2014 (6) TMI 1055 - HC - Indian Laws

Validity of Government Order in G.O. Ms. No. 178 Home (Police XIX) dated 19.03.2013 - direction to return the vehicles to the petitioner - case of the petitioner is that they granted financial assistance to the private respondents and its Partners/Directors for purchase of vehicles - hypothetication agreement between the petitioner and the purchaser - Section 120(b) 406 420 IPC read with Section 5 of the TNPID Act - HELD THAT - The writ petition has been filed to quash the Government Order in G.O. Ms. No. 178 dated 19.03.2013. The Government took note of the fact that the complaints were received from the depositors of the respondent company stating that they have defaulted in return of the deposits made by the depositors after maturity and the Government is satisfied that the financial establishments is not likely to return the deposits to the depositors and the Government have to protect the interest of such depositors and therefore the movable and immovable properties alleged to have been procured by the financial establishments from and out of the deposits collected from the depositors in exercise of powers conferred under Section 3 of the TNPID Act makes an ad-interim order of attachment of the movable and immovable properties and transfers the control of the same to the competent authority the third respondent in the writ petition. Admittedly the vehicles in question have not been disposed of by the competent authority and ad-interim attachment is yet to be made absolute and the application is stated to be pending - The challenge in the Criminal Revisions is to the orders passed by the Special Court dismissing the applications filed by the petitioner under Sections 451 457 Cr. P.C. The contentions raised by the petitioner and the objections made by the fourth respondent Police as well as the competent authority have been referred to in the preceding paragraphs. The Special Court after taking note of the submission made on either side referred to the Section 3 of the Act and held that the Government is having every power to attach the properties on financial establishment who had defaulted in payment to the depositors and therefore came to the conclusion that the petition filed by the petitioner is not maintainable in law. The petitioner has to be necessarily heard in the matter and their right to seek for custody of the vehicles should be considered in the light of their right over the hypothetical and simultaneously the powers under the Act which was enacted to protect the depositors in the light of the above discussion the order passed by the Special Court calls for interference. The matter is remanded to the Special Court for fresh consideration - the Criminal Revision Cases are allowed.

Summary

Issues Involved:
1. Challenge to the Government Order of ad-interim attachment.
2. Entitlement to interim custody of vehicles under Sections 451 and 457 of Cr.P.C.
3. Jurisdiction of the Special Court under the TNPID Act.

Issue-wise Detailed Analysis:

1. Challenge to the Government Order of ad-interim attachment:

The petitioner, a financial company, challenged the Government Order (G.O. Ms. No. 178 Home (Police XIX), dated 19.03.2013) which ordered the ad-interim attachment of vehicles financed by the petitioner, arguing that they are the absolute owner due to a hypothecation agreement. The Government issued the attachment order under Section 3 of the TNPID Act to protect depositors' interests, as the financial establishment had defaulted on returning deposits. The petitioner contended that the order violated their rights under Articles 14 and 19 of the Constitution of India. However, the court noted that the Government's satisfaction for attachment was based on records, and the seizure by the police was to protect the depositors' interests. Therefore, the court upheld the Government Order, stating that the petitioner could not challenge the Government's power under Section 3 of the TNPID Act.

2. Entitlement to interim custody of vehicles under Sections 451 and 457 of Cr.P.C.:

The petitioner sought interim custody of the vehicles under Sections 451 and 457 of Cr.P.C., arguing that they were the absolute owner due to the hypothecation agreement. The Special Court dismissed the petitions, stating that the Government had the power to attach properties of financial establishments that defaulted on payments to depositors. The court emphasized that the vehicles were purchased using public money, and returning them to the petitioner would harm the depositors. The court referred to previous directions given in earlier writ petitions, which allowed the petitioner to approach the Special Court for interim custody. The court highlighted the need to balance the petitioner's rights under the hypothecation agreement with the depositors' protection under the TNPID Act. The Special Court failed to consider these aspects, leading to the revision cases being allowed and the matter remanded for fresh consideration.

3. Jurisdiction of the Special Court under the TNPID Act:

The court discussed the Special Court's jurisdiction under the TNPID Act, emphasizing that the Act is a special statute aimed at protecting depositors' interests. The court referred to previous judgments, including the Supreme Court's decision in Anup Sharmah vs. Bhola Nath Sharma & Ors., which held that in hire purchase agreements, the financier retains ownership, and repossession by the financier does not constitute a criminal act. The court concluded that the Special Court should adjudicate the petitioner's right to seek interim custody of the vehicles, considering their ownership under the hypothecation agreement and the provisions of the TNPID Act.

Conclusion:

The court dismissed the writ petition challenging the Government Order of ad-interim attachment and allowed the criminal revision cases, setting aside the Special Court's orders. The matter was remanded to the Special Court for fresh consideration, directing it to hear all parties and decide the petitioner's rights vis-`a-vis the TNPID Act within three months. The decision emphasized the need to balance the petitioner's ownership rights under the hypothecation agreement with the depositors' protection under the TNPID Act.