Karnataka High Court
Ummehani. A vs The Competent Authority on 22 April, 2024
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NC: 2024:KHC:16188
MFA No. 2639 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF APRIL, 2024
BEFORE
THE HON'BLE MR JUSTICE R. NATARAJ
MISCELLANEOUS FIRST APPEAL NO. 2639 OF 2023 (KPIDFA)
BETWEEN:
UMMEHANI. A
W/O. ABDUL RAHMAN,
AGED ABOUT 44 YEARS,
R/AT NO.16, M.K. MANZIL,
3RD CROSS, 3RD MAIN,
HGH LAYOUT, GANGANAGAR,
R.T. NAGAR POST,
BANGALORE-560 032.
...APPELLANT
(BY SRI. MOHAMMED TAHIR, ADVOCATE)
AND:
1. THE COMPETENT AUTHORITY
FOR-I.M.A. GROUP OF COMPANIES,
REGIONAL COMMISSIONER-(REV),
BENGALURU DIVISION, BENGALURU,
Digitally signed 2ND FLOOR, BMTC COMPLEX,
by K.H.ROAD, SHANTHI NAGAR,
MARKONAHALLI
RAMU PRIYA BENGALURU-560027.
Location: HIGH
COURT OF
KARNATAKA
2. I MONETARY ADVISORY
A COMPANY REGISTERED UNDER
THE PROVISIONS OF COMPANIES ACT,
REPRESENTED BY ITS MANAGING DIRECTOR,
MOHAMED MANSOOR KHAN,
NO.56/4, 1ST FLOOR, NANDI BUILDING,
HOSPITAL ROAD, SHIVAJI NAGAR,
BENGALURU-560 001.
...RESPONDENTS
(BY SRI. VEERESH R. BUDIHAL, ADVOCATE FOR RESPONDENT
NO.1 (NOC);
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NC: 2024:KHC:16188
MFA No. 2639 of 2023
VIDE ORDER DATED 14.06.2023, NOTICE TO RESPONDENT
NO.2 IS DISPENSED WITH)
THIS MFA IS FILED UNDER SECTION 16 OF THE
KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN
FINANCIAL ESTABLISHMENT ACT, 2004, AGAINST THE ORDER
DATED 30.03.2023 PASSED IN MISC. NO.722/2019 ON THE
FILE OF THE XCI ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE, SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU,
(CCH-92), ALLOWING THE PETITION FILED UNDER SECTION
5(2) OF THE KPIDFE ACT, 2004.
THIS APPEAL, COMING ON FOR DICTATING JUDGMENT,
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
The objector in Misc. No.722/2019 before the XCI Additional City Civil and Sessions Judge and Special Judge for KPIDFE Cases, Bengaluru, (henceforth referred to as 'the Special Court') has filed this appeal challenging an order dated 30.03.2023 passed therein by which the Special Court allowed the petition filed by the respondent No.1 herein and overruled the objection raised by the objector/appellant herein and confirmed the order of interim attachment passed by the Government vide -3- NC: 2024:KHC:16188 MFA No. 2639 of 2023 notification bearing No.RD.20.GRC.2017 (P2), Bengaluru dated 09.07.2019 and corrigendum notification No.RD.20.GRC.2017 (P2) dated 06.08.2019 under the provisions of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (henceforth referred to as 'the Act of 2004').
2. The respondent No.1 herein filed a petition in Misc. No.722/2019 under Section 5(2) of the Act of 2004 inter alia for an order to confirm the order of interim attachment passed by the Government of Karnataka vide notification bearing No.RD.20.GRC.2017 (P2) Bengaluru dated 09.07.2019 and corrigendum notification No.RD.20.GRC.2017 (P2) dated 06.08.2019 in respect of the petition schedule properties. The said petition was disposed off by the Special Court on 16.08.2022 confirming the interim order of attachment passed by the Government with regard to the petition schedule properties. Against the said order of the Special Court in respect of one property, the objector approached this -4- NC: 2024:KHC:16188 MFA No. 2639 of 2023 Court in MFA No.6539/2022. A coordinate Bench of this Court in terms of its judgment dated 14.02.2023, set aside the order dated 16.08.2022 passed by the Special Court in Misc. No.722/2019 only in respect of the objector / appellant herein and remanded the case back to the Special Court for fresh consideration in accordance with law only in so far as it related to the property claimed by the objector/appellant herein.
3. The objector contended that she had purchased a gold antique with studded stone / 'long hara' on 15.12.2018 weighing 227.462 g for a total consideration of Rs.6,39,810/- from the branch office of the respondent No.2 herein situate at Nos.47 and 48, 11th main road, Jayanagar 4th block, Bengaluru (henceforth referred to as 'the branch office'). She claimed that after purchase, the ornament was damaged and it required to be repaired. Hence, on 03.06.2019, she approached the nearest branch of the respondent No.2 i.e., corporate office No.5, Lady Curzon Road, near Bowring Hospital, Bengaluru -5- NC: 2024:KHC:16188 MFA No. 2639 of 2023 (henceforth referred to as 'the corporate office branch') and handed over the ornament for repair. Accordingly, the respondent No.2 had undertaken to get it repaired and issued an acknowledgement and advised the objector to collect it on 12.06.2019. The objector claimed that in the meanwhile, a criminal case in FIR No.73/2019 came to be registered against the respondent No.2 - Company and all the gold ornaments including the ornament given by the objector for repair were seized by the Police. Though she made a request to the Police and before the respondent No.1 to release the ornament, the same was not heeded to. She claimed that the ornament purchased by her was in no way connected with the alleged crime and as such, the order of provisional attachment deserved to be set aside in so far as the gold ornament purchased by her. She claimed that there was no other rival claimant to claim the ornament and that she was the only person who was entitled to have the custody and use of the said ornament. Therefore, she prayed the Special Court to -6- NC: 2024:KHC:16188 MFA No. 2639 of 2023 release the gold ornament in her favour by releasing it from the custody of the respondent No.1.
4. In support of her contention, the objector was examined as RW.1 and she marked documents as Exs.R1 to R7 and closed her side. The respondent No.1 herein did not adduce any evidence.
5. Based on the oral and documentary evidence adduced by the objector, the Special Court held "therefore on conjoint reading of Exs.R1 & R6 it is clear that the Objector had purchased gold antique item studded stone as found in Ex.R1 and she is the owner of the said gold ornament". Further, the Special Court held that the description of the gold ornament given in Ex.R2 did not tally with the description of the gold item shown in Ex.R1. It held "in fact in Ex.R1, what kind of the gold ornament was purchased is not clear and there is no any specifications of the item except stating that 'gold antique item studded stone'.". It further held "On the basis of the said description, it can't be said that what was purchased -7- NC: 2024:KHC:16188 MFA No. 2639 of 2023 by the objector under Ex.R1 is a 'long hara' as contended by her or any other antique gold item. The objector has not placed any evidence to show that the item purchased under Ex.R1 is the 'antique hara' or the 'long hara' as found in Ex.R2 and Ex.R5. It is not understood on what basis the description in the repair memo was shown as "Antique Har". The Special Court further held "such being the case, at-least reference should have been made in Ex.R2 with regard to Ex.R1 bill, to say that whatever gold item stated in Ex.R2 is the same gold item stated in Ex.R1 so as to identify the same. In Ex.R2, there is no reference as to studded stones. As found in Ex.R1, the weight of the studded stones is 16.680 g. If at all the item mentioned in Ex.R1 was given for repair as stated by the Objector, then there should have been reference as to the studded stone also in Ex.R2. When there is no description of the gold item in Ex.R1, it is not understood how the 'antique har' as described in Ex.R2 could be held on the item purchased under Ex.R1. Therefore, on the basis of Ex.R2, it can't be said that the objector had given the same gold ornament -8- NC: 2024:KHC:16188 MFA No. 2639 of 2023 stated to be purchased by her under Ex.R1." It further held that the objector had not opted to examine the author of Exs.R1 and R2 to establish what was the item purchased under Ex.R1 and what item was given for repair. It further went on to hold "Now the contents of Ex.R5 the property form, under which the police have seized the gold ornament including the item claimed by the Objector is analysed, as already stated serial No.78 mentioned in Ex.R5 ie., 'long hara 22 kt' is claimed by the objector. Now it is interesting to note that, in Ex.R5 also the description of the item in serial No.78 is shown as 'long hara 22 kt' gross weight of which was 227.33 and net weight was 207.33. In Ex.R5 also there is no reference as to studded stone. If the descriptions of the other items in Ex.R5 are looked in to, if the gold items contain a stone the same is mentioned in Ex.R5. Therefore it is clear that even the description shown in Ex.R5 is not tallying either with Ex.R1 or Ex.R2. Therefore in the light of the available evidence on record, it can't be said that the item purchased under Ex.R1 is the same item -9- NC: 2024:KHC:16188 MFA No. 2639 of 2023 shown in Exs.R2 & Ex.R5. Further, on the basis of Ex.R1, one can't say as to what item was purchased by the Objector." It further held that the contents of Ex.R5 disclosed that the properties were not seized by the Police on 12.06.2019 but were seized on 20.06.2019. Therefore, there is no clarity in the case of the objector. With these and other findings, the Special Court held that the objector was unable to establish that the property purchased by her under Ex.R1 was the property that was seized by the Police at serial No.78 mentioned in Ex.R5 - property form and hence, rejected the claim of the objector and allowed the petition filed by the respondent No.1 herein by the impugned judgment.
6. Being aggrieved by the said judgment, the objector is before this Court in this appeal.
7. Learned counsel for the objector / appellant contended that the marriage of the daughter of the objector was scheduled on 13.01.2019. He contended that the objector and her husband purchased a gold antique
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 item with studded stone weighing 227.462g on 15.12.2018 for a total sale consideration of Rs.6,39,810/- from the branch office of respondent No.2. Out of the aforesaid amount, a sum of Rs.5,78,110/- was paid to respondent No.2 through National Electronic Funds Transfer (NEFT). Ex.R1 was the bill and Ex.R6 was the statement of account relating to the husband of the appellant maintained at Canara Bank, Sanjaynagar Branch. He submitted that as per the account extract, it is clear that a sum of Rs.5,78,110/- was transferred to the respondent No.2 through NEFT. Therefore, he contends that what was purchased by the objector was a gold antique item with studded stones / 'long hara'. He contended that the very same item was seized by the respondent No.1 / Police consequent to a complaint lodged against respondent No.2 about defrauding the investors. He submits that the gold ornament was damaged and had to be repaired and therefore, the objector handed it over for repair at the corporate office branch of respondent No.2 on 03.06.2019 who issued a receipt acknowledging
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 the receipt of the gold ornament for repair on 12.06.2019 and advised the appellant to visit the corporate office branch on 12.06.2019 to collect the gold ornament. He submits that during investigation, the ornaments were seized by respondent No.1 / Police from the respondent No.2 on 20.06.2019 and item at serial No.78 mentioned in Ex.R5 - property form corresponded with the gold ornament purchased by the objector. He, therefore, contends that the gold ornament at serial No.78 in Ex.R5 that was seized from the custody of the respondent No.2 was not a product of crime but was lawfully purchased by the objector and therefore, the same could not be attached for the distribution of proceeds to the depositors. He submitted that the Special Court committed an error in superficially examining the case of the objector and rejecting it. Learned counsel has placed on record the photograph of the ornament that was purchased by the objector and contends that it corresponded with the photograph taken of the ornament by the respondent No.1 at the time of attachment. He, therefore, prays that the
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 impugned order passed by the Special Court be set aside and in the light of the judgment dated 14.02.2023 passed by a coordinate Bench of this Court in MFA No.6539/2022, an order be passed directing the respondent No.1 herein to pay the appellant therein the value of the gold ornament that was sold by auction.
8. Per contra, the learned counsel for the respondent No.1 submitted that what was purchased by the objector under Ex.R1 was "Gold Antique Item Studded Stone" weighing gross weight of 227.462 g and net weight of 210.782 g whereas in Ex.R2 which was the repair memo issued by the respondent No.2, it was mentioned as "Antique Har' - physical weight 227.378g. for soldering purpose and additional gold will be added for that customer has to pay". He submitted that what was attached by the respondent No.1 as per Ex.R5 at serial No.78 was "long hara 22 kt" weighing gross weight of 227.33g and net weight of 207.33g. He, therefore contends that the description of gold ornament purchased
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 by the objector under Ex.R1 did not tally with the description of gold ornament seized by the respondent No.1 / Police on 20.06.2019 and therefore, the order of attachment passed by the Government had to be confirmed. He further contended that as per Ex.R2, the objector was supposed to receive the gold ornament at the corporate office branch on 12.06.2019. However, there is nothing to show that the objector had gone to the corporate office branch of the respondent No.2 to collect the gold ornament on 12.06.2019. He contends that the ornament was seized by the respondent No.1 / Police only on 20.06.2019 and therefore, the objector must have received back the gold ornament and is now trying to make an unlawful claim in respect of the gold ornament that was seized by the respondent No.1. He states that even the weight of the gold ornament that was purchased by the objector did not correspond with the weight of the gold ornament seized by the respondent No.1 under Ex.R5 at serial No.78. Therefore, he contends that it is difficult to accept the case of the objector that the property seized by
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 the respondent No.1/Police was the property that was purchased by the objector. Therefore, he prays that the appeal be dismissed.
9. I have considered the submissions made by the learned counsel for the objector/appellant as well as the learned counsel for the respondent No.1.
10. This Court in terms of the order dated 20.03.2024, directed the learned counsel for the appellant to produce photographs of the ornament which the objector/appellant purchased in terms of Ex.R1 - invoice dated 15.12.2018. Likewise, the learned counsel for respondent No.1 was directed to produce photographs of the gold ornament found at serial No.78 of P.F. No.9/2019. Consequent thereto, the objector filed a memo on 27.03.2024 along with a photograph of the gold ornament, while the learned counsel for the respondent No.1 filed a memo on 28.03.2024 along with a photograph of the gold ornament that was seized from the custody of respondent No.2. A perusal of the photograph produced
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 by the learned counsel for respondent No.1 shows that the ornament was damaged as the harness to the two chains was missing and the gross weight of the ornament was shown as 227.330g and the net weight as 207.33g which nearly corresponded to the weight of the ornament mentioned in Exs.R1 and R2. Therefore, it is evident that what was seized by the respondent No.1 / Police on 20.06.2019 from the custody of respondent No.2 was the ornament purchased by the objector under Ex.R1. Since the husband of the objector had paid the money to respondent No.2 for purchasing the said gold ornament, the same could not be treated as a product of crime and therefore, was not liable to be attached and the proceeds of the sale of the said gold ornament could not be used to distribute amongst the depositors. Consequently, the impugned order passed by the Special Court warrants interference.
11. Since it is stated by the learned counsel for the respondent No.1 that the gold ornament in question was
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NC: 2024:KHC:16188 MFA No. 2639 of 2023 disposed off at a public auction on 06.02.2023 at a sum of Rs.11,16,315/- and in view of the judgment dated 14.02.2023 passed by a coordinate Bench of this Court in MFA No.6539/2022, it is appropriate to direct the respondent No.1 to return a sum of Rs.11,16,315/- to the objector/appellant herein along with interest at the rate of 6% per annum from 06.02.2023 till the date of payment.
12. In view of the above, the appeal is allowed. The impugned order dated 30.03.2023 passed by XCI Additional City Civil and Sessions Judge and Special Judge for KPIDFE Cases, Bengaluru, in Misc. No.722/2019 is set aside and the respondent No.1 is directed to pay a sum of Rs.11,16,315/- to the appellant along with interest at the rate of 6% per annum from 06.02.2023 till the date of payment. The respondent No.1 shall make the said payment to the appellant within a period of three months from the date of receipt of a certified copy of this order.
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NC: 2024:KHC:16188 MFA No. 2639 of 2023
13. In view of disposal of this appeal, I.A. No.1/2023 for direction does not survive for consideration and the same stands disposed off.
Sd/-
JUDGE SMA List No.: 1 Sl No.: 48