2021 (9) TMI 665 - HC - Indian Laws

Attachment of several properties of the petitioner-company - vires of notification dated 19th January 2017 issued by the Government of Tripura in exercise of powers under Section 4(1)(ii) of the Tripura Protection of Interests of Depositors (In Financial Establishments) Act, 2000 - seeking protection of attached moveable and immovable properties till appropriate orders are passed by the designated Court - valuation of the properties - HELD THAT - Once the property has been validly attached under Section 4 of the Act of 2000, all issues concerning such property would be dealt with and decided by the Designated Court. However, when the petitioner has raised a fundamental question of validity of the order of attachment itself, the same must be examined by this Court - As per sub-section (2) of Section 4, upon publication of the order under sub-section (1), all properties and assets of the financial establishment shall forthwith vest in the competent authority appointed by the Government pending further order from the Designated Court - As per sub-section (2) of Section 4, upon publication of the order under sub-section (1), all properties and assets of the financial establishment shall forthwith vest in the competent authority appointed by the Government pending further order from the Designated Court. In an affidavit-in-reply, dated 16th April 2019, filed on behalf of the Government, it is pointed out that the Director of Institutional Finance as well as the office of the District Magistrate Collectors and Sub-Divisional Magistrates had received many complaints from depositors against the petitioner-company of making short payment of maturity amount or non-payment of the invested amount. Some of the complaints are annexed with the said affidavit - It is also stated that the Sub-Divisional Magistrate had issued an interim order, on 12th June 2013, restraining the company from accepting deposits from the public. It is further stated that after receiving the reports of the District Magistrates Collectors and Superintendent of Police of the districts, the Principal Secretary, Finance, Government of Tripura, has issued the impugned notification. It was after perusal of such voluminous material that the Finance Secretary issued the impugned notification. There was thus neither any dearth of material before the authority to enable the said authority to come to the conclusion that it was necessary to exercise the powers in terms of Section 4 the Act of 2000, nor there was any breach of procedural requirement. It is true that sub-section (1) of Section 4 of the Act requires reasons to be recorded in writing. However, such requirement cannot be seen in isolation. Merely because there is no such narration of the satisfaction of the said authority in the impugned notification, it cannot be stated that his decision is bereft of reasons. Once the petitioner is divested of any control over the attached property and pending further orders by the Designated Court the property is to vest in the Government, both in the interest of the petitioner-company as well as the depositors it is the duty of the Government machinery to ensure that the property does not deteriorate or is encroached or stolen for want of proper protection. To what extent the Government machinery can be blamed. However, what ultimate directions can be issued must depend on the outcome of the various proceedings before the Designated Courts and these questions also must be decided by such Courts who are in charge of all proceedings and are entrusted with duty and responsibility to examine all such issues and also vested with necessary powers to do so under the Act of 2000 - the concerned Courts are left to examine full facts and pass appropriate orders either by way of interim measures, if found necessary, or while disposing of the proceedings. Obtaining valuation reports - HELD THAT - The same can be urged before the Designated Courts which can take a proper view in the matter. Petition disposed off.

Summary

Issues Involved:
1. Validity of the notification attaching the petitioner's properties.
2. Protection of the attached properties from theft and pilferage.
3. Valuation of the attached properties.

Detailed Analysis:

1. Validity of the Notification:
The petitioner challenged the notification dated 19th January 2017 issued by the Government of Tripura under Section 4(1)(ii) of the Tripura Protection of Interests of Depositors (In Financial Establishments) Act, 2000, attaching the petitioner-company's properties. The petitioner argued that the notification was invalid as no reasons were recorded by the competent authority before passing the order, and there was no material to justify the attachment. The respondents countered that multiple proceedings suggested the company misled the public to receive deposits without proper licenses and despite prohibitions from SEBI and the Government of Tripura. The court noted that the Act of 2000 requires reasons to be recorded in writing for such attachments. However, the court found that the Finance Secretary had ample material, including complaints, FIRs, and reports from District Collectors and police authorities, to justify the attachment. The court concluded that the notification was valid, despite the lack of explicit written reasons, due to the substantial evidence of the company's irregular activities.

2. Protection of Attached Properties:
The petitioner contended that the State-authorities failed to protect the attached properties, resulting in theft and pilferage, diminishing their value. The respondents claimed they had taken steps to protect the properties. The court observed that there was some delay in the government's protective measures, as evidenced by letters from the District Magistrate and Sub-Divisional Magistrate urging police action months after the notification. The court emphasized that once the properties are attached and vested in the government, it is the government's duty to protect them. However, the court deferred the final determination of this issue to the Designated Courts, which are responsible for overseeing the attached properties and can issue appropriate orders.

3. Valuation of Attached Properties:
The petitioner requested a valuation of the attached properties to be produced before the court, arguing that the total valuation was higher than the outstanding dues. The respondents maintained that this issue should be addressed by the Designated Courts. The court agreed, stating that the question of valuation should be raised before the Designated Courts, which can take appropriate measures.

Conclusion:
The court upheld the validity of the notification attaching the petitioner's properties, acknowledging the substantial evidence of the company's irregular activities. The court recognized the delay in the government's protective measures but deferred the final resolution of this issue to the Designated Courts. The court also directed the petitioner to raise the issue of property valuation before the Designated Courts. The petition was disposed of with these observations and directions.