9911796707
TMI Blog2002 (4) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... State of U.P. v. M.L. Gupta and others by which he has directed Official Liquidator, 33 Tashkand Marg, Allahabad to comply with the Order dated 20-12-1999 and handover the Supurdagi of the case properties in his presence on 10-1-2000, and submit a compliance report on 11-1-2000. 2. In Criminal Revision No. 41 of 2000 the operation of the Order dated 20-12-1999 was stayed by this Court on 10-1-2000 and that order has been extended from time to time. In Criminal Revision No. 49 of 2000, the operation of Order dated 6-1-2000 passed by Chief Judicial Magistrate, Ghaziabad to handover the possession of the properties in compliance of the order dated 20-12-1999 has also been stayed by this Court on 11-1-2000 and the same has also been extended from time to time. 3. Civil Misc. Application No. 7683 of 2000 (A-30) was filed on behalf of PICUP to decide the company petition along with aforesaid criminal revisions. The then Company Judge by his Order dated 28-12-2000 found that prayers in the application cannot be granted without the consent of the Hon ble Judge hearing criminal revisions and thus the papers were directed to be placed before Hon ble the Chief Justice. By an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also reported to be belonging to the Directors of SSI Ltd. and MRGP Ltd. Similar detailed examination on 21-11-1998 revealed that in case of MRGP Ltd. also, installed financed machines were removed and wooden models of machines estimated to cost Rs. 578.25 lakhs were replaced. PICUP lodged two F.I.Rs. - one at Police Station Surajpur on 24-11-1998 in respect of removing machines of SSI Ltd. under sections 406/420, I.P.C. registered as Crime No. 114 of 1998 and the other F.I.R. was lodged on 28-11-1998 at Police Station Sector-20, NOIDA in respect of MRGP Ltd. registered as Crime No. 993 of 1998 under sections 420/406/419, IPC. 6. During the investigation of offences reported by these two F.I.Rs. on 3-12-1998 the P.S. Sector-20, NOIDA Police recovered a large number of missing machines from the Mohali unit of KE (P.) Ltd. and took possession thereof. These machines were then given in the Supurdagi of PICUP consisting a team of Shri Devender Singh, Deputy General Manager; Shri Akhil Swami, Senior Manager (Finance); Sri Abrar Ahmad, Senior Manager (Law); Sri S.K. Agarwal, Senior Manager (Technical) and Sri Varun Kumar Vij, Deputy Manager (Technical) who had accompanied the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice to wind up M/s. Sakura Seimitsu India Ltd. Notices were issued on 24-4-1998, after prima facie, satisfaction that respondent-company is unable to pay its dues, directing the petition to be advertised under Rule 24 of the Companies (Court) Rules, 1959. By an order dated 23-11-1998, the company petition was allowed and M/s. Shakura Seimitsu India Ltd. was directed to be wound up. The Court also observed that, in fact, several petitions by different creditors for winding up of the respondent company are pending before this Court, including Company Petition No. 33 of 1997 and that the company which was indebted to M/s. Allianz Capital Management Services Ltd. for payment of Rs. 26,94,318, was unable to pay its debts. 10. After receipt of winding up order, the Official Liquidator, who was appointed liquidator under section 449 of the Companies Act, 1956, deputed officers for taking over possession of the assets of the company on which he was informed that the entire factory and its assets had been taken into possession by PICUP by invoking section 29 of the State Financial Corporation Act, just five days prior to the winding up order and the possession was with them. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Officer deputed by him will jointly open the lock and inspect the premises and prepare inventory. In order to see that inventory is prepared properly and to entertain any objection to any item of the inventory by the Official Liquidator or PICUP on the spot. Sri Piyush Agarwal, Advocate, is appointed as an Observer or Commissioner. PICUP will bear the expenses of travel as well as stay of Sri Piyush Agrawal from Allahabad to Delhi and for transportation from the place of stay at Delhi to NOIDA for the purpose of preparing inventory. Both the parties will ensure that the inventory is prepared either on the same day or at best by the next date. The inventory, which will be prepared by the Official Liquidator or his officers and will be signed by the officers of PICUP also and counter signed by Sri Piyush Agrawal, Sri Piyush Agrawal, Advocate, will be paid Rs. 11,000 per day for the two days and also expenses of AC First Class fare to and fro. The PICUP will made suitable arrangement for stay of Sri Piyush Agrawal at Delhi. The ex-management represented by Sri R.P. Agrawal is allowed to make inspection of record which are taken by the Official Liquidator, in pursuance of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er affixed on these machines as well as the machine numbers as per plates affects on the machines. Photographs of the machines were also taken and Video Cassettes, which was screened on 29-12-1999 and 30-12-1999, were also submitted along with the report. A copy of the minutes and inventory has also been submitted by the Official Liquidator along with his Report No. 4 of 2000 on 10-1-2000. After the receipt of this report, this Court passed following order on 10-1-2000. "The Official Liquidator is reported to have taken possession of the premises and the movable assets of the company (in liq.) on 29-12-1999 pursuant to the order of this Court dated 17-12-1999 in proceedings for winding up. Official Liquidator s Report No. 4 of 2000 dated 7-1-2000 has been filed which may be kept on record. Another application has been moved by PICUP dated 10-1-2000. At the hearing of the application, it was reported by Sri Anurag Khanna appearing for the PICUP that order dated 20-12-1999 passed by Chief Judicial Magistrate, Ghaziabad in Misc. Case No. 153 of 1999 in respect of Case Crime No. 114 of 1998 and 993 of 1998 directing release of the property in favour of M/s. Keshav Enterprises has alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affidavits of vendors of the properties. (3)PICUP has not been able to produce documents of ownership or mortgage in respect of the properties in inventories dated 3-5-1999 and 30-8-1999. (4)The police neglected in preparing correct inventory dated 3-12-1998 in accordance with the description of the machineries. (5)The allegation against the officers of PICUP that they have not taken care of the custody of the properties, is prima facie correct. (6)In case the possession of properties is given by police to PICUP, without any condition or bond, obstruction shall be caused for taking action against the PICUP in respect of complaint of loss of properties. Without expressing any opinion on the respective claims of ownership the Chief Judicial Magistrate, Ghaziabad held that he was prima facie satisfied that for proper maintenance of the properties, which are in possession of PICUP and to produce them without changing their nature, Supurdagi must be given to M/s. Keshav Enterprises Pvt. Ltd. 12. Thereafter it appears that after the inventories were prepared and possession was handed over by the PICUP to the Official Liquidator on 13-12-1999, an application was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. It has been held that whether an order is interlocutory order or not, cannot be decided by merely looking on the order because the order has been passed at the interlocutory stage. The other test is if the contention of the petitioner, who moves the superior Court in revision is upheld, would the criminal proceedings as a whole culminate? If it would, then the order is not interlocutory in spite of the fact that it was passed during any interlocutory stage. The observations were made with reference to section 397(2) of the Code of Criminal Procedure where the Sessions Court, in exercise of revisional powers, had set aside an order of Magistrate issuing bailable warrants against the accused. In Shiva Leasing Co. s case ( supra ), Delhi High Court upheld the order of Sessions Judge by which he refused to interfere with the order of Metropolitan Magistrate rejecting the application under section 451 of the Code for the release of the car pending trial. In Murlidhar s case ( supra ), the Court drew distinction into interlocutory order and "intermediate orders". The Court was examining the validity of the order in which the custody of truck was given to Deoraj Patel, who was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ghaziabad and that in spite of order of Superior Court, the Chief Judicial Magistrate, Ghaziabad directed these assets to be given back to the custody of those from whose custody they were seized. Such an order passed on prima facie satisfaction of ownership, changing custody in violation of order of Superior Court, cannot be said to be an interlocutory order which does not affect rights of any person. The order on its face, appears to give custody of seized assets in Supurdagi and thus is an interlocutory order in nature. On going deeper into the matter, it appears to have been passed over reaching the jurisdiction under section 451, Cr.P.C. in disobedience of the order of Superior Court. Such an order cannot be said to be an order which is step in aid of pending proceeding, for instance summoning witnesses, adjourning cases, passing orders for bail. It touches the rights of the parties; jurisdiction of Chief Judicial Magistrate as well as attempt to decide the ownership of machines in respect of which the accused have been charged under section 406 etc. I.P.C. There is serious dispute about the identification of the machineries with allegations in the F.I.R. that these have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the provisions of the Code of Criminal Procedure. According to respondents police officials of Police Station Sector-20, Noida investigated the crime registered as Case Crime No. 993 of 1998 under section 420/406, IPC in respect of the assets of MRG P. Ltd., could not have proceeded to Mohali without taking search warrants from either Ghaziabad or at Mohali. There was complaint of breach of trust and misappropriation by illegal removal of only 30 machines of SSI Ltd. and 4 machines of MRG (P.) Ltd. whereas the assets over and above these properties, which were not subject-matter of investigation, were seized at Mohali and part of assets were brought in about 14 trucks without seeking authority from any competent Court for removal of the same. The inspecting party breached an injunction granted in Civil Suit No. 413 of 1998, for which a contempt petition is pending. An F.I.R. was lodged against the indiscriminate and arbitrary action of PICUP at Mohali. According to him, after the assets were illegally brought to the premises of SSI Ltd. they were illegally given in custody by the officers of PICUP, part of the assets have been illegally removed and appropriated by the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were hypothecated with PICUP at the time when these companies had taken loan worth crores of rupees from PICUP. These machines were found missing from the factories at the time of taking possession and that having taken recourse of section 29 of the State Financial Corporation Act, 1951, the financial corporation shall be deemed to be owner of such concern. The accused, who were the officers of the PICUP, had accompanies NOIDA Police so as to identify the machines and that whatever these officers have done, the same was done by them in discharge of their duties and that the F.I.R. lodged by way of counter-blast to the two F.I.Rs. lodged by the PICUP. Special Leave Petition has been filed against the said judgment which is pending before Supreme Court. 22. Supplementary affidavit has been filed by PICUP bringing on record the deeds of hypothecation dated 23-4-1993 and 22-4-1995 with SSI Ltd. (in liquidation) tallying the machinery, plant, its supply, amount and location; deed of hypothecation dated 26-4-1995, between MRG (P.) Ltd. and PICUP annexing the bills of plant and machinery, documents of account of State Bank of Patiala towards the sale conducted for imports of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always bad and retention of the illegally seized articles will be a continuous and recurring illegality deprivation of a citizen s property, not authorised by law and as such is unconstitutional. 24. The matter with regard to the seizure and detention of property, or the search itself, is illegal, has been subject-matter of adjudication in several cases before Supreme Court. While interpreting the provisions of Income-tax Act, a constitution Bench in Pooran Mal v. Director of Inspection (Investigation) of Income-tax AIR 1974 SC 348, while upholding the powers of search and seizure under section 132 of the Income-tax Act, held that a power of search and seizure in any system of jurisprudence is an overriding power of the State for the protection of social security and that power is necessarily regulated by law. When the Constitution makers have thought it fit not to subject such regulation to constitutional limitations by recognition of a fundamental right to privacy, analogous to the American Fourth Amendment, the Courts have no jurisdiction to import it into a totally different fundamental right, by some process of strained construction nor is it legitimate to assume that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that search may, however, be relied upon by the prosecution in other/independent proceedings against an accused notwithstanding the recovery of that material during an illegal search and its admissibility would depend upon the relevancy of that material and the facts and circumstances of that case. The judgment in Pooran Mal s case ( supra ), thus cannot be understood to have laid down that an illicit article seized during a search from a person, on prior information, conducted in violation of the provisions of section 50 of the Act, can by itself be used as evidence on unlawful possession of the illicit article on the person from whom the contraband has been seized during the illegal search, and thus it was held, that Ali Mustaffa Abdul Rahman Moosa s case ( supra ) correctly interprets and distinguishes the judgment in Pooran Mal s case ( supra ), and the broad observations made in Pirthi Chand s case ( supra ) and State of Punjab v. Jasbir Singh [1996] 1 SCC 288 are not in tune with the correct exposition of law as laid down in Pooran Mal s case ( supra ). 26. It is thus found that there is a distinction between the use of recovery of article as evidence agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird inventory was prepared on 30-8-1999 in case crime No. 106 of 1999 and that a fourth inventory was prepared in on 29-12-1999 pursuance of the orders of this Court dated 17-12-1999. The Court of C.J.M., therefore, had before him two FIRs and the aforesaid four inventories. He was thus required to go into question of proper custody of the property seized and brought before him vide aforesaid inventories pending the conclusion of inquiry or trial. 30. The properties which were purchased with the financial assistance of PICUP and hypothecated/mortgaged by SSI Ltd. and MRG (P.) Ltd. with PICUP were the properties in respect of which search was conducted at Mohali. The CJM, therefore, had jurisdiction only with regard to such properties and for its safeguard under section 451, Cr. P.C. 31. With regard to the assets of SSI Ltd., the Court find that the company was wound up by order of this Court dated 23-11-1998 and thus under section 456(2) of Companies Act, 1956, the assets of the company came to be in the custody of the Court i.e., High Court. By the same order, the Official Liquidator was required to take over the possession of the assets of the company. The Official Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pothecated plant and machinery and other fixed assets. M/s. MRG (P.) Ltd. was promoted by Sri Sanjeev Gupta, Rajeev Gupta and Sri M.L. Gupta which had executed a deed of hypothecation on 26-4-1995 through its Director by which they had hypothecated the plant and machinery of MRG (P.) Ltd. in favour of PICUP. Out of the sanctioned term loan of Rs. 313 lakhs, PICUP had disbursed Rs. 155 lakhs on 24-12-1993 and 100 lakhs on 31-1-1994 totalling Rs. 255 lakhs. The remaining undisbursed amount loan was cancelled. Against the ESI loan of Rs. 331 lakhs the PICUP had disbursed 329 lakhs on 2-7-1995 out of Rs. 213.58 lakhs was disbursed through L.C. opened by State Bank of Patiala, Daryaganj, New Delhi for import of Coil Winding Machines, Mould for injection Moulding Machine and Ultra Sonic Wire Binder from Golden Wheel Corporate Ltd., Hong Kong vide letter the State Bank of Patiala, New Delhi dated 6-6-1995. A sum of Rs. 115.44 lakhs was also disbursed to the company for the payment of custom duties through Air Cargo Services. These amounts were released to the company on the retirement of L.C. s by the Bank. Against the sanctioned loan of Rs. 459 lakhs of MRG (P.) Ltd. PICUP had disburse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng possession of the unit on 18-11-1998 and 19-11-1998 whereas notices under section 29 of S.F.C. Act was issued on 24-9-1998 and approval was communicated on 28-9-1998. He was further chargesheeted for vide discrepancy in the inventories prepared at the time of taking over the possession and on 23-11-1998 along with representatives of the banks and that charge relating to failure to take preventive measure to secure the safety of the assets to the financial unit. There are allegations against Sri S.K. Agrawal for having misappropriated some of the assets which were seized at Mohali and brought to Ghaziabad which were given in schedule 3 of PICUP through Sri S.K. Agrawal. 36. In the facts and circumstances of the case, the Court finds that order of C.J.M. giving supurdagi of entire movable assets including financial machines seized from the premises of K.E. (P.) Ltd. at Mohali to Sri Amrik Singh, authorised representative of K.E. (P.) Ltd., suffers from gross error of jurisdiction and beyond the scope for powers conferred upon him under section 451 for proper custody of the property during the pendency of the trial. The property of SSI Ltd. which were removed to Mohali and we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol any property, effect or actionable claims to which the company is or appears to be entitled, the Liquidator may be writing request the Chief Presidency Magistrate or the District Magistrate within whose jurisdiction such property, effects or actionable claims or any books of account or other documents of the company may be found to take possession thereof, and the Chief Presidency Magistrate or the District Magistrate may there- upon, after such notice as he may think fit to give to any party, take possession of such property, effects, actionable claims, books of account or other documents and deliver possession thereof to the liquidator. Sub-section (1B) inserted by some amendment in section 456 provides for securing compliance with the provisions of sub-section (1A), the Chief Presidency Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may in his opinion be necessary. 39. In the present case the C.J.M., Ghaziabad was informed to the effect that the Company Judge of the High Court at Allahabad had, by his order dated 17-12-1999, had directed the Official Liquidator to take possession of the properties a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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