 gives the Court a discretion which in respect of jurisdiction is to be
exercised in the way in which judicial power and discretion ought to be exercised
upon principles which are well understood; the words ‘sufficient cause’ receiving a
liberal construction so as to advance substantial justice when no negligence nor
inaction nor want of bona fide imputable to the appellant.
22.The words “sufficient cause” in Section 5 of the Limitation Act has to be
construed liberally in order to advance substantive justice. Here, the Competent
Authority is only appointed by the Government to exercise control over the
attached properties. Whereas the depositors i.e., the defacto complainants are the
parties who are affected by the delay of the Competent Authority. The negligent
attitude or inaction of such authority need not affect innocent depositors.
Therefore, in the interest of substantial justice, there is sufficient cause to condone
the delay in filing the application and there is no infirmity in the decision of the
Special Court.
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23.The Government appoints Competent Authority under Section 4(1) of the
TNPID Act. The powers and duties of the Competent Authority are also defined
under Section 4 of the TNPID Act. For the sake of convenience, Section 4 of the
TNPID Act is extracted hereunder:-
“4. Competent authority. - (1) The Government may, by
notification, appoint one or more authorities for such area or areas or
such case or cases as may be specified in the notification hereinafter
called "the Competent authority" to exercise control over the properties
attached by the Government under section 3.
(2) The Competent authority shall have such other powers as may
be necessary for carrying out the purposes of this Act.
(3) Upon receipt of the order of the Government under section 3,
the Competent authority shall apply within thirty days to the Special
Court constituted under this Act for making the ad-interim order of
attachment absolute and for a direction to sell the property so attached
by public auction, and realise the sale proceeds.
(4) An application under sub section (3) shall be accompanied by
one or more affidavits, stating the grounds on which the belief that the
Financial Establishment has committed any default or is likely to
defraud, is founded, the amount of money or value of other property
believed to have been procured by means of the deposit, and the details,
if any, of persons in whose name such property is believed to have been
invested or purchased out of the deposits or any other property attached
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under section 3.
(5) The Competent authority shall make an application to any
court having jurisdiction to try similar cases or deal with the subject
matter pertaining to money or property belonging to a Financial
Establishment or any person specified in section 3 situated within the
territorial jurisdiction of that court for appropriate orders.
(6) For the purpose of crediting the dealing with the money
realised by the Competent authority, he shall open an account in any
Scheduled commercial bank.”
24.The DROs of respective districts are designated as Competent Authority
vide G.O.Ms.No.1049, Home Department, dated 26.08.2004. As pointed out by the
learned Additional Advocate General, the DROs are also having other duties such
as,
i. Assisting the District Collector in discharging their duties.
These functions include District Administration ranging from
maintaining Law and Order, Planning and Development, General
Elections, Arms licensing and etc.
ii. The District Revenue Officer looks after all the branches of
the Collectorate which mainly deals with general administration and is
also vested with supervision of day-to-day functions of the Collectorate.
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iii. The District Revenue Officer runs the Revenue
Administration under various enactments in a district.
iv. The District Revenue Officer is also designated as
Additional District Magistrate.
v. The District Revenue Officer mainly deals with civil
supplies, land matters, mines and minerals, village officers etc.
Therefore, it appears that they are not effectively discharging their duties as a
Competent Authority under the TNPID Act.
25.The present case at hand is a glaring example for the same. The ad-
interim order of attachment passed in G.O.Ms.No.989, Home (Police XIX)
Department, dated 24.12.2012 was challenged by the accused in Crl.OP(MD).No.
6607 of 2013, in which one of the main grounds raised is that the application under
Section 4 of the Act to make the order as absolute was not filed. This Court
allowed the petition on 19.03.2014 recording that the application required under
Section 4(3) has not been filed. Even thereafter, the Competent Authority has
failed to file necessary application and filed this application belatedly only in
September 2021.
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26.This delay maybe due to their work pressure as claimed or due to
malafide intentions. In this case, it appears that the application under Section 4(3)
was not filed, deliberately, even though the application in Crl.OP(MD).No.6607 of
2013 was allowed by this Court on the same ground. The Hon’ble Supreme Court
in Crl.A.No.933 of 2017 set aside the order passed by this Court, as early as on
09.05.2017. Even thereafter, the first respondent / Competent Authority has failed
to take any immediate action. In view of this delay, the application filed in the year
2021 was not concluded for past 2 years. Therefore, this Court has verified with
the learned Additional Advocate General as to the functioning of the system to
achieve the objective of the TNPID Act. The details furnished by the authorities is
extracted as under:-
PARTICULARS OF CASES UNDER TNPID ACT
Number of Cases filed under the TNPID Act 1,249
Number of deposits involved 6,90,166
Worth of properties attached Rs.827,67,75,644/-
Value of sale of properties Rs.321,45,37,093/-
Amount deposited through TNPID Court, Frozen Rs.50,71,61,303/-
amount and advance amount
Total Amount deposited in the DRO Account under the Rs.372,16,98,396/-
TNPID Act
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Amount disbursed to the depositors through DRO Rs.264,73,34,273/-
under the TNPID Act
Number of depositors who received their deposits 60,824
under the TNPID Act
27.From the details furnished, it appears that only 39% of the properties
attached have been subjected to auction and the sale proceeds were realized. The
official website of Economic Offences Wing of Government of Tamil Nadu also
shows the details of the amount refunded to the general public, but this data is only
up to August, 2017. For better appreciation, the same is extracted as follows:-
Year Amount Refunded
2012 Rs.46.96 Crores
2013 Rs.56.99 Crores
2014 Rs.23.44 Crores
2015 Rs.38.61 Crores
2016 Rs.41.13 Crores
2017 (upto August) Rs.23.84 Crores
28.The number of criminal cases registered under the TNPID Act are
increasing every year. The volume of fraud is also huge. The depositors are mostly
poor and illiterate. There is a considerable delay in attaching the properties and
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bringing the property to auction. Considering the volume of cases and the amount
involved, the Government may consider appointment of an exclusive officer in the
cadre of IAS or a retired High Court Judge as a Competent Authority for disposing
the property which were attached under the TNPID Act. If the properties are
brought for auction by a retired High Court Judge or an IAS officer, the confidence
among the general public would increase in purchasing the property attached
which would see a raise in the number of poor depositors in getting their deposits
back.
29.In the interest of the depositors, as discussed above, this Court is not
inclined to interfere with the discretion exercised by the Special Court in
condoning the delay of 1537 days. Hence this civil revision petition is dismissed.
30.Learned Additional Advocate General is expected to address the issue
raised by this Court to the Government and make necessary recommendations as
suggested above.
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There shall be no order as to costs. Consequently, connected miscellaneous
petitions are closed.
Internet : Yes 08.06.2023
Index : Yes / No
NCC : Yes / No
gk
Note:
Mark a copy of this order to
i. The Chief Secretary,
State of Tamil Nadu,
Secretariat, Chennai.
ii. The Secretary to Government,
Home, Prohibition and Excise Department,
State of Tamil Nadu,
Secretariat, Chennai.
To
1.The Judge,
Special Court under Tamil Nadu Protection of Interest of Depositors Act,
Madurai.
2.The District Revenue Officer,
O/o.the District Revenue Officer,
Madurai.
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CRP(MD)No.169 of 2022
B.PUGALENDHI, J.
gk
CRP(MD)No.169 of 2022
08.06.2023
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