Judgment:
1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE20H DAY OF DECEMBER, 2024 BEFORE THE HON'BLE MR. JUSTICE H.P. SANDESH MISCELLANEOUS FIRST APPEAL NO.702/2024 (KPIDFA) BETWEEN:
1. . M/S. LANCER FINANCE HAVING OFFICE AT NO.27, 8TH MAIN, YADAVAGIRI, DEVARAJA MOHALLA, MYSURE-570 020, REP. BY ITS PROPRIETOR, SRI. RAJENDRA. 2 . SRI. RAJENDRA S/O. CHINNAPPA NAIK, AGED ABOUT50YEARS, R/AT NO.27, 8TH MAIN, YADAVAGIRI, DEVARAJA MOHALLA, MYSURE-570 020. … APPELLANTS (BY SMT. ABHINAYA K., A/W. SRI K.V.MANOJ, ADVOCATES FOR SRI C.H.HANUMANTHARAYA, ADVOCATE) AND:
1. . THE COMPETENT AUTHORITY FOR M/S. LANCER FINANCE, OFFICE AT No.1, ALI ASKAR ROAD, BANGALORE-560 052, REPRESENTED BY ITS COMPETENT AUTHORITY, 2 PRAVEEN B. NAYAK, JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, AGED ABOUT50YEARS. 2 . SMT. D. ANITHA W/O. SRI. RAJENDRA, AGED ABOUT45YEARS, R/AT NO.27, 8TH MAIN, YADAVAGIRI, DEVARAJA MOHALLA, MYSURE-570 020. … RESPONDENTS (BY SRI VEERESH R. BUDIHAL, ADVOCATE FOR R1; NOTICE TO R2 IS DISPENSED WITH VIDE
ORDERDATED0612.2024) THIS M.F.A. IS FILED UNDER SECTION16OF KARNATAKA PROTECTION OF INTEREST ON DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, 2004, AGAINST THE DATED121.2024 PASSED IN MISC.NO.775/2023 ON THE FILE OF THE XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR KPIDFE CASES, BENGALURU (CCH-92), ALLOWING THE PETITION FILED UNDER SECTION52) OF THE KARNATAKA PROTECTION OF INTEREST ON DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, 2004. THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENTON0612.2024 THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
3. CORAM: HON'BLE MR. JUSTICE H.P.SANDESH CAV
JUDGMENTHeard learned counsel for the appellants and learned counsel for respondent No.1.
2. This appeal is filed under Section 16 of the Karnataka Protection of Interest on Depositors in Financial Establishments Act, 2004 (‘the KPIDFE Act’ for short) against the order dated 12.01.2024 passed the Trial Court in Miscellaneous No.775/2023, wherein the Trial Court confirmed the interim order of attachment passed by the Government vide notification dated 20.06.2019 read with Corrigendum dated 03.11.2022 as absolute.
3. The factual matrix of the case is that the respondent No.1-Competent Authority for M/s. Lancer Finance Office represented by Joint Registrar of Co-operative Societies filed the petition under Section 5(2) of KPIDFE Act seeking that the interim order of attachment be made as absolute in respect of the petition schedule properties, pursuant to the Government Notification dated 20.06.2019 contending that respondent No.1- 4 M/s.Lancer Finance Office is the Proprietor Concern owned and managed by the respondent No.2 i.e., the appellants herein. The said proprietary concern was registered with the Registrar of money lenders and issued with a license for money lending business. The respondent No.2 has collected the deposits from the general public in the name of the respondent No.1 on the promise to return the same within specified time along with profits. However, the respondent Nos.1 and 2 have failed to return the deposited amount as promised. It is the contention that from and out of the deposit collected by the respondent No.1, the petition schedule properties were acquired in the name of the respondents Nos.2 and 3. The respondent No.3, who is the wife of the respondent No.2 is the benami owner of the half of the item No.2 of the schedule property situated at Yadavagiri, Devaraj Mohalla, Mysore District as she was not having any income of her own to purchase the said property. The sale consideration was paid by the respondent No.2 himself. Hence, the said property is treated as the personal assets of the respondent No.2 himself. 5
4. It is also contended that respondent No.1-M/s. Lancer Finance is liable to pay approximately Rs.15 Crores to its depositors. The Government having satisfied as to fraudulent transactions of the respondent No.1 concern and its failure to pay the deposited amount to the depositors, issued interim order of attachment vide notification dated 20.06.2019 attaching the properties belonging to the respondent No.2 under Section 3(2) of the KPIDFE Act as the respondent No.1 concern does not possess any immovable property in its name. The Government had also carried out the paper publication of the interim order of attachment as contemplated under Section 3(3) of the KPIDFE Act. Further, the Deputy Commissioner, Mysore was appointed as the Competent Authority under Section 5(1) of the KPIDFE Act for respondent No.1 concern to take further steps. He had filed a petition against the respondents seeking further order of attachment absolute. Thereafter, the said matter was transferred to City Civil Court, Bengaluru and renumbered as Misc.No.271/2022. It is also contended that there was a mistake in the description of the respondent No.1 concern in the notification issued. The name of the respondent No.1 concern 6 was shown as ‘M/s. Lancer Finance Company Pvt. Ltd.’, instead of ‘M/s. Lancer Finance’ in the notification. Hence, corrigendum was issued. Therefore, the petition was filed against non- existing company as described in the notification was withdrawn and similar petition was filed at Chikkamangalore in Crl. Misc. No.637/2018 and the said petition was also withdrawn.
5. The Trial Court issued notice under Section 12(1) of the KPIDFE Act. The respondent No.1 is the proprietary concern represented by its Proprietor, respondent No.2 himself. In pursuance to the notice so issued, the respondent Nos.1 and 2 have put in their appearance through their counsel and filed their objection statement and contend that the petitioner has not approached the Court with clean hands and his conduct has been most unfair, dishonest and tainted with illegality. It is contended that since the respondent No.2 has filed the criminal case against one Abhinava Kare, who was the then S.P, Mysore Rural District, as a counterblast, the present petition and other proceedings have been initiated without any cause of action. It is further contended that the petition filed by the petitioner is 7 hopelessly barred by limitation and the same was filed after the delay of 1409 days. The petitioner has not explained the inordinate delay caused and has stated that there is only 226 days delay. The Court has no jurisdiction to entertain the petition as similar petition was already filed on the same cause of action and the same was dismissed by this Court on the memo filed by the petitioner and no liberty to present the fresh petition was granted by the Court. The petitioner has not challenged the said order passed by this Court in C.Misc.No.271/2022 and also contend that fresh petition is hit by principles of respondent- judicata. It is also contended that there is no cause of action to initiate any proceedings against the respondent Nos.1 and 2 and no single complaint has been filed by any depositors and the petitioner has not produced any single bonds to show that the respondent Nos.1 and 2 were due to the alleged depositors. Under the circumstances, they cannot maintain the petition.
6. It is also contended that the police have registered the case in S.C.No.65/2016 before the Principal District and Sessions Judge, Mysore and accordingly, the respondent No.2 8 was discharged from the charge under Section 9 of the KPIDFE Act by order dated 22.07.2017 and the said order has attained its finality. After lapse of two years from the date of the order of discharge, the alleged notification has been issued only on the recommendation of the then M.P. Sri Pratap Simha by letter dated 17.02.2017, which shows that due to political pressure, the alleged attachment order has been passed and published. Hence, the petition is liable to be dismissed. It is further contended that the petition filed by the petitioner is nothing but abuse of process of law with malafide intention to cause harm to the respondents at the instigation of the Corporator one Sri Nagabhushan and the then S.P., Mysore Sri Abhinava Kare by way of legal threat. The allegations made against the petitioner is false and denied the allegation that the petition schedule properties are acquired out of the depositors fund and the respondent No.3 is a benami owner of half property in schedule item No.2 as put up by the petitioner.
7. It is further contended that all the schedule properties were acquired by the respondents prior to 2009 and 9 the same cannot be linked to present case. It is also contended that after registration of criminal case under the guise of investigation, the office of respondent Nos.1 and 2 were searched and took all the original Cheques, documents, receipts. False complaint has been registered only to give legal threat by abusing the process of law and contend that respondent No.2 has been repaying the loan amount to the customers and repaid more than Rs.70,00,000/-. He has neither absconded nor made delay in making payment to his customers. Hence, provisions of KPIDFE Act cannot be attracted and there is no cause of action to entertain the petition.
8. The Trial Court having taken note of the averments made in the petition as well as the contention of the respondents, formulated the points whether the respondent Nos.1 and 2 have shown any cause as to why the interim order of attachment passed by the Government notification dated 20.06.2019 should not be made absolute in respect of the petition schedule premises and whether the petitioner is entitled for the relief. The Trial Court answered Point No.(1) in the 10 ‘negative’ and point No.(2) in the ‘affirmative’ and passed the order making the earlier notification of attachment as absolute. Hence, the present miscellaneous first appeal is filed before this Court.
9. The main contention of the learned counsel of the appellants is that having obtained the license itself, they are running the business and no complaints are filed against the appellants and against the investments made by the public, interests have been paid. Learned counsel also would contend that only Rs.15 lakhs was invested by the complainant and the same was not refunded and he had not made the claim for refund also. Only at the instance of the then S.P. of Mysore Rural District and the M.P. of Mysore, the proceedings has been initiated at the instance of the complainant. Learned counsel would vehemently contend that the very filing of the petition is not maintainable, since there is a delay and period of limitation is 30 days plus 15 days and limitation cannot be extended. Learned counsel would contend that even if no objection is filed regarding condonation of delay, the same cannot be the criteria 11 to condone the delay. Learned counsel would vehemently contend that notification was issued on 20.06.2019 and corrigendum was issued on 03.11.2022. Learned counsel would contend that delay has been condoned with consent and hence, the Trial Court could not have invoked Section 5 of the KPIDFE Act. Learned counsel further contends that very notification dated 20.06.2019 was stayed by this Court and the Trial Court ought not to have proceeded in considering the matter on merits and there is no basis for initiation of proceedings against the appellant and issuance of notification is erroneous, since no enquiry is held and no notice was given go the appellant No.2 The counsel also contends that license is also reissued and no material to the effect that he owes money to the general public. No investigation report is also filed before the Trial Court and the Trial Court proceeded to pass such an order.
10. Learned counsel for the appellants, in support of her argument, she relied upon the judgment in M/S. GARNET FINANCE LIMITED, REP. BY ITS MANAGING DIRECTOR CHALLA SUDHAKAR VS. THE COMMISSIONER OF POLICE, 12 HYDERABAD CITY AND THE COMPETENT AUTHORITY UNDER ANDHRA PRADESH PROTECTION DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999 REPRESENTED BY ITS PUBLIC PROSECUTOR reported in 2015 SCC ONLINE HYD576and brought to notice of this Court discussion made in paragraph No.21 of the judgment, wherein it is observed that whether the Government was satisfied as required by Section 3 of the Act that Accused No.1-Company is not likely to return deposits in cash or kind after maturity or in any manner agreed upon and that it was necessary in order to protect the interests of depositors of accused No.1 to pass ad interim order of attachment. Learned counsel also brought to notice of this Court discussion made in paragraph No.22, wherein also sub-Section (1) of Section 4 of the Act was discussed and so also, paragraph No.23, wherein an observation is made that it is not the case of the respondent that any material other than what was mentioned in the references to the G.O. was taken into account by the Government at the time when it issued the G.O. 13
11. Learned counsel also brought to notice of this Court paragraph No.28 of the judgment, wherein also discussed the judgment of DEVINDER SINGH’s case and the Apex Court held that formation of opinion must precede application of mind and such application of mind must be on the materials brought on record. It is also held that material should be such which are required to be collected by the authorities entitled therefor and the authorities must act within the four corners of the statute. Learned counsel also brought to notice of this Court paragraph No.29 with regard to Section 3 of the Act and paragraph No.30 regarding satisfaction as required by Section 3 must be of the Government and not that of the competent authority. Learned counsel also brought to notice of this Court paragraph No.32 as regards the existence of satisfaction as required by Section 3 is a jurisdictional fact and such satisfaction can be shown to have been in existence on the basis of material placed before the Government. Learned counsel also brought to notice of this Court detailed discussion made in paragraph Nos.33 and 35, wherein it is held that there was no independent application of mind by the Government as required by Section 3 of the Act and 14 so also paragraph No.38, wherein the Apex Court observed that the second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Learned counsel referring this judgment would vehemently contend that there is no ground to initiate proceedings against the appellants under Section 3 as well as Section 5 of the Act.
12. Per contra, learned counsel for respondent No.1 would vehemently contend that license is obtained for lending money and during the course of evidence, R.W.1 categorically admitted that they have given consent to condone the delay and now they cannot raise the very same ground of limitation. Learned counsel would vehemently contend that the final order is challenged and the same is not on delay. Learned counsel would further contend that the stay of notification dated 20.06.2019 is an interim order between the parties and remarks made against the S.P. and M.P. cannot be considered in this 15 petition and the initiation of proceedings is not only at the instance of the S.P. or M.P., but based on the report received from the Deputy Commissioner, Assistant Commissioner, the Police submitted the report and the Government was satisfied with the reasons and initiated the proceedings. Learned counsel also brought to notice of this Court that corrigendum was issued only for correction of name of the appellant No.1-concern, since there was a typographical error in mentioning the name in the earlier notification. Learned counsel also would vehemently contend that there is an admission regarding receipt of complaint and number of cases are registered against the proprietor of the appellant No.1-concern and also admits that in some of the cases, charge sheet is filed and some of the cases have been settled in Lok-adalath and also in some of the cases, admittedly, acquittal order has been passed.
13. Learned counsel for respondent No.1, in support of his argument, relied upon the judgment of the High Court of Judicature for Rajasthan at Jodhpur passed in W.P.NO.3657/2010 decided on 18.05.2010 in THE16FEDERATION OF PRIVATE MEDICAL AND DENTAL COLLEGES OF RAJASTHAN & ORS. VS. STATE OF RAJASTHAN & ORS. Learned counsel referring this judgment brought to notice of this Court discussion made in the judgment of STATE OF ASSAM VS. BARAK UPATYAKA D.U. KARMACHARI SANSTHA reported in (2009) 5 SCC694 wherein the Apex Court has held that an interim order cannot be precedent and is only an order making temporary arrangement to preserve status quo to ensure that the matter does not become either infructuous or a fait accompli before final hearing. The interim order does not finally and conclusive decide an issue and it is not possible to read such tentative reasons as final conclusion. The above interim order cannot be applied to whole of the India and particularly in the State of Rajasthan, where the Hon’ble Apex Court between the parties (between the present petitioners and the respondent-State), has decided the issue in earlier round of litigation. Learned counsel also contend that it is settled law that interim orders/directions are issued on the basis of prima facie finding and makes temporary arrangements to preserve status-quo to ensure that the matter does not either 17 become infructuous or a fait accompli before final hearing and contend that the same cannot be a conclusive precedent which was binding between the parties only.
14. Learned counsel also relied upon the judgment of the High Court of Kerala at Ernakulam in WP(C)No.11686 OF2020(S) decided on 19.06.2020 in PRATHYASA MENTAL HEALTH COUNSELLING FORUM VS. STATE OF KERALA AND OTHERS reported in 2020:KER:22184 and brought to notice of this Court paragraph No.11, wherein the judgment of VISHNU TRADERS VS. STATE OF HARYANA reported in (1995) SUPPL1SCC461was discussed and at point No.(iii) relying upon the very same judgment of STATE OF ASSAM VS. BARAK UPATYAKA D.U. KARMACHARI SANSTHA, extracted the observations relating to interim directions.
15. Learned counsel also relied upon the order passed by Calcutta High Court in WPA11123OF2020decided on 16.04.2021 in DEIFIC ABODE LLP VS. UNION OF INDIA & ORS. and brought to notice of this Court observation made in paragraph No.11, wherein it is held that the effect of the order of 18 stay in a pending appeal before the Apex Court does not amount to ‘any declaration of law’ but is only binding upon the parties to the said proceedings and at the same time, such interim order does not destroy the binding effect of the judgment of the High Court as a precedent because while granting the interim order, the Apex Court had no occasion to lay down any proposition of law inconsistent with the one declared by the High Court which is impugned. Learned counsel for respondent No.1 referring these judgments would vehemently contend that, if any interim order is granted, the same binds only the parties and not others.
16. In reply to the argument of the learned counsel for respondent No.1, learned counsel for the appellants would vehemently contend that consent cannot be a ground to condone the delay and also not furnished the list of complaints before initiating the proceedings and no material is placed before the Court for initiation of proceedings.
17. Having heard learned counsel for the appellants and learned counsel for respondent No.1 and considering the material available on record as also the grounds which have 19 been urged in the appeal, the points that would arise for consideration in this appeal are: (1) Whether the Trial Court committed an error in passing an order answering point No.(1) as ‘negative’ and confirming the interim order of attachment as absolute and whether it requires interference?. (2) What order?. Point No.(1) 18. Having heard learned counsel for the appellants and learned counsel for respondent No.1 and also considering the factual aspects of the case on hand, the arguments of the learned counsel for the appellants is on three counts. The first count is that miscellaneous proceedings has not been initiated within 30 days and additional 15 days of limitation period, in total 45 days and contend that even if consent is given, the delay cannot be condoned. On the other hand, learned counsel for respondent No.1 would contend that once the consent is given for condonation of delay and delay has been condoned, the said issue cannot be reopened. Having regard to the delay is 20 concerned, the Trial Court while passing the order, in paragraph No.6 taken note of the fact that application is filed under Section 5 of the Limitation Act seeking condonation of delay and with the consent of learned counsel for the respondent Nos.1 and 2, the delay was condoned and the application was allowed by order dated 12.09.2023.
19. It is also important to note that when the delay was condoned by allowing the application, the same has not been challenged and even if consent is given and the application was allowed, the appellants have kept quiet till 12.01.2024 and not raised the said issue before the Trial Court and only in the present appeal, raised the same. Hence, the contention of the learned counsel for the appellants cannot be accepted, once consent was given. No doubt, there is a limitation period, when the delay application was filed and consent was given to condone the delay, question of raising the said issue does not arise, since the order condoning the delay vide order dated 12.09.2023 had already attained its finality and the same has not been questioned before this Court or before any other competent 21 authority. Therefore, the first ground of learned counsel for the appellants cannot be accepted.
20. The second count of argument of the learned counsel for the appellants is that very notification was challenged before this Court by filing a writ petition and when the same was stayed by this Court, the Trial Court ought not to have proceeded in disposing of Miscellaneous No.775/2023 and there is no dispute with regard to the fact that there was a stay. But, learned counsel for respondent No.1 would vehemently contend that the respondents are not parties in the said proceedings and also brought to notice of this Court, even if there is stay, the same is only protecting the interest of the parties in the writ proceedings and the said proceedings was not initiated by the appellants herein and the same is initiated by the Co-operative Society and the appellants herein may be the respondents in the said writ proceedings and the same cannot be an obstacle for disposal of the miscellaneous proceedings, unless the same is brought to notice of the Trial Court. 22
21. Learned counsel for respondent No.1 also brought to notice of this Court judgment of Rajasthan High Court, wherein the judgment in STATE OF ASSAM VS. BARAK UPATYAKA D.U. KARMACHARI SANSTHA reported in (2009) 5 SCC694is referred, wherein the Apex Court held that an interim order cannot be precedent and is only an order making temporary arrangement to preserve status quo to ensure that the matter does not become either infructuous or a fait accompli before final hearing. The interim order does not finally and conclusive decide an issue and it is not possible to read such tentative reasons as final conclusion. The above interim order cannot be applied to whole of the India and the same is between the present petitioners and the respondent.
22. Learned counsel also relied upon the judgment of Kerala High Court, wherein also very same judgment was extracted by the Kerala High Court in paragraph No.11 of the judgment. So also the judgment of Calcutta High Court in WPA11123OF2020decided on 16.04.2021 in DEIFIC ABODE LLP VS. UNION OF INDIA & ORS. and brought to notice of 23 this Court observation made in paragraph No.11, wherein it is held that the effect of the order of stay in a pending appeal before the Apex Court does not amount to ‘any declaration of law’ but is only binding upon the parties to the said proceedings and the principles laid down in the judgments referred by the learned counsel for the respondent No.1 is very clear that any interim order of stay in a pending appeal does not amount to any declaration of law, but it is only binding upon the parties to the said proceedings.
23. In the case on hand, when the learned counsel for the respondent argued more on the point that the said order is only inter se between the parties and the very contention of the learned counsel for the appellants that the Trial Court ought not to have proceeded cannot be accepted in view of the principles laid down in the above cases. The other ground of learned counsel for the appellants is that there was no complaint against the appellants herein and only at the instance of the Member of Parliament and S.P. of Mysore Rural District, proceedings was initiated. 24
24. This Court, having considered the grounds urged and also the contentions of learned counsel for the appellants, called upon the respondents to place the material before this Court whether the proceedings have been initiated at the instance of the Member of the Parliament and Police official to place the material on record. In view of the direction of this Court, learned counsel for respondent No.1 has placed the documents before this Court. No doubt, when the representation was given to the Member of Parliament, the same is forwarded to the concerned by the Member of the Parliament that depositors have given complaint to look into the matter. Apart from that, report is also given by the Deputy Commissioner of Mysore regarding the complaint received from the depositors and based on the said report, the proceedings have been initiated by the State Government invoking the provisions of the KPIDFE Act. The records also disclose that Section 3 of the Act was taken note of by the Government before issuing the notification i.e., attachment of properties on default of return of deposits Magistrates in their respective jurisdiction, suo moto or on receipt of any complaint may cause investigation of a complaint 25 or fraudulent transaction referred to in this section. The District Magistrate shall forward his report together with the complaint to the Government at the earliest. Based on the report of the District Magistrate, the Assistant Commissioner of the same District also submitted the report and also taken note of Section 5(2) of the Act and initiation of proceedings before the District Court at Chikkamangalur. The records also reveal that earlier proceedings have been withdrawn and proceedings have been initiated afresh. It is also not in dispute that Corrigendum was issued as regards mistake in mentioning the name of the appellant No.1-concern and notification dated 20.06.2019 is with regard to attachment of property as a interim measure and the appellants also filed the petition before the competent Court of law requesting the Trial Court to confirm the same. The records also disclose that on the report given by the Superintendent of Police of Mysore to the Assistant Commissioner, the proceedings have been initiated. The very contention of learned counsel for the appellants is that only at the instance of M.P., proceedings have been initiated cannot be accepted. 26
25. The Trial Court also while considering the grounds urged, since the very same grounds have been urged in the miscellaneous proceedings, discussed in detail the same and analyzed the finding discussing the scope of Section 3(2) and Section 5 of the Act, notification as well as corrigendum. The Trial Court also taken note of the fact that properties are purchased by respondent No.2 which are situated at Mysore in the name of respondent No.3, who is none other than the wife of the respondent No.2 and particularly, taken note of the fact that item No.2 of the property is purchased by the respondent Nos.2 and 3 jointly in paragraph No.13(a)(g) of the order. The Trial Court also taken note of scope of Section 3(2) in paragraph No.13(b) and so also discussed the requirement of Sections 7(1) and (2) of the Act in paragraph No.13(c). The Trial Court also taken note of Ex.R3 letter dated 08.06.2018 written by the Assistant Commissioner, Mysore Sub-Division, Mysore to the Deputy Commissioner, seeking information from the Police Department with regard to the details of the depositors, deposit amount, repayment of deposit details of the respondent No.1- concern. Exs.R5 and R6 are the endorsements dated 24.08.2018 27 issued by the Public Information Officer of the District Commissioner Office. Ex.R5(a) is the copy of the letter dated 13.03.2017 issued by the Additional Deputy Commissioner to the Assistant Commissioner, Mysore Sub-division, Mysore to submit the report in connection with complaint of one Smt. Chitralekha and the letter addressed by the member of Parliament Sri Pratapsimha. Ex.R6(a) is a letter dated 02.05.2017 issued by the Additional District Commissioner, Mysore to the Principal Secretary, Revenue Department for issuance of attachment notification of the property of the respondents under the provisions of the Act. Ex.R6(b) is the letter dated 31.08.2017 issued by the office of the Deputy Commissioner to the Assistant Commissioner, Mysore Sub-division. Having gone through all these materials available on record, the Trial Court comes to the conclusion that none of these documents reveal as to payment made by the respondents to the depositors as contended by the respondent No.2. The Trial Court also taken note of the fact that no documents are placed before the Court for having paid the amount in favour of the depositors and though the appellant contend that they are not due for any amount and matters have 28 been settled and also given the list, some of the cases have been compromised in Lok-adalath and in some of the cases, the they have been acquitted. However, some of the cases are still pending for consideration, in view of filing of charge sheet.
26. It is also important to note that the proceedings have been initiated and order has been passed in S.C.No.65/2016 on the file of the Principal District and Sessions Judge, Mysore and they are discharged, the very initiation of proceedings has not been disputed. The material on record clearly disclose that though respondent Nos.1 and 2 have contended that no single complaint has been made against them before Competent Authority for non-payment, not furnished the list and an observation is made that just because no complaint is made before the Competent Authority by any depositors, that will not prevent the Government from exercising its power under the provisions of the Act and to attach the property of the Financial Establishment and its associated persons, if the Government is satisfied as to necessity of passing such order. In paragraph No.13(j), the Trial Court also taken note that 29 respondent No.1 has specifically stated that he had repaid entire deposit amount of about 400 to 500 depositors as stated in Ex.R2, but not placed any material before the Court for having paid the amount. These are the materials taken note by the Trial Court while passing such an order.
27. In paragraph No.13(k) of the order, the Trial Court taken note of the fact that in Ex.R4, respondent No.2 himself has admitted as to filing of 29 cases, out of which in 3 cases, charge sheets were also filed and in remaining cases, charge sheets are yet to be filed. Further, the Trial Court also observed that Ex.R6(a) reveals that one Smt. Chitralekha has reported for non- payment of deposited amount of Rs.51,00,000/- by the respondents. The Police Commissioner, Mysore who had conducted the investigation has also reported as to non-payment of the deposited amount to the depositors even after its maturity. Having considered these materials available on record and registration of the case in Crime No.156/2015 for the offence punishable under Sections 406, 420, 506 read with Section 34 of IPC and Section 9 of the Act, observations are 30 made in paragraph Nos.13(k), 13(l) and 13(m) and detailed discussions are made by the Trial Court confirming the interim order of attachment passed by the Government as absolute.
28. When such detailed discussion is made by the Trial Court while considering the matter on merits and considered Section 3(2) of the Act and analyzed the same and invoked Section 5(2) of the Act and also in paragraph No.13(w) comes to the conclusion that, admittedly, the respondent No.1-Financial Establishment had no property in its name and the properties were standing in the name of respondent No.2 and in order to safeguard the interest of the depositors, the Trial Court passed an order and confirmed the order of earlier notification and made the same as absolute. When such materials are placed before the Court, the very contention of the learned counsel for the appellants that no complaints are given by the depositors cannot be accepted. Learned counsel for the appellants would contend that, if any depositors claim for any amount, they will make payment. If that is the case, if they make the payment, they can seek for appropriate relief before the competent jurisdiction. 31 But, on perusal of the material available on record, based on the report of the Deputy Commissioner, Assistant Commissioner and also the investigation conducted by the Superintendent of Police, the proceedings have been initiated. Hence, I do not find any merit in the appeal to come to an other conclusion. Accordingly, I answer point No.(1) as ‘negative’. Point No.(2) 29. In view of the discussion made above, I pass the following:
ORDERThe miscellaneous first appeal is dismissed. Sd/- (H.P. SANDESH) JUDGE ST