IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 18.11.2010
CORAM
THE HONOURABLE MR. JUSTICE M.M.SUNDRESH
W.P. NO.12532 OF 2002
1.T.K.Krishnasamy Naidu
2.J.Somasundaram
3.L.S.Kothandan
4.M.Padmanabhan
5.L.Venkatesalu
6.Dhanammal
7.G.Purushothaman
8.C.G.Seshachalam
9.R.C.Kesavelu Naidu
10.A.J.Jayalakshmi ..Petitioners
Versus
1.State of Tamil Ndu
rep.by Secretary to Government
Home (Courts-IIA) Department
Secretariat, Chennai 600 009.
2.The Inspector-General of Police
Economic Offences Wing-II
Government Estate
Chennai 600 002.
3.The Commissioner for Land
Administration
Government of Tamil Nadu
Ezhilagam, Chepauk
Chennai 600 005.
4.The Inspector of Police
District Crime Branch
Vellore. ..Respondents
PRAYER : Petition filed Under Article 226 of the Constitution of India praying to issue a Writ of certiorarified mandamus, calling for the records of the respondents herein culminated in the impugned order of the first respondent in G.O.Ms.No.1066, Home (Courts-IIA) Department, dated 24.10.2001, quash the said order as illegal, unconstitutional and non-est in law and violative of the principles of natural justice and consequently directing the respondents to forbear from proceeding against the petitioners and their properties by resorting to Tamil nadu Protection of Interests of Depositors Act, 1997 (Act XLIV of 1997) except under the common law remedy pending with the 4th respondent herein.
For Petitioners : Mr.M.Balasubramanian
For Respondents : M/s.D.Geetha
Additional Government Pleader
O R D E R
The petitioners herein are the partners of Sri Andal Finance and its sister concerns situated in Gudiyatham Town, Vellore District. They have been carrying on business in partnership by lending money on hire purchase basis to the general public. The petitioners have been making the payment to the depositors till 1993 in so far as the interests is concerned. On 16.02.1995, the President of Sri Andal Financiers Depositors’ Association, Gudiyatham, Vellore District, lodged a complaint alleging that most of the members of his Association did not get the amount deposited with Sri Andal Finance, Sri Sivasankeri Finance and Sri Andal Auto Finance. It has been stated in his complaint that the members are mostly comprising of retired Government employees, Ex-Army Personnel, retired teachers, landless farmers and small scale industrialists. It has been further stated that in the meeting convened with the petitioners, it was assured that the entire amount would be paid back to the depositors.
2.In pursuance to the complaint given by the President of M/s.Andal Financiers Depositors’ Association, a case has been registered in Crime No.4 of 1995 under Sections 420 and 409 IPC, for having defaulted to pay 195 depositors to the tune of Rs.62,28,440/-. Thereafter, a charge sheet was filed on 19.12.1996 before the Judicial Magistrate Court against the petitioners. The case was transferred to the Judicial Magistrate Court No.II and thereafter to Chief Judicial Magistrate Court, Vellore in C.C.No.53 to 56 of 2001 and the same is still pending disposal.
3.The respondent No.1, on a consideration of the reports of the second respondent dated 02.04.2001 and 03.09.2001 as well as the complaint received from the depositors of the petitioners, has passed the Government Order in G.O.Ms.No.1066 Home (Courts IIA) Department, dated 24.10.2001 ordering ad-interim attachment of the properties of the concerns namely, Sri Andal Finance, Sivasankari Finance Chit Funds, Sri Andal Auto Finance and Sri Andal Financiers, Gudiyatham Town, Vellore District. Challenging the above said Government Order, the petitioners have filed the present writ petition.
4.Shri.M.Balasubramanian, learned counsel appearing for the petitioners submitted that the order impugned is liable to the set aside, since the same has been passed without power or authority and jurisdiction in as much as the complaint was given in the year 1995 and the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 (Tamil Nadu Act 44 of 1997) (in short “Act 44 of 1997) has come into force only on 07.08.1997. Therefore, in the absence of any power to apply the same retrospectively, the Act being prospective, the exercise of the power by the first respondent cannot be sustained. The learned counsel also submitted that the impugned order is liable to be set aside for non-application of mind, since the relevant materials are not taken into consideration while passing the same. The third contention of the learned counsel for the petitioners is that the provisions contained in Section 4(3) of the Act XLIV of 1997 having been not complied with and hence the Government Order cannot be enforced. Hence, the learned counsel submitted that the writ petition will have to be allowed.
5.The learned counsel for the respondents based upon the counter affidavits filed by the respondents, submitted that the petitioners have willfully defaulted the repayment to 195 depositors running to several lakhs of rupees. The petitioners are also deliberately dragging on the criminal case. The decision has been made on public interest by invoking the provisions of the Act. Therefore, the writ petition will have to be dismissed.
6.In so far as the first contention raised by Shri.M.Balasubramanian, learned counsel appearing for the petitioners is concerned, this Court is of the opinion that the said contention cannot be countenanced. Taking cognizance of an offence is different from taking action to attach the property. A perusal of the complaint registered originally would show that the same has been registered for the alleged offences under Section 420 and 409 IPC. Section 3 of the Act 44 of 1997 provides for attachment of the properties in default of return of deposits. The said provision has not been complied with retrospective effect but only with prospective effect. The order impugned has been passed in the year 2001 after coming into the provisions of the Act. Therefore, in accordance with the provisions of the Act, the respondent No.1 has passed the impugned order. The judgment relied upon by the learned counsel for the petitioners rendered by this Court in Crl.R.C.No.1412 of 1999 [N.JOTHIVEL v. STATE], Crl.O.P. Nos.5588 and 6534 of 2000 [S.BALASUBRAMANIAM v. STATE] and Crl.R.C.No.1147 of 2001 [N.JOTHIVEL v. STATE] have no application to the present case on hand.
7.As observed earlier, the procedure contemplated under the Act 44 of 1997 has been applied prospectively to the pending case. A perusal of Section 3 of the Act 44 of 1997 would show that it is only a power vested with the respondent No.1 to protect the interests of the depositors. It is only ad-interim measure giving power to the respondent No.1 to act. This has got nothing to do with the registration of the complaint and the decision to be made by the competent Criminal Court. Therefore, this Court is of the opinion that the submission of the learned counsel for the petitioners cannot be accepted.
8.In so far as the contention of the learned counsel that the proceedings of the respondent No.1 are liable to be set aside for non-application of mind is concerned, the same also cannot be countenanced. A perusal of the impugned order would show that the report of the second respondent was taken into consideration. The power exercised by the first respondent is to protect the interests of depositors by way of ad-interim measure. Therefore, for exercising such a power, a total adjudication is not required. What is required is a prima facie satisfaction on the part of the respondent No.1. In as much as the final decision is to be taken by the Special Court constituted under the Act, it cannot be said that the respondent No.1 will have to give a complete consideration of all the materials available on record.
9.Even a perusal of Section 3 of the Act 44 of 1997 would show that what is required is the satisfaction of the Government that the financial institution is not likely to return the deposits. In such an event, the respondent No.1 has to exercise its power in order to protect the interests of the depositors and pass ad-interim order attaching the property. Therefore, the said power having been exercised by the first respondent in order to protect the interests of the depositors, the same cannot be interfered with.
10.In so far as the third contention of the learned counsel for the petitioners is concerned, it is no doubt true that Section 4(3) of the Act 44 of 1997 provides for an appointment of a competent authority by the respondent No.1 by a notification. After the receipt of the orders of the Government under Section 3, the competent authority will have to apply within 15 days to the Special Court constituted under the Act for making the interim order of attachment absolute. Such a procedure has to be followed by the competent authority in pursuance of the Government Order passed.
11.This Court is not willing to go into the said aspect in as much as what is challenged in the writ petition is the validity of the Government Order and not the consequential action of the competent authority. Therefore, the said contention cannot be gone into by this Court by exercising the power under Article 226 of the Constitution of India. It is of course open to the petitioners to agitate the said issue before the appropriate forum, if so advised. It is further to be seen that the depositors who are the persons aggrieved, have not been made as parties to this writ proceedings.
12.Hence for the reasons stated above, this Court does not find any reason to interfere with the order impugned and accordingly, the writ petition is dismissed. No costs.
sri
To
1.The Secretary
Government of Tamil Ndu
Home (Courts-IIA) Department
Secretariat, Chennai 600 009.
2.The Inspector-General of Police
Economic Offences Wing-II
Government Estate
Chennai 600 002.
3.The Commissioner for Land Administration
Government of Tamil Nadu
Ezhilagam, Chepauk
Chennai 600 005.
4.The Inspector of Police
District Crime Branch
Vellore