Madras High Court
B.Srinivasan vs The District Collector on 29 July, 2008
Author: P.Jyothimani
Bench: P.Jyothimani
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 29/07/2008 CORAM THE HONOURABLE MR.JUSTICE P.JYOTHIMANI Writ Petition (MD)No.4005 of 2005 and Writ Petition (MD)No.4913 of 2005 and W.P.M.P.(MD)Nos.4211 and 5298 of 2005 B.Srinivasan ... Petitioner in W.P.(MD)No.4005/2005 K.S.Pasupathi ... Petitioner in W.P.(MD)No.4913/2005 Vs. 1.The District Collector, Karur District, Karur. 2.The Co-ordination Officer cum Revenue Divisional Officer, Karur, Karur District. 3.The Tahsildar, Karur Taluk, Karur District. 4.The Inspector of Police, Economic Offences Wing-II, Karur, Karur District. ... Respondents in both Wps. PRAYER in W.P.(MD)No.4005 of 2005 Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Mandamus, forbearing the respondents from interfering with the peaceful possession of the petitioner of his constructed residential building situated at Old No.617 New No.848, Jawahar Bazaar, Karur, including demanding of monthly rent, without following due process of law. PRAYER in W.P.(MD)No.4913 of 2005 Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Mandamus, forbearing the respondents from in any interfering with the peaceful possession of the petitioner of his constructed residential building situated at New Door No.91/48, Rajaji Street, Karur, at T.S.No186, including demand of monthly rent, without following due process of law. !For Petitioner ...Mr.B.Saravanan ^For Respondents ...Mr.D.Sasikumar, Government Advocate. :COMMON ORDER
Both these writ petitions, the prayer is for a direction forbearing the respondents to interfere with the peaceful possession of the property which are residential building situated at Old No.617 New No.848, Jawahar Street, Karur and at Door No.91/48, Rajaji Street, Karur at T.S.No.186 without insisting for payment of rent.
2.The Government by invoking its powers under Section 3(ii) of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 has issued G.O.Ms.No.110 Home (Courts IIA) Department dated 04.02.2003. As per the said Government order, it is seen that the Government received complaint from number of depositors that Sri Alamelu Financing Corporation, Sri Kanniga Financing Corporation, Sri Vasavi Credit and Gri Easwari Financing Corporation and others situated at in G2S and 630, Kadai Veedhi, Karur have committed default in return of deposits made by the depositors after maturity. It was in those circumstances, in order to safeguard the interest of depositors, the Government passed Order by attaching the properties stated in the schedule and transferring the control over the said properties to the competent authority constituted under the Act. As per the schedule to the Government order, it is seen that the residential building of the petitioner in W.P.(MD)No.4005 of 2005 namely at Door No.617 and New No.848, Jawahar Bazaar, Karur is not included in the column provided as details of the property.
3.In respect of the residential house belonging to the petitioner in W.P.(MD)No.4913 of 2005 namely at New No.91/48 Rajaji Street, Karur at T.S.No.186 is included in the schedule to the said Government order stating that the petitioner in the said writ petition as the owner of the house.
4.The case of the petitioner in W.P.(MD)No.4005 of 2005 is that even though he is one of the partners of the said financial corporations, the house of the petitioner has not been included in the schedule to the Government Order issued under Section 3(ii) of the Tamil Nadu Protection of Interests of Depositors (In Financial Estabilshments) Act, 1997 (hereinafter referred to as 'the Act 44 of 1997) and therefore, it cannot be presumed that there is an attachment of his house and consequently, it is not open to the second respondent who has been appointed as competent authority or any competent authority appointed as per the Act to demand any rent from the petitioner by treating that the petitioner's property by virtue of the attachment has vested with the competent authority and consequently, it is under the control of the Government.
5.In respect of the writ petition in W.P.(MD)No.4913 of 2005, the case of the petitioner is that even though the property of the petitioner included in the schedule to the Government and the property which has been attached as per the Government order by virtue of Section 4 of the Act 44 of 1997, inasmuch as the competent authority appointed under the Act has not taken any steps to make the ad-interim order of attachment absolute within a period of 30 days from the date of attachment it is deemed to have been raised and therefore, even in respect of the said writ petition also any demand made by the respondents or competent authority who may be appointed as per the Act for payment of rent is not tenable in law.
6.On the other hand, counter affidavit filed by the fourth respondent, namely, the Inspector of Police, Economic Wing-II, Karur based on whose report, the Government Order itself came to be passed, it is stated that the purport of the Act 44 of 1997 is to safeguard the interests of the depositors and it is only in that view of the matter by making the order of attachment the ownership over the property by the financial corporations or any of the partners or any persons who are interested in the financial corporations is temporarily divested from said persons and vested with the competent authority and thereafter, the Special Court has power under the Act on enquiry to make the interim order of attachment made absolute in which, the Special Court can also give direction to the competent authority for the equitable distribution among the depositors of the money attached or realised out of the sale of the attached properties and therefore, according the fourth respondent even if the schedule to the Government order passed under Section 3(ii) of the Act does not include the information of the properties, inasmuch as the petitioners in both the cases admitting themselves to be the partners and therefore, they are not the outsiders and therefore, it is not open to them to say as if their properties cannot be subject matter of attachment.
7.I have heard the submissions made on either side and given anxious thought to the issue involved in this matter.
8.A reference to the statement of objects and reasons leading to the passing of the Act namely, Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997 shows that the object of passing of the said Act is to regulate the activities of financial establishments who have defaulted to return the deposits on maturity to the public amounting to crores of rupees resulting in public resentment and therefore, taking into consideration the said public interest, the act came to be enacted by the Government. Under the said Act, the financial establishment has been defined in Section 2(3) as follows:
"2.(3)Financial Establishment means an individual, an association of individuals, 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 a co-operative 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 X of 1949)"
9.A reading of the said Section would show that only a Corporation or a Society owned or controlled by any State Government or the Central Government and other institutions or associations or firms etc., carrying on business in receiving deposits under any scheme or arrangement or in any other manner are not treated as financial establishments.
10.Section 3 of the Act 44 of 1997 enables the Government to make the 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 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 in repayment or such other properties of that person in whose name the properties were purchased from and out of the deposits collected by the financial establishment, as the Government can exercise its powers to pass an order of interim order of attachment if it is satisfied that such financial establishments not likely to return deposits or to make payment of interest or to provide service to depositors.
11.Section 3 of the Act 44 of 1997 is as follows:
"3.Attachment of properties on default of return of deposits.- Notwithstanding anything contained in any other law for the time being in force:-
i)where upon complaints received from a number of depositors, that any Financial Establishment defaults the return of deposits after maturity, or fails to pay interest on deposit or fails to provide the service for which deposit has been made or
ii)where the Government have reason to believe that any Financial Establishment is acting in a calculated manner with an intention to defraud the depositors, and if the Government are satisfied that such Financial Establishment is not likely to return the deposits, or to make payment of interest or to provide the service, the Government may, in order to protect the interest of the depositors of such Financial Establishment, 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 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".
Therefore, the interim order of attachment which can be passed by the Government is a initial protection given to the depositors and to avoid the financial establishments from further dealing with its own property in the interest of the depositors.
12.Section 4 of the Act 44 of 1997, enables the State Government to appoint the competent authority to exercise control over the properties attached under Section 3. As per the said Section, the Competent authority has been appointed by notification as it is seen in the G.O.Ms.No.110 Home (Courts IIA) Department, dated 04.02.2003 which is a subject matter of the issue in this case, the Government has appointed the Additional Commissioner for Land Administration, Chennai as competent authority as per G.O.Ms.No.250 Home Department dated 21.03.2002 in the place of the Commissioner for Land Administration, Chennai who was originally appointed as per the G.O.Ms.No.1484 Home Department, dated 04.10.1997. It is no doubt true that Section 4(i) of the Act 44 of 1997, the Government is entitled to appoint one or more authorities as competent authority by notification. Further under Section 4(iii) of the Act, such competent authority appointed by the Government, on receipt of interim order of attachment passed by the Government under Section 3(ii) of the Act within 30 days, thereafter, shall make application before the Special Court for the purpose of making the ad-interim order of attachment absolute. It is at that time when such application is made for making the ad-interim order absolute, the financial establishment has to be given right to contest its case which may include even the defence as to whether the properties which were attached and which were procured from and out of the deposited money and so on and thereafter, the Special Court decides either to make the ad-interim order absolute or the attachment is raised.
13.The point involved in this case is as to whether by mere not filing the application by the competent authority for making the interim order of attachment absolute within 30 days from the date of receipt of attachment Order, the interim order of attachment passed by the Government is lapsed.
14.Section 4 of the Act 44 of 1997 reads as follows:
"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 orders 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.
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 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 and dealing with the money realised by the Competent authority, he shall open an account in any Scheduled commercial bank."
15.As far as the writ petition in W.P.(MD)No.4005 of 2005 is concerned, inasmuch as on record, it is seen that it is also not in dispute that the property of the petitioner who is one of the partners of the financial estabilshments has not been included in the schedule to the Government order issued under Section 3 of the Act 44 of 1997.
16.In view of the same, there is absolutely no difficulty to come to the conclusion that either the competent authority notified by the Government or any of the respondents will have any right over the said property of the petitioner and therefore, it is made clear that in respect of the said writ petition in W.P.(MD)No.4005 of 2005, the respondents have no manner of right to interfere with the possession of the said property at Door No.617 and New No.848, Jawahar Bazaar, Karur. However, it does not prevent the Government from passing any orders as per Section 3 of the Act 44 of 1997 by including the said property, if it is so advised.
17.As far as the W.P.(MD)No.4913 of 2005 is concerned, admittedly the property has been included in the schedule to the Government order and the question is to be decided as to whether when the competent authority was stated to have been appointed even in the year 2004 itself, has not taken any steps to file an application for the purpose of making the interim order of attachment absolute and in such event, whether there is any right on the part of the respondent to require the petitioner to pay the rent for its own property and the same is vested with the competent authority under the order of interim order of attachment.
18.Be that as it may, as the learned counsel appearing for the petitioner Mr.B.Saravanan, fairly submitted that even it is not known as to whether the second respondent has been duly appointed competent authority constituted under the Act and the properties as per the Government order vested with the competent authority and what authority, the second respondent claiming to be the competent authority as per Section 4(1) of the Act 44 of 1997. In such view of the matter, it is not necessary for this Court to go into that question. As submitted by the learned counsel for the petitioner that if the competent authority duly notified by the Government makes such an application before the Special Court within the time that may be stipulated by this Court, the Special Court can be directed to pass appropriate orders after giving opportunity to the petitioner.
19.In view of the submissions of the learned counsel for the petitioners, the W.P.(MD)No.4913 of 2005 is disposed of with a direction to the competent authority who may be notified as per Section 4(1) of the Act 44 of 1997 in respect of the above said financial establishments to take appropriate steps to file an application before the Special Court under the Act 44 of 1997 for the purpose of making the interim order of attachment dated 04.02.2003 absolute within a period of four weeks from the date of receipt of a copy of this order. On receipt of such application by the competent authority, it is for the Special Court to pass further orders after giving opportunity to the parties on merits and in accordance with law. It is made clear that in W.P.(MD)No.4913 of 2005, it is not known as to whether the second respondent is duly constituted or notified competent authority, the respondents shall not insist the petitioner to pay any rent in respect of his house on the basis of the ad-interim order of attachment passed as per G.O.Ms.No.110, dated 04.02.2003.
20.With the above observation and direction, the W.P.(MD)No.4913 of 2005 is disposed of and W.P.(MD)No.4005 of 2005 is allowed. No costs. Consequently, connected miscellaneous petitions are closed.
sms To
1.The District Collector, Karur District, Karur.
2.The Co-ordination Officer cum Revenue Divisional Officer, Karur, Karur District.
3.The Tahsildar, Karur Taluk, Karur District.
4.The Inspector of Police, Economic Offences Wing-II, Karur, Karur District.