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TMI Blog2017 (4) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Application No.4689 of 2014 and allied matters to the extent of reserving liberty to the petitioners to move an appropriate Court at Maharashtra including the court designated under the MPID Act, as may be advised. However, it is clarified that though the contentions of the parties are recorded in this judgment, no opinion is expressed on merits thereof since it may affect any of the parties before any other forum. - SPECIAL CIVIL APPLICATION NO. 18637, 18638, 18639 of 2015, SPECIAL CIVIL APPLICATION NO. 5724, 5400, 6012, 4689 of 2014, LETTERS PATENT APPEAL NO. 463, 464, 480, 481 of 2015 - - - Dated:- 29-3-2017 - MR. R.SUBHASH REDDY AND VIPUL M. PANCHOLI, JJ. FOR THE PETITIONER : MR KS NANAVATI, SENIOR ADVOCATE ASSISTED BY MR NANDISH CHUDGAR, RAHEEL PATEL AND PRATEEK BHATIA, ADVOCATES FOR NANAVATI ASSOCIATES, ADVOCATE FOR THE RESPONDENT : MR PK JANI, SENIOR ADVOCATE WITH MR AVINASH AVADH, ADVOCATE, MR KAMAL TRIVEDI, SENIOR ADVOCATE WITH MR ARJUN R SHETH, ADVOCATE, MR MIHIR THAKORE, SENIOR ADVOCATE WITH MR. BHADRISH S RAJU, ADVOCATE CAV JUDGMENT (PER : HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI) 1. All the captioned petitions being Special Civil Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and also trading in edible/non-edible oils. One Mr. Nilesh Patel is the Managing Director of the said company, whereas Mr. Nimesh Patel is Chairman of the said Company. Petitioner No.1 of Special Civil Application No.18637 of 2015 is wife of Mr. Nilesh Patel, whereas petitioner No.2 is wife of Mr. Nimesh Patel and both are also holding shares of NKPL. 4.2. National Spot Exchange Limited (hereinafter referred to as 'NSEL') is a company registered under the provisions of the Companies Act, 1956, which was incorporated in May 2005. The main object of NSEL was of providing electronic platform for the purpose of trading of agricultural based commodities. The Government of India, vide notification dated 05.06.2007 issued under Section 27 of the Forward Contracts (Regulation) Act of 1952, exempted NSEL from the operation of the provisions of the said Act on certain conditions. The said Electronic Exchange of NSEL became operative from 15.10.2008. NKPL became a member of the said Exchange from October 2008. Thus, NKPL was permitted to carry out activities on the said Exchange for itself and/or on behalf of its clients. However, by communication dated 12.07.2013, the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions Court, Mumbai, designated under the MPID Act, and also directed to make necessary entries in the record to that effect. Petitioners therefore filed Special Civil Application No.4689 of 2014 and allied matters before this Court against the action of respondent No.2. That the learned Single Judge of this Court, by common judgment dated 24.02.2015 passed in the said petition, dismissed all the petitions on the ground of ' forum conveniens' without deciding on the merits of the case. At this stage, it is relevant to note that against the said order, the petitioners preferred Letters Patent Appeal No.463 of 2015 and allied matters under Clause 15 of the Letters Patent, which are also heard along with these petitions. 4.7. It is the say of the petitioners that NSEL has filed a suit for recovery of the alleged outstanding amount of ₹ 969.89 crores against NKPL and 50 others including the petitioners before the Bombay High Court by filing Suit No.432 of 2015 along with Notice of Motion No.749 of 2015. As per the case of the petitioners the said suit is still pending. 4.8. Even as per the case of the petitioners, NSEL had filed writ petition challenging the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NKPL and other entities including the petitioners of Special Civil Application No. 18637 of 2015 have been attached. It is the grievance of the petitioners that property includes the petitioners' land, bungalow and office premises situated at Ahmedabad, Mehsana and Patan. Petitioners have therefore filed the present petitions challenging the notifications dated 12.03.2015 and 22.06.2015 issued by the respondent No.1 as well as the letter dated 05.09.2015 issued by the respondent No.2. 4.12.As observed above, petitions being Special Civil Application Nos.18638 of 2015 and 18639 of 2015 have been filed by the respective petitioners, whereby the said petitioners have also challenged the aforesaid notifications. 4.13.In another set of petitions being Special Civil Application No.4689 of 2014 and allied matters, the petitioners challenged the notice/order dated 09.11.2013 issued by the respondent No.2 herein to the Collector of Ahmedabad, whereby the said authority informed the Collector that the properties of NKPL and other petitioners, details of which are given in the notice, which are situated in the territorial jurisdiction of the Collector, Ahmedabad, are secured in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity. In support of the said contention, learned counsel have relied upon the decision rendered by the Hon ble Supreme Court in Bishambhar Dayal Chandra Mohan and Ors. v/s. State of Uttar Pradesh, reported in (1982) 1 SCC 39 . 6.1. It is contended that from the record, the respondent Nos. 1 and 2 have failed to point out that the power has been delegated to the respondent no.1 by following due process of law. It is submitted that reliance placed by the respondent nos. 1 and 2 on Rule 13 of Maharashtra Government Rules of Business and Instructions for contending that respondent No.1 has authority and power to issue the impugned notifications/orders is misconceived. At this stage, it is pointed out that Rule 13 of the aforesaid Rules only deals with mechanically signing of the order of the Government and not issuing the order while exercising statutory power of the Government, whereby the concerned authority would have to record reasons and satisfaction for issuing the notifications. Thus, mere power to sign the orders/notifications cannot empower the concerned authority to issue an order under Section 4 of the MPID Act. At this stage, learned counsels have placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the properties in dispute are not the properties of the financial establishment i.e. NSEL or its Chairman or Director. Section 4 of MPID does not provide for attachment of properties of the shareholders or a member of a financial establishment. Thus, it is submitted that the properties of borrowers or defaulters or debtors of a financial establishment are not liable to be attached or confiscated under Section 4 of the MPID Act. 6.4. Learned counsel appearing for the petitioners have thereafter contended that the impugned orders/notifications are issued without complying the condition precedent for acquiring jurisdiction to pass orders under Section 4 of MPID Act and the impugned notifications suffer from non-application of mind and colourable exercise of powers. In support of the said submission, learned counsel referred the details of the properties enclosed with the impugned notifications and submitted that the said properties includes trade mark of NKPL as well as the properties of the petitioners and NKPL. It is contended that the action of attachment of Trade Marks, which are intellectual properties and came to be acquired by NKPL after it was originally incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir properties sought to be attached and the action taken under Section 4 of the MPID Act by the respondent No.1 as the conditions of the said section are not established. Learned counsel would contend that it is well settled that State Legislature's power to enact laws are limited to the territories of the State by virtue of Article 245 of the Constitution of India and the State has no power to enact law which has extra-territorial operation or application. In support of this contention, learned counsel would place reliance upon the decisions rendered by the Hon'ble Supreme Court in the following cases: 1. In R.S.D.V.Finance Co. Ltd. v/s. Shri Vallabh Glass Works Ltd., reported in (1993) 2 SCC 130 2. In Nautam Prakash DSGVC, Vadtal and Ors. v/s. K.K.Thakkar and Ors., reported in (2006) 5 SCC 330 3. In State Bank of India v/s. Jaipur Udyog and Ors., reported in AIR 1986 Del. 357 4. In State of Bombay v/s. R.M.D. Chamarbaugwala, reported in AIR 1957 SC 699 5. In State of Bihar and Ors. v/s. Charusila Dasi, reported in AIR 1959 SC 1002 7. On the other hand, learned Senior Counsel Mr. P. K. Jani appearing for respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel has placed reliance upon the order dated 24.01.2014 passed by the High Court of Andhra Pradesh in Writ Petition No.37056 of 2013 in case of Melkore Alloys Industries Limited v. Union of India . 7.2. At this stage, it has been pointed out by learned counsel Mr. Jani that as per the provisions contained in MPID Act, the order of attachment has to be brought within the judicial scrutiny of Court of learned District and Sessions Judge, Mumbai, which is Designated Court. The life of the order of attachment is 30 days and thereafter it becomes subject to judicial proceedings wherein order of attachment may be confirmed or modified or vacated. Even statutory remedy is provided for filing an appeal against the order passed by the Designated Court. Thus, it is submitted that MPID Act is a selfcontained Code where appropriate safeguards are made. Thus, it is submitted that this Court may not exercise extraordinary writ jurisdiction under Article 226 of the Constitution of India as there is an equally efficacious remedy available with the petitioners. 7.3. Learned counsel alternatively contended that this Court may not entertain these petitions on the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Said Shri Shankarlal Guru was the Chairman of NSEL for years. Shri Nilesh Patel is Chairman of N.K.Group of companies. It is contended that all family members of the petitioners and their group companies through Shri Nilesh Patel and Shri Nimesh Patel have used the platform of NSEL to misappropriate an amount of approximately ₹ 937 crores of depositors. Thus, the petitioners have not disclosed the aforesaid important aspects in the petitions and therefore only on this ground the petitions be dismissed. 7.5. On merits, learned counsel Mr. Jani would contend that under Section 4 of MPID Act, the State Government is empowered to attach the properties which are attached so as to meet the liability of the financial establishment vis-avis the depositors. It is submitted that validity of the MPID Act was challenged. However, the Hon'ble Supreme Court in the case of K.K.Baskaran v/s. State Represented by its Secretary, Tamil Nadu and Ors., reported in (2011) 3 SCC 793, upheld the constitutional validity of the MPID Act. 7.6. At this stage, learned counsel Mr. Jani referred to Rule 13 of Maharashtra Government Rules of Business which provides that every order or inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of mind and without any authority of law. In support of the aforesaid contentions, learned counsel has placed reliance upon the following decisions: (1) In the case of Brizo Reality Company Pvt. Limited v/s. Aditya Birla Finance Ltd. reported in 2014(5) Bom.CR 572 (2) In the case of Gautam Khaitan and Ors. v/s. Union of India and Ors. reported in 2015(Cri.LJ) 2112 7.9. In view of the aforesaid submissions, learned counsel submitted that the petitions challenging the impugned notifications are required to be dismissed. At this stage, he further submitted that the learned Single Judge has passed common order dated 24.02.2015 in Special Civil Application No.4689 of 2014 and allied matters dismissing the petitions on the ground of forum conveniens. Hence , the learned Single Judge has not committed any error and therefore the appeals challenging the said order may also be dismissed. 8. Learned Senior Counsel Mr. Kamal Trivedi appearing for respondent No.10 at the outset contended that this Court may not entertain these petitions on the principle of ' forum conveniens', inasmuch as the multiple proceedings initiated at the behest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the similar matters are pending before the Bombay High Court and lastly it is submitted that proceedings under the MPID Act are also pending before the Designated Court at Mumbai. 8.2. Learned counsel thereafter would submit that the petitioners have an efficacious alternative remedy under Sections 6 and 7 of the MPID Act. Learned counsel referred to the provisions contained in Section 6 which confers exclusive jurisdiction in favour of the Designated Court. Thereafter, he referred to Section 11 of the MPID Act which provides for an appeal before the Bombay High Court against an order passed by the Designated Court. At this stage, it is pointed out that at present the attachment is symbolic in nature and is yet to become absolute and defaulters are enjoying the properties. In view of the aforesaid submission, it is contended that this Court may not entertain the present petitions. 8.3. On merits, learned counsel submitted that from the Statement of Object and Reasons for invoking the MPID Act read with the observations made by the Hon ble Supreme Court in the case of K.K. Baskaran (supra) , it is clear that MPID Act has been enacted to protect the interest of the inno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishments were, in fact, not dealing in sale and purchase of commodities, but under the pretext of trading in commodities, they fraudulently defaulted repayment of deposits of investors. NKPL and its group have admitted that transactions over NSEL were merely financial transactions and not that of purchase and sale by issuing letter to one of the investors with whom such money-trade had taken place. 8.6. At this stage, learned counsel has referred to the provisions contained in Section 4(1)(ii) of the MPID Act and highlighted the words such other properties of member of the said Financial Establishment . After referring to the same, it is contended that the said provision provides wider scope so as to take into consideration other properties even of the shareholder of the company for attachment, though the same may not have been purchased from out of monies collected from the investors, so as to facilitate the repayment of the deposits to the investors like respondent No.10. It is submitted that Mr. Nilesh Patel has also confessed of having diverted funds for personal use and to acquire properties through sister concerns like NK Industries Ltd. 8.7. Lastly learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of MPID Act and necessary orders/notifications were issued. Therefore, the petitioners can challenge the said action by filing appropriate proceedings before the appropriate Court situated in the State of Maharashtra and therefore this Court may not entertain these petitions. 9.2. Learned counsel would further submit that various proceedings, civil as well as criminal, are pending before the Courts in Mumbai, Bombay High Court, Committee constituted by the Bombay High Court and before the Economic Offence Wing under MPID Act which is being tried by Designated Special Court. Thus, the petitioners have wrongly invoked the jurisdiction of this Court by filing present proceedings with a view to create an unwanted hindrance in the proceedings which are pending before the Court in the State of Maharashtra and therefore on the principle of forum conveniens, this Court may not entertain the present petitions. In support of the aforesaid submission, learned counsel Mr. Thakore has placed reliance upon the decision rendered by the Hon'ble Supreme Court in the case of M/s. Kusum Ingots (supra) and the decision rendered by the larger Bench of Delhi High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. State of Bihar , reported in (2004) 7 SCC 166 . 10.2. Learned counsel for the petitioners thereafter submitted that this Court has jurisdiction by virtue of Article 226(2) of the Constitution of India, inasmuch as substantial part of the cause of action has arisen within the territorial limits of this High Court because the properties of the petitioners attached by the impugned orders/notifications are situated in the State of Gujarat. The effect, implementation and execution of the impugned orders/notifications by way of attachment are to be made in the State of Gujarat. The petitioners are residents of Ahmedabad and therefore fundamental as well as constitutional rights are prejudiciously affected in Gujarat. 10.3. Learned counsel for the petitioners lastly submitted that the objections for forum non-conveniens are raised by respondent Nos. 9 and 10 as well as respondent No.2. However, respondent Nos. 9 and 10 are neither necessary nor proper party to the present proceedings and no reliefs are prayed against them. The said respondents have on their own volition applied for and joined as respondents in the present proceedings. Therefore, it is not open for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the serious allegations of fraud are levelled against the group of the petitioners and family members. However, the said argument is misconceived because the equity follows the law. Therefore, if the law is clear, no notions of equity can substitute the law and therefore petitioners cannot be denied the relief when on the face of the order impugned in the petitions, it is de hors the provisions of Section 4 of the MPID Act and the Rules framed thereunder only on the grounds of equity. 10.7. Learned counsel therefore submitted that present petitions be allowed and the reliefs prayed for in the petitions be granted as well as the order dated 24.02.2015 passed by the learned Single Judge in Special Civil Application Nos. 4689 of 2014 and allied matters be set aside. 11. We have heard the learned counsel appearing for the parties. We have also perused the material produced on record and the decisions upon which reliance is placed by the learned counsel appearing for the parties. 12. Learned counsel appearing for the respondents have raised preliminary objections and therefore before dealing with the other submissions, the submissions made with regard to the preliminary obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al jurisdiction to entertain such petition. Hence, the said decision would not render any assistance to the respondents. 15. The next preliminary objection is with regard to availability of efficacious alternative statutory remedy with the petitioners. The petitioners have contended that though efficacious alternative statutory remedy is available, the petitioners can approach before this Court by filing a petition under Article 226 of the Constitution of India for enforcement of any of the fundamental rights or when there is violation of principle of natural justice or when the order or proceedings are wholly without jurisdiction. It is contended that the respondent No.1 has no authority of law to issue the impugned notifications and therefore the present petitions are maintainable before this Court. In support of the said contention, learned counsel for the petitioners relied on the decision of the Hon'ble Supreme Court in Whirlpool Corporation v Registrar of Trademarks , Mumbai , reported in (1998) 8 SCC 1 , wherein the Hon'ble Supreme Court has observed in para 14, 15 and 21 as under: 14. The power to issue prerogative writs under Article 226 of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Article 226 will consider for exercising the discretion to issue a writ under Article 2265. But the existence of such remedy does not impinge upon the jurisdiction of the High Court to deal with the matter itself if it is in a position to do so on the basis of the affidavits filed. If however a party has already availed of the alternative remedy while invoking the jurisdiction under Article 226, it would not be appropriate for the Court to entertain the writ petition. The Rule is based on public policy but the motivating factor is the existence of a parallel jurisdiction in another Court. But this Court has also held in C.B. Gosain Bhan v. State of Orissa, 14 STC 766 : 1963 (2) SCR 879 that even when an alternative remedy has been availed of by a party but not pursued that the party could prosecute proceedings under Article 226 for the same relief. This Court has also held that that when a party has already moved the High Court under Article 226 and failed to obtain relief and then moved an application under Article 32 before this Court for the same relief, normally the Court will not entertain the application under Article 32. But where in the parallel jurisdiction, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction has an effective, adequate alternative remedy. More often, it has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law. At any rate it does not oust the jurisdiction of the Court. In fact in the very decision relied upon by the High Court in The State of Uttar Pradesh v. Mohammad Nooh it is observed that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It should be made specifically clear that where the order complained against is alleged to be illegal or invalid as being contrary to law, a petition at the in stance of person adversely affected by it, would lie to the High Court under Art. 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government. An appeal in all cases cannot be said to provide in all situations an alternative effective remedy keeping aside the nice distinction between jurisdiction and merits. Look at the fact situation in this case. Power was exercised formally by the authority set up und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1920, other than the Designated Court shall have jurisdiction in respect of any matter to which the provisions of this Act apply. (3) Any pending case in any other court to which the provisions of this Act apply shall, on the date of coming into force of this Act, stand transferred to the Designated Court. 7. (1) Upon receipt of an application under section 5, the Designated Court shall issue to the Financial Establishment or to any other person whose property is attached and vested in the Competent Authority by the Government under section 4, a notice accompanied by the application and affidavits and of the evidence, if any, recorded, calling upon the said Establishment or the said person to show cause on a date to be specified in the notice, why the order of attachment should not be made absolute. (2) The Designated Court shall also issue such notice, to all other persons represented to it as having or being likely to claim, any interest or title in the property of the Financial Establishment or the person to whom the notice is issued under sub-section (1), calling upon all such persons to appear on the same date as that specified in the notice and make ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ID Act reads as under: 11.Any person including the Competent Authority, if aggrieved by an order of the Designated Court, may appeal to the High Court within sixty days from the date of the order. 20. Thus, in view of the aforesaid efficacious alternative statutory remedy provided under the MPID Act, we are of the view that the present petitions are not required to be entertained on this ground. 21. The third and important preliminary objection taken by the respondents is with regard to applicability of forum conveniens . The respondents have contended that on the principle of forum conveniens, the present petitions may not be entertained by this Court and the petitioners be permitted to raise all the contentions on merits before the appropriate Court at Mumbai or before the Bombay High Court. 22. We would like to examine the said contentions in detail. If the facts of the present case are closely examined, it is revealed that the respondent No.9 NSEL is located in Mumbai. T+2 and T+25 contracts were executed in Mumbai between investors/brokers and NSEL as well as between NSEL and members like NKPL. Further, the investors got their monies deposited in the acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re laid down by the Bombay High Court Rules. The concerned plaintiffs and defendants together came into consensus by way of a Minutes of Order, to form a 3 Member Committee to implement the settlements arrived between the third party Noticees and NSEL, which was tendered before the learned Single Judge of the Bombay High Court. The Ld. Single Judge of Bombay High Court passed an order on 02.09.2014 appointing a 3 Member Committee. The NKPL challenged the said order before the Division Bench of Bombay High Court by filing an Appeal(L) 741 of 2014 along with Notice of Motion (L) 2744 of 2014. The said appeal is still pending before the Bombay High Court. 24. In view of the aforesaid proceedings which are pending or filed before the Courts situated at Mumbai including the Designated Court and the Bombay High Court, if the contention of the learned counsel appearing for the parties are examined, it is the say of the respondents that the Designated Court situated at Mumbai or the Bombay High Court is the more convenient forum for the parties as the substantial part of the cause of action has arisen in the State of Maharashtra. It is also to be kept in mind that the depositors who hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrest of an accused or suspect till the trial is concluded or conviction became final. The High Court has jurisdiction and control over the Court of Session or the Magistrate, but under the scheme of the Act there is a wall of separation and complete exclusion of the jurisdiction of the High Court is total. The Designated Court is neither subordinate to the High Court, nor the High Court has any control or supervisory jurisdiction under Article 227. XXX XXX XXX 428. The decision or order or a writ issued by the High Court under Article 226 is subject to judicial review by an appeal to this Court under Article 136 whose sweep is wide and untrammeled. The question, therefore, is whether the High Court would be proper to exercise its power under Article 226 over the proceedings or the offenses, or the other offenses committed in the course of the same transaction, covered under the Act. The jurisdiction of the High Court though was not expressly excluded under the Act, by necessary implication it gets eclipsed not so much that it lacked constituent power but by doctrine of concomitance. 27. In Kusum Ingots Alloys Ltd. (supra) , the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt will have jurisdiction in the matter though the doctrine of forum conveniens may also have to be considered. 29. In M/s. Sterling Agro Industries Ltd. (supra), Delhi High Court observed and held in para 31 and 32 as under: 31. The concept of forum conveniens fundamentally means that it is obligatory on the part of the court to see the convenience of all the parties before it. The convenience in its ambit and sweep would include the existence of more appropriate forum, expenses involved, the law relating to the lis, verification of certain facts which are necessitous for just adjudication of the controversy and such other ancillary aspects. The balance of convenience is also to be taken note of. Be it noted, the Apex Court has clearly stated in the cases of Kusum Ingots (supra), Mosaraf W.P.(C) No.6570/2010 with connected matters Page 30 of 34 Hossain Khan (supra) and Ambica Industries (supra) about the applicability of the doctrine of forum conveniens while opining that arising of a part of cause of action would entitle the High Court to entertain the writ petition as maintainable. 32. The principle of forum conveniens in its ambit and sweep encapsulates the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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