Insofar as the present case is concerned, this Court directs the first respondent / Committee to ensure that the further steps are being taken to refund the amount to the victims within a reasonable time.In fine, this writ petition stands disposed of. There shall be no order as to costs.
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 03.03.2023
DELIVERED ON : 26.02.2024
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
WP(MD)No.4378 of 2016
- T.Prabhakar
- P.Sudharani
- T.Manivannan
- T.Sakuntala
- T.Veereswari : Petitioners
Vs.
1.The Monitoring Committee,
(Constituted by virtue of G.O.D.No.32,
Home [Police XIX] Department, dated 14.01.2015) Madurai,
Madurai District.
2.The Deputy Superintendent of Police,
Economic Offences Wing – II, Madurai,
Madurai District.
3.Axis Bank,
Rep. by its Branch Manager,
Good Shed Street,
Madurai. : Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India seeking issuance of a writ of mandamus directing the first respondent to release a sum of Rs.34,23,000/- to the petitioners freezed by the second respondent in the third respondent’s bank, by considering their
representation dated 17.08.2015 within a stipulated time limit.
For Petitioners : Mr.M.Jerin Mathew
For Respondents: Mr.T.Senthil Kumar,
Additional Public Prosecutor for R.1, R.2
ORDER
The petitioners and their family members have deposited a sum of
Rs.40,15,000/- in the Madurai Rural and Transformation India Limited,
Madurai Rural Development Benefit Fund Limited of India, MRDT Chits Ltd., and MRDT Cloud Hostings Ltd [MRDT Group Company] expecting higher returns. The Company has collected similar such deposits from the general public, however, cheated them by not repaying the deposits. In this regard, a criminal case in Cr.No.4 of 2014 was registered. The petitioners are some of the victims, who have deposited amounts in the Company. The petitioners have filed this writ petition in the year 2016 for a mandamus directing the first respondent / Monitoring Committee constituted as per G.O.D.No.32, Home (Police XIX) Department, dated 14.01.2015, to release the petitioners’ balance deposited amount of Rs.34,23,000/-, from and out of the funds frozen by the second respondent / Deputy Superintendent of Police, Economic Offences Wing, Madurai, by considering their
representation.
2.Learned Counsel appearing for the petitioners submitted that the Company has projected as if they are registered ones, having necessary approval for conducting the chit business and other activities. The petitioners and their family members have deposited a huge amount of Rs. 40,15,000/- in the Company and likewise, the Company has also collected deposits from other general public. Since the Company has failed to repay the amount, on the complaint lodged by the victims, the second respondent has registered a criminal case in Cr.No.4 of 2014 u/s.406, 420, 120(b) IPC and Section 5 of TNPID Act, as against the Managing Director of the Company and other Administrators. During investigation, it was found that the MRDT Company was neither registered nor notified under the Companies Act. After investigation, charge sheet was also filed and taken on file in C.C.No.11 of 2015 by the Special Court. This Court, by order dated 27.03.2017 in Crl.OP(MD)No.14675 of 2016 and by order dated 29.11.2017 in Crl.OP(MD)No.14537 of 2017, directed the trial Court to conclude the trial within a period of twelve weeks and six months, respectively. However, the case is still pending.
3.By relying on the orders passed by this Court in WA(MD)No.1267 of 2014 dated 14.11.2014 and 22.06.2015, learned Counsel for the petitioners submitted that as per the directions of this Court, the first respondent Committee was constituted. The Committee was also directed to ascertain the liability of the depositors and to refund the amount to the depositors from the amount, which has been appropriated from the Company.
Therefore, he prayed for appropriate orders to refund the amount.
4.Though this writ petition was pending from the year 2016, none of the respondents have filed their response. Therefore, this Court, by order dated 20.02.2023, directed the second respondent to file a status report as to the stage of the criminal case; the reasons for not concluding the trial; the details of the properties and amounts seized and confiscated by the Department; and the steps taken by the Competent Authority / District Revenue Officer and the Special Court in disbursing the amount to the depositors.
5.Only thereafter, a status report has been filed by the second respondent on 02.03.2023 that on the complaint of one Jeyakumar, they have registered a case in Cr.No.4 of 2014 for the offence u/s.406, 420, 120(b) IPC and Section 5 of TNPID Act and they have also arrested some of the accused. The Police have identified the properties of the accused, seized those properties and attached the bank accounts. A sum of Rs. 20,49,91,152/- and another sum of Rs.91,79,756/-, the amount which stood in the bank accounts of the Company and the accused have been freezed and necessary proposals were made to attach the said accounts. The Government, accepting the proposal, has also issued interim orders of attachment vide G.O.Ms.No.721 and G.O.Ms.No.722, dated 12.10.2015, respectively.
6.The status report further reads that apart from the bank accounts, the investigating agency has also identified gold ornaments, silver articles worth about Rs.8,77,840/- and made a separate proposal for attaching the same. The Government has also issued an interim order of attachment vide G.O.Ms.No.228, dated 14.03.2017. The accused Company has invested a sum of Rs.1,86,41,168/- in share trading units and the same was also attached vide G.O.Ms.No.372, dated 19.04.2017. Apart from the above, they have also identified some immovable properties standing in the name of the accused and the Company in Madurai, Virudhunagar Districts, to the worth of several Acres and proposals have been made to attach those immovable properties on 06.11.2015 and 12.10.2016 and the same are pending consideration.
7.From the status report, it appears that the interim orders of attachment passed by the Government vide G.O.Ms.Nos.721, 722 dated
12.10.2015; G.O.Ms.No.228, dated 14.03.2017; G.O.Ms.No.372, dated
19.04.2017, were made absolute by the Special Court for TNPID Act Cases,
Madurai. The investigation agency has also filed the final report before the Special Court, which took the same on file in C.C.No.11 of 2015 on 05.11.2015. There are 5595 witnesses in the case and the petitioners herein are arrayed as witness nos.1654 to 1656.
8.This Court paid it’s anxious consideration to the rival submissions and also perused the materials placed on record.
9.It appears that more than 10,000 people have lost their money in the MRDT Group Companies. The Companies have lured the depositors by paying 35 – 40 % interest for their deposits. The Companies were neither registered under the Company Act nor obtained any permission from the Reserve Bank of India for collection of deposits. However, these Companies have collected deposits of several Crore of rupees from more than 10,000 people. It is quite unusual that the common man was approached easily by the Company, whereas, the second respondent / Economic Offences Wing was not aware of such an activity being taken place at the first instance.
10.In order to protect the interest of the depositors in financial establishments, the Tamil Nadu Protection of Interest of Depositor’s (Financial Establishments) Act, 1997, was enacted and the Economic Offences Wing was established with experts from various fields like law, accountancy, banking, shares, real estates, valuation, computer, etc., to deal with frauds committed by financial institutions on the public. The Economic Offences Wing in the State of Tamil Nadu started functioning with effect from 01.01.2000.
11.It appears that the Officers of the Economic Offences Wing are under the impression that they are supposed to act / prosecute only after a case has been reported before them. They have to understand that they are also liable to prevent such offences. If any Company is offering interest above the rate of interest prescribed by the Reserve Bank of India, it is the duty of the Economic Offences Wing to ascertain from the Company as to whether they have any registration or authority to collect the deposits and as to whether they are having means to give such higher returns. Though every month, such types of cases are reported in the daily newspapers, the greedy people are also depositing money without ascertaining whether the Companies are genuine or not. Neither the Government nor the Police are viewing in this aspect and the people like the petitioners are lured by such Companies and the people are depositing the amount that they may get higher returns, however, ends up waiting for getting at least their deposited amount.
12.By the TNPID Act, Special Courts have been constituted to deal with the offences of such nature. Provisions have been made to seize the properties and bank accounts of the accused and to realize the amount. Though this Act is in existence from the year 1997, very few people have benefitted out of this Act and got their money back. Most of the victims like the petitioners are waiting with a hope that at one point of time, they will get their money back.
13.In this case itself, the complaint was lodged in the year 2014, case was registered in Cr.No.4 of 2014 and final report was also filed on 05.11.2015. The investigating agency has also identified the properties, bank accounts, ornaments, shares of the accused and made proposals for attachments. Interim orders of attachments have been passed by the Government and the same were also made absolute by the Special Court. The investigating agency has also identified the depositors and the depositors were made as witnesses in the final report. The trial is pending before the Special Court for the past nine years and the depositors are still waiting for getting their money back.
14.When the accused Company has approached this Court in WP(MD)No.15200 of 2004, as against the order of freezing of accounts, a learned Single Judge has dismissed the writ petition on 17.09.2014. As against the same, the Company has preferred a writ appeal in WA(MD)No. 1267 of 2014, wherein, the Hon’ble First Bench, on 14.11.2014, has passed an order as under:-
“6.We may add, at this stage, that as per the learned counsel for the appellant, the appellant company is willing to settle the dues. The Director of the Company is stated to be also present, as per the directions issued by this Court, on 12.11.2013. We put to the learned Assistant Solicitor General and the learned Special Government Pleader for the State that there be a mechanism for verifying the investors’ claim and the process of refund would require to be monitored by them. This is more so, as all the amounts are not available in liquid form, in view of the submission of the learned counsel for the appellant that land, measuring 385 acres, is available which would have to be sold to satisfy the claim of the investors. The cash available is only Rs.23 Crores. It is claimed that the lands worth Rs.40 Crores.
7.Learned Assistant Solicitor General and the learned Special Government Pleader assure that this matter will be discussed and an appropriate Committee constituted to monitor the process of verification and refund of investors and also to deal with the land in question. Such
Committee be constituted within a period of one month from today.”
15.Accordingly, the first respondent Committee was also constituted to deal with the issue. Thereafter, when the writ appeal came up for hearing on 22.06.2015, the Division Bench has held as follows:-
“13. Committee constituted by the Government is directed to take steps expeditiously, to get orders from the Government for interim attachment of the money, now frozen. During the course of hearing, Mr.K.Chellapandian, learned Additional Advocate General, submitted that the Government have also identified the District Revenue Officer of Madurai, Madurai District, as the competent authority to deal over the property attached under Sections 3 and 4 of the TNPID Act. Section 4(5) of the TNPID Act empowers the competent authority to make an application to any Court having jurisdiction to try similar cases or deal with the subject matter pertaining to money or property belonging to a Financial Establishment or any person specified in Section 3 situated within the territorial jurisdiction of that Court for appropriate orders. For the purpose of crediting and dealing with the money realised by the competent authority, he shall open an account in any scheduled commercial bank is also contemplated to make the ad-interim order of attachment absolute.
- After going through the reports dated 06.03.2015 and 15.06.2015 respectively filed by the Deputy Superintendent of Police, Economic Offences Wing-II, Madurai, and a Committee member, we are satisfied that steps have been taken to monitor the process of verification and refund of investors. Appropriate orders under Section 3 of the TNPID Act, 1997, is awaited from the Government as indicated. The Committee shall follow up action with the Government, and proceed further, in accordance with law. Request for pro rata payment to the investors, has to be considered by the TNPID Court. No further order is required. Writ Appeal is closed.”
16.Though the Committee has been constituted in the year 2014 and the Division Bench of this Court has also passed an order on 14.11.2014 & 22.06.2015, till date, not even a single pie has been refunded to the depositors.
17.If the Government is satisfied that a financial establishment is not likely to return the deposits or to make the payment of interest, in order to protect the interests of the depositors of such financial establishment, the Government may pass an order of interim attachment attaching the money or other properties said to have been procured either in the name of the financial establishment or in the name of any other person from and out of the deposits collected by the financial institution, as per the provision u/s.3 of the TNPID Act. The ad-interim order of attachment passed by the Government is to be made absolute by the Special Court constituted under the TNPID Act. The Competent Authority appointed u/s.4 of the Act shall apply within 30 days to the Special Court for making the ad-interim order of attachment absolute and he may ask for a direction to sell the properties so attached by public auction and realize the sale proceeds.
18.The Competent Authority is not defined under the Act. Whoever appointed by the Government is the Competent Authority to deal with the properties which are seized and attached by the Government, however, by filing necessary application before the Special Court within a period of 30 days. Section 4 of the Act mandates the Government to appoint one or more Competent Authorities. For the sake of convenience, Section 4 of the
TNPID Act is extracted hereunder:-
“4. Competent authority. – (1) The Government may, by notification, appoint one or more authorities for such area or areas or such case or cases as may be specified in the notification hereinafter called “the Competent authority” to exercise control over the properties attached by the Government under section 3.
(2) The Competent authority shall have such other powers as may be necessary for carrying out the purposes of this Act.
(3) Upon receipt of the order of the Government under section 3,
the Competent authority shall apply within thirty days to the Special Court constituted under this Act for making the ad-interim order of attachment absolute and for a direction to sell the property so attached by public auction, and realise the sale proceeds.
(4) An application under sub section (3) shall be accompanied by one or more affidavits, stating the grounds on which the belief that the Financial Establishment has committed any default or is likely to defraud, is founded, the amount of money or value of other property believed to have been procured by means of the deposit, and the details, if any, of persons in whose name such property is believed to have been invested or purchased out of the deposits or any other property attached under section 3.
(5) The Competent authority shall make an application to any court having jurisdiction to try similar cases or deal with the subject matter pertaining to money or property belonging to a Financial Establishment or any person specified in section 3 situated within the territorial jurisdiction of that court for appropriate orders.
(6) For the purpose of crediting the dealing with the money realised by the Competent authority, he shall open an account in any
Scheduled commercial bank.”
19.The Government of Tamil Nadu has appointed the District Revenue Officers of the respective Districts as the Competent Authorities under the Act to deal with the issues vide G.O.Ms.No.1049, Home Department, dated 26.08.2004. He is expected to file necessary applications to make the ad-interim order of attachment passed by the Government as absolute as per Sub-Section 3 of Section 4 of the Act and shall file necessary applications before the Special Court concerned under Sub-Section 8 of Section 7 of the Act for the equitable distribution of the amount among the depositors.
20.In the case on hand, a sum of Rs.20,49,91,152/- and Rs.91,79,756/- was identified and freezed from the bank accounts of the accused in the year 2014. The Government has issued interim orders of attachment vide G.O.Ms.No.721 and G.O.Ms.No.722, dated 12.10.2015, respectively. Gold ornaments and silver articles worth about Rs.8,77,840/- was freezed and the Government has issued an interim order of attachment vide G.O.Ms.No.228, dated 14.03.2017. A sum of Rs.1,86,41,168/- invested by the Company in share trading units was attached vide G.O.Ms.No.372, dated 19.04.2017. The orders of interim attachment passed by the Government were also confirmed by the Special Court. However, the further steps were not taken by the Competent Authority for auctioning the freezed assets and to refund the deposit amounts to the depositors.
21.The District Revenue Officers are having several works such as,
i. Assisting the District Collector in discharging their duties. These functions include District Administration ranging from maintaining Law and Order, Planning and Development, General Elections, Arms licensing and etc.
ii. The District Revenue Officer looks after all the branches of the Collectorate which mainly deals with general administration and is also vested with supervision of day-to-day functions of the Collectorate.
iii. The District Revenue Officer runs the Revenue
Administration under various enactments in a district.
iv. The District Revenue Officer is also designated as
Additional District Magistrate.
v. The District Revenue Officer mainly deals with civil supplies, land matters, mines and minerals, village officers etc.
22.The District Revenue Officers / Competent Authorities who are burdened with their usual heavy works in the Revenue Department are not paying much attention to the cases under the TNPID Act. While dealing with a similar issue, this Court, in G.Ramdoss v. Competent Authority and Others, reported in 2023 SCC OnLine Mad 3770, has called for certain particulars as to the functioning of the system to achieve the objective of the TNPID Act. The details furnished by the authorities in the said case are extracted as under:-
PARTICULARS OF CASES UNDER TNPID ACT
Number of Cases filed under the TNPID Act 1,249
Number of deposits involved 6,90,166
Number of GOs issued 366
Worth of properties attached Rs.827,67,75,644/-
Value of sale of properties Rs.321,45,37,093/-
Amount deposited through TNPID Court, Frozen amount and advance amount Rs.50,71,61,303/-
Total Amount deposited in the DRO Account under the TNPID Act Rs.372,16,98,396/-
Amount disbursed to the depositors through DRO under the TNPID Act Rs.264,73,34,273/-
Number of depositors who received their deposits under the TNPID Act 60,824
23.From the details furnished, it appears that only 39% of the properties attached have been subjected to auction and the sale proceeds were realized. The official website of Economic Offences Wing of Government of Tamil Nadu also shows the details of the amount refunded to the general public, but this data is only up to August, 2017. For better appreciation, the same is extracted as follows:-
Year Amount Refunded
2012 Rs.46.96 Crores
2013 Rs.56.99 Crores
2014 Rs.23.44 Crores
2015 Rs.38.61 Crores
2016 Rs.41.13 Crores
2017 (upto August) Rs.23.84 Crores
24.Having noted these aspects, this Court, in G.Ramdoss’s case (supra), has observed as follows:-
“29. The number of criminal cases registered under the TNPID Act are increasing every year. The volume of fraud is also huge. The depositors are mostly poor and illiterate. There is a considerable delay in attaching the properties and bringing the property to auction. Considering the volume of cases and the amount involved, the Government may consider appointment of an exclusive officer in the cadre of IAS or a retired High Court Judge as a Competent Authority for disposing the property which were attached under the TNPID Act. If the properties are brought for auction by a retired High Court Judge or an IAS officer, the confidence among the general public would increase in purchasing the property attached which would see a raise in the number of poor depositors in getting their deposits back.
… … … - Learned Additional Advocate General is expected to address the issue raised by this Court to the Government and make necessary recommendations as suggested above. ”
25.The petitioners / victims have deposited a sum of Rs.40,15,000/- in the Company, which has collected the amount without any authority. Since the Government bodies are not having any mechanism to prevent these frauds, it is not only these petitioners, but several lakh of people have lost their hard earned money with these fraudulent finance companies. Actions are taken only after the registration of complaint. These Companies are managing to pay the interest at higher rate to the depositors for some time, which induces others to deposit amount in these fraudulent institutions. The accused, after collecting huge amount, invest the same safely and easily escape from the clutches of law. Only when they have not paid the interest, the greedy depositors are approaching the police for registering cases. The police have also registered the cases and in some cases, they are attaching the properties, however, no action is taken any further to refund the deposit amount.
26.The Competent Authorities, who are supposed to take further action, are not paying much attention to these cases and ultimately, in most of the cases, not even the application required u/s.7(8) of the Act was filed. The data which is available on the number of cases registered, disposed of and disbursed speaks for itself. Realizing this scenario, this Court in G.Ramdoss’s case (supra) has suggested the Government to appoint an IAS Officer or a retired High Court Judge exclusively for dealing with the properties. The Government is yet to take a decision in this regard. The Government, u/s.4 of the Act, can appoint any number of Competent
Authorities to take appropriate action to disburse the amount recovered from the accused. In this case, a Committee was also constituted, which has been accepted by this Court and directions were also issued to the Committee to complete the task as expeditiously as possible. The Committee which was constituted in the year 2014 appears to have been convened its meetings on 06.02.2015, 19.02.2015, 06.03.2015, 27.04.2015 and thereafter no useful purpose was served by this Committee also.
27.In view of the foregoing discussions and reasonings, this Court directs the Government to take a decision on the recommendations made in G.Ramdoss’s case (supra) for appointing a retired High Court Judge or an IAS Officer, exclusively, as the Competent Authority to deal with these issues. This Court also directs the Government to instruct the officials of Economic Offences Wing to take preventive steps, as and when advertisements regarding higher interest rates are flagged by financial institutions, as to their veracity and authority. Insofar as the present case is concerned, this Court directs the first respondent / Committee to ensure that the further steps are being taken to refund the amount to the victims within a reasonable time.
In fine, this writ petition stands disposed of. There shall be no order as to costs.
Internet : Yes 26.02.2024
Index : Yes / No NCC : Yes / No
gk
Note:
Mark a copy of this order to i. The Chief Secretary, State of Tamil Nadu, Secretariat, Chennai.
ii. The Secretary to Government,
Home, Prohibition and Excise Department, State of Tamil Nadu, Secretariat, Chennai.
iii. The Judge,
Special Court under Tamil Nadu Protection of Interest of Depositors Act, Madurai.
To
1.The Monitoring Committee,
(Constituted by virtue of G.O.D.No.32,
Home [Police XIX] Department, dated 14.01.2015)
Madurai,
Madurai District.
2.The Deputy Superintendent of Police,
Economic Offences Wing – II, Madurai,
Madurai District.
B.PUGALENDHI, J. gk
WP(MD)No.4378 of 2016
26.02.2024
