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TMI Blog2021 (9) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner as a company registered under Companies Act, 1956 and is engaged in the business of hospitality related industry in the name of Rose Valley Hotels and Entertainment Ltd. In the course of its business, the petitioner company had received deposits from several individuals. The petitioner had also acquired immoveable properties from such deposits. The petitioner had established an amusement park in the vicinity of the city of Agartala. The business activities of the company, however, ran into several legal disputes. A detailed reference would be made to some of these disputes at a later stage. For the moment, it may be noted that initially Securities and Exchange Board of India (SEBI) found it objectionable that the company was accepting deposits and acting like a Non-Banking Financial Company (NBFC) without proper licences. SEBI therefore, prohibited the petitioner-company from carrying out certain activities. Police complaints were also filed against the petitioner for alleged fraudulent acts in receiving deposits by making false promises and claims of returns. Prohibitory orders were also issued by the Government of Tripura in exercise of powers of the Act of 2000. Eventual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not record reasons which is a mandatory requirement of the statute. Even otherwise, there was no material before the authority to be satisfied that such action was necessary. He drew my attention to various documents on record to canvass that the Stateauthorities had not taken sufficient steps to protect the properties. Such negligence would harm the depositors. [6] On the other hand, learned Government Advocate Mr. Debalaya Bhattachariya opposed the petition contending that there was ample material before the authority to pass the impugned order. He placed before me the original file leading to issuance of the impugned notification which I had perused with the consent of the counsel for the petitioner. (I had offered to share with him the documents which I propose to rely upon in this judgment and which form part of the original files. He, however, did not insist on the same.) Learned Government Advocate further submitted that all necessary steps are taken to protect the properties under attachment. [7] Before deciding these three issues raised by the petitioner, one may have a quick glance at the provisions contained in the Act of 2000. To protect the interest of depositors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or repayment of the deposits, such other property of the said Financial Establishment or the promoter, Director, partner or manager or member of the said Financial Establishment, as the Government may think fit. (2) On the publication of the order under sub-section (1) all the properties and the assets of the Financial Establishment and the persons mentioned therein shall forthwith vest in the Competent Authority appointed by the Government pending further order from the Designated Court. (3) The Collector of a District shall be competent to receive the complaints from his District under Sub-Section (1) and shall forward the same together with his report to the Government at the earliest and shall send a copy of the complaint also to the concerned Superintendent of Police in the District for investigation." [10] Sub-section (1) of Section 5 provides that the Government while issuing the order under sub-section (1) of Section 4, appoint any officer not below the rank of a Deputy Collector as a competent authority to exercise control over the money and the properties attached under Section 4. Subsection (4) of Section 5 empowers the competent authority to make an application to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial establishment shall forthwith vest in the competent authority appointed by the Government pending further order from the Designated Court. [15] In this context, let us see the material considered by the Government before issuing the impugned notification. 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 further stated that the Development Officer of Small Savings, Group Insurance and Institutional Finance has lodged an FIR before the West Tripura Police Station against the functionaries of petitioner-company for carrying out illegal and fraudulent business activities inter alia on the grounds that the company have been collecting deposits from the public under a plan called Holiday Membership Plan, has been accepting deposits and carrying out the activities as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. SEBI therefore, passed a prohibitory order directing the company not to collect any money from investors or to launch any scheme, not to dispose of any of the properties or delineate assets and not to divert any fund raised from the public kept in the Bank account or which is in the custody of the company. [18] Original file of the Government also contains various reports made by the District Collectors. For example, we have on record a report-cum-proposal of the District Collector, Sipahijala, dated 19th December 2016, pointing out that a letter of the Superintendent of Police, Tripura, was received regarding proposal for attachment of property due to cheating of the large amount of public money. A notice was issued to the company to put forth its views. Notice could not be served due to closure of the office and it was pasted on the wall. He stated that field inquiries were also conducted through the Sub-Divisional Magistrate which shows that there are certain lands of the company under the jurisdiction of the Bishalgarh Sub-Division. He also attached a report of Sub-Divisional Magistrate, Bishalgarh and other necessary documents and requested that necessary action be taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him that the filed functionaries during their visit at the Rose Valley office building have found some unclaimed goods which are lying in front of the main gate which was later seized by the police. He requested that necessary arrangements for placing the guards around the property may be made. [21] We may recall, the impugned notification was issued on 19th January 2017. When the District Magistrate and Sub-Divisional Magistrate were writing to police authorities on 22nd June 2017 and 1st November 2017, there was substantial time lapse between the issuance of the notification and the letters urging the police authorities to take protective measures. In the letter dated 22nd June 2017, it was conveyed that the properties are being stolen. Undoubtedly, therefore, there was some delay on part of the Government machinery to properly protect the attached properties which by virtue of Section 4(2) of the Act of 2000 had vested in the Government. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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