Criminal Appeal No. 813 of 2016,Criminal Appeal No.110 of 2017,Criminal Application No. 57 of 2017,Criminal Application No. 238 of 2017,Criminal Application No. 658 of 2017,Criminal Application No. 1262 of 2017,Criminal Application No. 100 of 2017

30th November, 2017.

Petitioner Counsel: Mr. S.P. KADAM i/b. Mr. PRASHANT BADOLE with Mr. R.P. HAKE PATIL, Mr. AMOGH SINGH i/b. Mr. D.P. SINGH
Respondent Counsel: Mr.VINAY BHANUSHALI, Mr. J.P. YAGNIK

JUDGMENT

S. C. Dharmadhikari, J. :- This appeal (Criminal Appeal No. 813 of 2016) challenges an order passed by the learned Special Judge presiding over the court known as Designated Court under the Maharashtra Protection of Interest of Depositors (In Financial Establishment) Act, 1999 (hereinafter referred to as the "MPID Act"). The appellant challenges the order dated 16th November, 2016 in MPID Special Case No. 8 of 2005 along with 11 of 2003 and 10 of 2012.

2. The appellant before this court Shri. Suresh Raju Shetty is the original accused. He says that a crime was registered bearing number 10 of 2003 at Mulund Police Station, Mumbai alleging offences of cheating (406, 420, 120B of the Indian Penal Code, 1860). The complaint was lodged by one Smt. Laxmi Balkrishna Shetty, the second respondent to this appeal. Thereafter, the investigations were transferred to the State CID. A charge-sheet was laid and the matter is pending before the Designated Court under the MPID Act. Smt. Sunita Suresh Shetty was the other accused in the said case, however, she was discharged by the learned Special Judge.

3. It is contended that the accused had started an investment company in the year 1995 in the name and style as "Om Sai Capital and Leasing and Finance Private Limited". It had office at Mulund, Mumbai. The complaint alleges that the complainant, along with her relatives invested moneys and she was promised return on the same with 25% interest per annum. The interest amount was to be paid over quarterly. A sum of Rs.25 lac was invested by the complainant and her relatives invested Rs.8 lacs. Thus, the total investment at the relevant time was Rs.33 lacs. After this amount was invested and duly received, no interest was ever paid. The principal amount and the interest due was also not refunded. Therefore, the FIR was registered on 28th January, 2003, copy of which is at Annexure 'A'. The appellant was arrested on 11th March, 2003 and released on bail on 14th April, 2003. Similar was the case with the co-accused Sunita Suresh Shetty now discharged. Even she was arrested and enlarged on bail.

4. The present appeal concerns an order dealing with a property, more particularly described in para 4 of the memo of this appeal. The accused-appellant had sold a business and the rights in the shops where it was carried out, namely, Sairaj Bar and Restaurant being Shop Nos. 1 to 4 situate at Survey No. 123- A and 123-B, Hissa No. 2 of Pallav Niwas, J. N. Road, Mulund (West), Mumbai and received Rs.2.45 crores as consideration. The learned Judge directed, by the impugned order, the appellant to deposit a sum of Rs.2.45 crores.

5. The appellant submits that a request was made to grant a stay on the operation of this order. That was declined. We are not concerned with the other persons in this matter for the simple reason that the objection of the appellant is that a notification dated 18th March, 2016 came to be issued under section 4 of the MPID Act by the Deputy Secretary, Home Department, Government of Maharashtra. In that notification, three immovable properties and 10 movable properties came to be attached. A copy of this notification is annexed as Annexure 'G' to the petition. That notification reads as under:-

“NOTIFICATION

No. MPI 2006/C.R.39/Pol 11 Government of Maharashtra Home Department, 2nd Floor, Mantralaya, Mumbai – 32 Date : 18.03.2016

No MPI 2016/C.R.39/Pol :- Whereas complaints have been received from number of depositors against OM SAI CAPITAL LEASING AND FINANCE PVT. LTD. (herein after referred to as “the said Financial Establishment”), complaining that they had collected the Fund and have defaulted to return the said deposits made by the depositors, on demand;

And whereas, the State Government is satisfied that the said Financial Establishment and its Chairman/ Directors are not likely to return the deposits to the depositors and hence the Government has to protect the interests of the depositors;

And whereas, the properties specified in the Schedule appended hereto are alleged to have been acquired by the said Financial Establishment and its Chairman/Directors from and out of the deposits collected by the said Financial Establishment;

Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 4, Section 5, Section 8 and Section 12 of the Maharashtra Protection of Interest of Depositors (In Financial Establishment) Act, 1999 (Mah. XVI of 2000) (hereinafter referred to as “the said Act”) the Government of Maharashtra hereby attaches the properties of the said Financial Establishment and in the name of its Chairman/Directors as specified in the Schedule.

Schedule

The property of the said accused to be attached is as follows

A] Immovable property (Land/Flat etc.):-

Sr. no.	Property	Area
1	Sai Apartment, Back side of Sairaj Bar and Restawrant, J. N. Road, Mulund West Mumbai	Survey No. 123
2	Room No. 1 and 3, Pallav Niwas, J.N.Road, Mulund West Mumbai	Surve No. 123 A, B Hissa No. 2
3	Sairaj Bar and Restawrant, Gala No. 1, 2, 3, 8 and 9, Pallav Niwas, J. N. Road, Mulund West Mumbai	Surve No. 123 A, B Hissa No. 2

B] Movable Property, - Bank Accounts, Bank Balance, and other Investments of Partners

Sr. No.	Bank Name and Address	Balance/Amount	Account Number
1	The Bharat Co-Op Bank Mumbai Ltd- Mulund West Mumbai	Rs.1,054	SB 12483
2	The Bharat Co-Op Bank Mumbai Ltd- Mulund West Mumbai	Rs.5,220	CA 1763
3	The Bharat Co-Op Bank Mumbai Ltd- Mulund West Mumbai	Rs.2897	CA 32
4	The Bharat Co-Op Bank Mumbai Ltd- Mulund West Mumbai	Nil	CA 1459
5	The Thane Janata Co-op Bank Ltd- Mulund Mumbai	Rs.200.73	CA 83
6	The Thane Janata Co-op Bank Ltd- Mulund Mumbai	Rs.720	AB 1071
7	The Sarvoday Co-op Bank Ltd. Bhandup West Mumbai	Rs.1320	516
8	Central Bank of India	Rs.766.87	35
9	Central Bank of India Mulund West Mumbai	Rs.2,404.74	4947
10	Central Bank of India Mulund West Mumbai	Rs.338	101784

By order and in the name of the Governor of Maharashra.

(Suresh Khade)

Deputy Secretary, Home Department,

Government of Maharashtra”

6. Pursuant to this notification, the Revenue machinery geared itself up and the competent authority/Deputy Collector (Encroachment and Removal), Mulund Division filed application Exhbit 1-B invoking section 5(3) of the MPID Act on 16th July, 2016, pursuant to which, a notice dated 21st July, 2016 came to be issued to the appellant and objections under section 7 were invited, in the sense a notice to show cause why the attachment order be not made absolute. Annexure 'H' is a copy of the notice and Annexure 'I' is a copy of the reply dated 28th July, 2016. The objection of the appellant was that property mentioned at serial number 1 being company's office is concerned, that was taken on leave and licence basis for the period from 1995 to 1998. The owner of the said premises is Mr. S. V. Pandian. Then, as far as property mentioned at serial number 2 being room nos. 1 and 3 are concerned, the accused-appellant submitted that room no. 3 was purchased by him in the year 1989 much before starting of the business of investment company. It was not acquired from the amount invested by the complainant and others. Room no. 3 was purchased in the year 1989 out of his own funds earned in hotel business. Then, room no. 1 does not belong to him nor any of his relatives. It is owned by Mr. Raviraj. This was the defence/objections insofar as attachment of the properties mentioned at serial numbers 1 and 2.

7. As far as property at serial number 3, which is stated to be the prime property, the objections runs as under:-

"(3) That the property at Sr. no. 3 being Sairaj Bar and Restaurant, Gala no. 1, 2, 3, 8 & 9, Pallav Niwas, J. N. Road, Mulund (W), Mumbai 400 080, it is submitted on behalf of the Accused herein as follows:

(a) That the Shop no. 1 & 2 has been acquired by the Accused in the year 1984, Shop no. 3 has been acquired by the Accused in the year 1989.

(b) That there is no Shop no. 8 & 9 in the said building.

(c) That the Shop no. 4 has been purchased by the accused in the year 1992.

Hereto annexed and marked as "Exh-B" are the documents with regards to the purchase of the above mentioned Shop no. 1, 2, 3 & 4.

(d) That the said property was never attached by the Competent Authority/Government, however the said property was mortgaged with Central bank of India, Ghatkopar (W) Branch, Mumbai.

(e) That the said property was under mortgage to the Central Bank of India and it was released by the DRT III as per the law to the prospective purchaser and accordingly the Central Bank of India has debited their dues/liability of Rs.60 Lacs and the balance was credited to the accused account and thereafter the said property was transferred as per the registered sale deed in favour of the purchaser Mr. Satyaprakash Laxmi Singh."

8. The appellant argued that the alleged deposit is of the year 1998 and the property shop nos. 1 and 2 was purchased in the year 1984, shop no. 3 was purchased in the year 1989, shop no. 4 was purchased in the year 1992 and room no. 3 was purchased in the year 1989. Hence, this property cannot be said to be acquired from the alleged deposits/investment and cannot, therefore, be attached under the MPID Act. Then, it is stated in paras 5 and 6 as under:-

"(5) That there was settlement between Accused and the Original Complainant Smt. Laxmi Shetty wherein Accused had handed over Flat premises and landed property situated at Udpi, Karnataka. But the Original Complainant cleverly insisted the Accused to execute the sale deed and registered the same in her Husband Brother's name and accordingly the Accused entered into the sale deed on 01.11.1998 in the name of one Mr. Bhasker Shetty. Later on in the year 2001 i.e. 09.02.2001, the said Property was cleverly re-transferred in the name of the Original Complainant's husband. The Accused had also paid Rs.23 Lacs in cash to the Original Complainant and her Husband Mr. Balkrishna Shetty and they have also acknowledged the receipt that they have received cash of Rs.23 Lacs. Hereto annexed and marked as "Exh-C" are the copies of the said receipt and registered sale deed.

(6) That the valuation of the landed property as Udpi, Karnataka amounts to about Rs.1.08 Crore and the Accused has the Valuation Report of the year 2009 which mentions that the Value of the Landed Property is about Rs.1.08 Crore. Hereto annexed and marked as "Exh- D" is the copy of the said valuation report."

9. These were the objections on record on 28th July, 2016. It is stated that one application Exhibit 22 was thereafter heard afresh pursuant to the order and directions of this court and the impugned order came to be passed, copy of which is at Annexure 'J'. Our attention has been invited to the operative part of this order and that reads as under:-

“ORDER

1. The accused Suresh Raju Shetty is directed to deposit an amount of Rs.1.5 Crores by way of D. D. in the name of Sr. P. I. EOW Unit 7 within 30 days from the date of this order.

2. On failure of the accused to deposit the amount of Rs.1.5 Crores as aforsaid, the bail order and the bail bonds of the accused shall stand automatically cancelled without any reference to this Court. In that case NBW shall be issued against the accused. The accused shall be arrested and taken into custody.

3. On deposit being made by the accused as aforesaid, API Mule to get the DD incashed in the newly opened account with the SBI, Churchgate Branch, Mumbai in the name of Sr. P. I. EOW Unit 7 C. R. No. 10 of 2003 and instruct the bank to keep the amount in the FDR with auto renewal option.

4. On deposit being made by the accused as aforesaid, all the properties attached by the government under the notification except the amount in attached bank account shall be released from attachment.

5. On failure of the accused to deposit the amount as aforesaid, the order of attachment of Room No. 3 & freeze bank accounts shall become absolute. In that case the C. A. is directed to get the Room No. 3 vacated from the accused.

6. For vacating the premises the CA may take help of EOW Unit No. 7 and local police. Sr. P. I. EOW and Sr. P. I. Mulund West P. S., in whose jurisdiction the property comes, are directed to cooperate the C. A. to vacate and liquidate the attached Room No. 3.

7. On Room No. 3 i.e. residence of accused at Palav Niwas, J. N. Road, Mulund West, Mumbai – more specifically described in Sr. No. 2 of the schedule A of the notification Exh. 1-A, being vacated, the CA is directed to first liquidate the same by auction sale.

8. On failure of accused to deposit the amount as aforesaid and on realization of the amount from the auction of Room no. 3 by the CA, if, the amount less than Rs.1.5 Crores is realized, the C. A. is directed to intimate the noticee Satyaprahash Laxmi Singh to deposit the short coming amount to Rs.1.5 Crores within 15 days, failing which CA shall proceed to attach the property of malafide transferee – Satyaprakash Laxmi Singh, to the extent of amount which is short coming to Rs.1.5 Crores.

9. In the case the property of noticee Satyaprakash Laxmi Singh is attached the CA is directed to auction sale his property equivalent to the amount short coming to the amount of Rs.1.50 Crores.

10. On deposit being made by the accused as aforesaid, or on realization of the amount from auction sale of the Room No. 3 as aforesaid, or/and on realization of the short coming amount from the noticee – Satyaprakash Laxmi Singh by deposit by him or by sale of his property, the C. A. with the help of PA A. P. I. Mule is directed to disburse double the amount so deposited by the 15 depositors, as shown in the final report.

11. The PA API Mule and the CA is directed to file quarterly progress report and the compliance report without fail before this Designated Court.

12. With above directions the Exhibit 22 and Exhibit 1-B stands disposed of.

Date 16/11/2016

(D. P. Surana)

Spl. Judge, MPID Act &

Addl. Sessions Judge,

City Civil & Sessions Court,

Gr. Mumbai.”

10. Thus, it is this order, which is challenged on several grounds before us by the appellant.

11. Mr. Kadam learned advocate appearing for the appellant-accused would submit that the learned Judge has erred in law in passing the impugned order. Mr. Kadam would submit that by section 4(1), there is a power of attachment conferred in the Special Court. However, when there is an objection raised to the attachment, then, that objection has to be dealt with and that has to be dealt with is equally provided in the law. The language of section 7(1) of the Act is imperative. Our attention has been invited by Mr. Kadam to the scheme of the law itself.

12. Mr. Kadam would submit that the Act has been enacted to protect interest of depositors of the financial establishments and matters relating thereto. The Act has very few sections and by section 2, the definitions are set out. Our attention is invited to section 2(a), (c) and (d) by Mr. Kadam to submit that in the event any financial establishment, which fraudulently defaults in repayment of deposit on maturity along with any benefit in the form of interest, bonus, profit or in any other form as promised or fraudulently fails to render service as assured against the deposit, every person including the promoter, partner, director, manager or any other person or an employee responsible for the management of or conducting of the business or affairs of such financial establishment shall, on conviction, be punished with imprisonment. Mr. Kadam would submit that this is the offence inviting punishment. There is an Explanation which is set out below section 3. By section 4, there is a power to attach. The power to attach is vesting in the Government. The power to attach can be exercised notwithstanding anything contained in any other law for the time being in force, but upon complaints received from the depositors or otherwise. However, the Government is obliged to satisfy itself that any financial establishment has failed to return the deposit after maturity or on demand by the depositor or to pay interest or other asured benefit or to provide the services promised against such deposit or the Government has reason to believe that any financial establishment is acting in calculated manner detrimental to the interests of the depositors with an intention to defraud them. If the Government is satisfied that such financial establishment is not likely to return the deposits or make payment of interest or other benefits assured or to provide the services against whch the deposit is received, the Government may, in order to protect the interest or depositors of such financial establishment, after recording reasons in writing, issue an order by publishing it in the Official Gazette, attaching the money or the property believed to have been acquired by such financial establishment, either in its own name or in the name of any other person from out of deposits collected by the financial establishment or if it transpires that such money or other property is not available for attachment or not sufficient for 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.

13. By sub-section (2) of section 4, consequences of publication of the order under sub-section (1) are set out. The consequences are indeed grave and serious. The properties then forthwith vest with the competent authority appointed by the Government pending further orders from the Designated Court. By sub-section (3), the Collector of a district and chosen rightly by the legislature is competent to receive complaints from his district under sub-section (1) and he 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 District Police Superintendent or the Commissioner of Police for investigation.

14. While issuing the order under sub-section (1) of section 4, the Government has discretion to appoint any of its officials not below the rank of the Deputy Collector, as the competent authority to exercise control over the moneys and the properties of a financial establishment attached by the Government under section 4 of the MPID Act. Then, by sub-sections (2) and (3) of section 5, the competent authority is endowed with a power and it can apply to the Designated Court by one or more affidavits stating the grounds on which the Government has issued the said order under section 4 and the amount of money or other property believed to have been acquired out of the deposits and the details, if any, of persons in whose name such proeprty is believed to have been invested or acquired or any other property attached under section 4, for such further orders as found necessary.

15. Mr. Kadam submits that section 6 deals with establishemnt and powers of the Designated Court. Mr. Kadam relies heavily on sections 7 and 8, which read as under:-

"Section 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 objection if they so desire to the attachment of the property or any portion thereof, on the ground that they have interest in such property or portion thereof.

(3) Any person claiming an interest in the property attached or any portion thereof may, notwithstanding that no notice has been served upon him under this section, make an objection as aforesaid to the Designated Court at any time before an order is passed under sub-section (4) or sub-section (6).

(4) The Designated Court shall, if no cause is shown and no objections are made under sub-section (3), on or before the specified date, forthwith pass an order making the order of attachment absolute, and issue such direction as may be necessary for realisation of the assets attached and for the equitable distribution among the depositors of the money realised from out of the property attached.

(5) If cause is shown or any objection is made as aforesaid, the Designated Court shall proceed to investigate the same and in so doing, as regards the examination of the parties and in all other respects, the Designated Court shall, subject to the provisions of this Act, follow the summary procedure as contemplated under Order 37 of the Civil Procedure Code, 1908 and exercise all the powers of a court in hearing a suit under the said Code and any person making an objection shall be required to adduce evidence to show that on the date of the attachment he had some interest in the property attached.

(6) After investigation under sub-section (5), the Designated Court shall pass an order either making the order of attachment passed under sub-section (1) of section 4 absolute or varying it by releasing a portion of the property from attachment or cancelling the order of attachment:

Provided that the Designated Court shall not release from attachment any interest, which it is satisfied that the Financial Establishment or the person referred to in subsection (1) has in the property, unless it is also satisfied that there will remain under attachment an amount or property of value not less than the value that is required for repayment to the depositors of such Financial Establishment.

Section 8. (1) Where the assets available for attachment of a Financial Establishment or other person referred to in section 4 are found to be less than the amount or value which such Financial Establishment is required to re-pay to the depositors and where the Designated Court is satisfied, by affidavit or otherwise, that there is reasonable cause for believing that the said Financial Establishment has transferred (whether before or after the commencement of this Act) any of the property otherwise than in good faith and for consideration, the Designated Court may, by notice, require any transferee of such property (whether or not he received the property directly from the said Financial Establishment) to appear on a date to be specified in the notice and show cause why so much of the transferee's property as is equivalent to the proper value of the property transferred should not be attached.

(2) Where the said transferee does not appear and show cause on the specified date, or where after investigation in the manner provided in sub-section (5) of section 7, the Designated Court is satisfied that the transfer of the property to the said transferee was not in good faith and for consideration, the Designated Court shall order the attachment of so much of the said transferee's property as is in the opinion of the Designated Court equivalent to the proper value of the property transferred."

16. The argument of Mr. Kadam is that the further consequences in the law right up to section 18 would denote that this is a law for protection of interest of depositors and it confers wide powers in the Government and the competent authority. All proceedings under the Act have to be instituted before the Designated Court and when the Designated Court deals with them and passes any order, an appeal would lie to this court under section 11. Therefore, the argument of Mr. Kadam is that there is no finding in the impugned order in terms of the law. The matter has not been adjudicated in the backdrop of the allegations and particularly bearing in mind the provisions of law and the consequences that would follow the attachment.

17. Our attention has been invited to the impugned order by Mr. Kadam to submit that the objection has been referred cursorily by the Judge of the Designated Court. He firstly refers to application Exhibit - 22 filed by the informant on 6th July, 2013 to take appropriate steps/action against the accused for disposing of a secured property. The allegation is that the appellant before this court floated a scheme and committed default. He was arrested. Apart from three immovable properties, few bank accounts were attached/freezed. Then, the learned Judge refers to some orders passed by the Designated Court after the application Exhibit - 22 was filed.

18. Thereafter, the learned Judge at internal page 5 of the order refers to the objection, which has been raised by the present appellant and another objector Satyaprakash Laxmi Singh. Thus, the appellant's objection is styled as Exhibit 1-D and the other objectors objection is Exhibit 1-K. The order, according to Mr. Kadam, would purport to deal with Exhibit 1-D under section 5(3). Mr. Kadam submits that while Exhibit - 22 and its contents are referred to in internal pages 6 and 7 of the impugned order, the learned Judge was informed that there are two actions, which are required to be taken. The first to treat the application Exhibit - 22 as made under section 8 of the MPID Act and to decide whether the transfer was a malafide transfer and secondly, to proceed under section 439(2) of the Code of Criminal Procedure, 1973 for the cancellation of the bail so granted to the accused. Mr. Kadam would submit that a common or composite order is passed purporting to deal with all the applications/objections. The learned Judge erred in law firstly, in construing and interpreting sections 4, 8 and 9 and thereafter purporting to hold that the accused is not disputing that he sold the property at serial number 3 to the objector Satyaprakash Laxmi Singh. However, Mr. Kadam would submit that the learned Judge completely omits from consideration the objection that the property has been sold after it was purchased and prior to the commencement of the investment business. Thus, the learned Judge erroneously says that the date of purchase is immaterial and that fact need not be gone into. The learned Judge also terms the mode of transfer as immaterial. Mr. Kadam would submit that the learned Judge proceeds on the footing that the Debt Recovery Tribunal (DRT) has not sold the property, which was a secured asset in terms of a transaction of loan obtained by the accused. The property may have been disposed of by an inter-se agreement between the accused and Satyaprakash Laxmi Singh and the amount of Rs.60 lakhs may have been transferred to the recovery officer of the bank, but this is not done without any order from the DRT or Debt Recovery Appellate Tribunal (DRAT). Hence, according to Mr. Kadam, the learned Judge proceeds to hold that the transaction itself is tainted. Once the learned Judge was informed that there was an order directing the appellant-accused to bring in a sum of Rs.2.45 crores, then, without addressing himself to these vital issues, the learned Judge has proceeded to demolish the transaction, term it as malafide transfer and then held that once the property has been transferred otherwise than in good faith, then, conditions are required to be imposed. Thus, Mr. Kadam would submit that beyond this one para discussion, that too by terming everything in the objection as immaterial, the impugned order has been passed.

19. The impugned order is also impugned by Mr. Satyaprakash Laxmi Singh and he has filed an appeal being Criminal Appeal No. 110 of 2017.

20. Both appeals are vehemently opposed by Mr. Yagnik and Mr. Bhanushali appearing for respondent nos. 1 and 2 respectively. They would submit that this appeal is nothing but delaying tactics. Once the property has been rightly attached, then, we do not have to bother ourselves at this stage with the merits of the objections for they are raised by a person, who is admittedly an accused. The version of the accused should not be treated as final, much less binding on the court. Therefore, their argument is we should dismiss the appeal.

21. With the assistance of the learned advocates appearing for both sides, we have carefully perused the appeal memo and the impugned order. We have already summarised the controversy while noting down the facts, admitted dates, events and submissions of Mr. Kadam.

22. It is common ground that the objections that we have reproduced and particularly of the appellant in Criminal Appeal No. 813 of 2016 concern an attachment and that attachment has been levied pursuant to a notification Annexure 'G' dated 8th March, 2016. That is a notification which has been issued by the Government in exercise of the powers conferred by sections 4, 5, 8 and 12 of the MPID Act. However, before that, the State has recorded its satisfaction that the financial establishment and its Chairman/Directors are not likely to return the deposit to the depositors and hence, the Government has to protect the interest of the depositors. Equally, in this notification itself, it is alleged that the properties specified in the Schedule are alleged to have been acquired by the financial establishment out of the deposits collected from the depositors. The properties are listed in the Schedule. Then comes the show cause notice, where, the appellant is called upon to show cause as to why the attachment should not be made absolute. That is a notice, copy of which is at Annexure 'H' dated 21st July, 2016. The appellant raised specific objections and we have already reproduced them.

23. As far as the immovable property, styled as Sairaj Bar and Restaurant, with which alone we are concerned, the accusedappellant submitted that shop nos. 1 and 2 were acquired in the year 1984, shop no. 3 has been acquired in the year 1989 and there are no shop nos. 8 and 9 in the building. That shop no. 4 has been purchased in the year 1992. He has annexed copies of the documents of purchase of shop nos. 1, 2, 3 and 4. It is claimed that these properties were never attached by the Government or the competent authority. This property was free from encumbrances and the accused was free to deal with it. He mortgaged it to the Central Bank of India and it was released by DRT III as per the law to the prospective purchaser. The Central Bank of India has debited their accounts for a liability of Rs.60 lakhs. The balance of the sale proceeds are credited to the account of the accused and thereafter, the property was transferred by the registered sale deed in favour of the purchaser Mr. Satyaprakash Laxmi Singh.

24. Mr. Kadam submits that the matter could not have, therefore, been decided by the learned Judge of the Designated Court without verifying the facts in relation to these transactions. Mr. Kadam would submit that the document styled as proclamation of sale at page 242 of the appeal paper book refers to Rules 38, 52(2) of the Second Schedule to the Income Tax Act, 1961. The learned presiding officer of the DRT-III, Mumbai has directed that the Recovery Certificate be drawn up in Original Application No. 2 of 2002 for recovery of the sum of Rs.37,84,860/- plus interest at the rate of 15% per annum from the date of filing of application till realisation from M/s. Hotel Sairaj and others, namely the certificate debtors. The certificate holder is the Central Bank of India. 7th May, 2007 was the date fixed for sale and the amount to be recovered was on that date Rs.70,07,199/- inclusive of the costs and interest. The property was sought to be sold because it was attached. It was to be sold on as is where is and what is basis. In the absence of any order of postponement, the property was to be sold by public auction. In pursuance of this proclamation, it was sold and to the said Satyaprakash Laxmi Singh. Though the property was sold by a private treaty, what is placed on record is a copy of the conveyance and that conveyance as also the objections clearly say that this was a sale so as to discharge the debt of the bank and to release the property for it was a security towards outstanding loan. That was an inter-se transfer, but through the recovery officer, who had issued this proclamation of sale. How the learned Judge could dispose of the objection in one paragraph by holding that this private sale was without any order from the DRT or DRAT has not been clarified at all. Pertinently, the learned Judge refers to proceedings between the bank and the appellant, who says that it is not the DRAT which sold the property under the applicable law.

25. We are sorry to say that the learned Judge has unmindful of the above facts completely ignored the scheme of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). If this property was constituting a security interest of a bank, then, all these matters and several issues in relation to the transaction between the bank and the debtor-appellant are expressly relevant for the purpose of this adjudication. Then, whether the attachment by the bank so as to enforce its security precedes the attachment under the MPID Act, whether there was no attachment, but still there was a prior mortgage of the same property with the bank, there was a failure to discharge the liability of the bank, the bank was, therefore, in a position to deal with and dispose of the property in terms of the SARFAESI Act without the intervention of the court and whether the deals and transactions of the bank would prevail in terms of the SARFAESI Act over the attachments in terms of the MPID Act were equally important, relevant underlying issues. We see no discussion in that regard, but for the two lines in para 13 of the impugned order. We have, therefore, no hesitation in holding that the learned Judge of the Designated Court has failed to carry out his duty in law. He has completely ignored the scheme of the MPID Act. We have noted that scheme at length. If there is an attachment under section 4, then, whether there was a satisfaction by the Government and which is the principal requisite, whether that satisfaction was reached by applying relevant and germane materials and whether in terms of subsection (3) of section 5 was it necessary for the Designated Court to render any assistance to the competent authority is not clarified at all. If the other property is what is sought to be attached and the notification refers to that property, then, it was incumbent on the Designated Court to have satisfied itself as to whether there is nothing available with the authority except this property for repayment of the moneys of the investors. The later part of sub-section (1) of section 4 ends with the satisfaction of the Government that if the money or other properties are not available for attachment or not sufficient for repayment of the depositors, then, other properties of the financial establishment or promoter etc. can be attached. If that was the position and whether that other property was available for attachment or not has not been dealt with. Further, in dealing with the objections to the attachment, the powers of the Designated Court and in terms of section 7 enable it to deal with the same thoroughly. Subsection (5) of section 7 enables investigation of the claim/objection, examination of the parties and the Designated Court can, subject to the provisions of the MPID Act, follow the summary procedure as contemplated under Order 37 of the Civil Procedure Code, 1908 and exercise all the powers of a court while hearing a suit under the Civil Procedure Code, 1908 and any person making an objection shall be required to adduce evidence to show that on the date of the attachment, he had some interest in the property attached. We will come to this aspect later, but first, the Designated Court should have satisfied itself that this property can be attached or otherwise. In attaching that property, whether any illegality has been committed. Then comes the objection of Mr. Satyaprakash Laxmi Singh, the purchaser and he would be in a position then, on being called upon, to produce that evidence in support of the objection that on the date of the objection he had some interest in the property attached. The powers are in summary in nature, but we do not think that they can be exercised in such a casual manner. These are serious proceedings and a trained legal mind is chosen to deal with the same. A person who has the powers of an Additional Sessions Judge has to preside over the Designated Court as a Judge. Once he so presides, it is expected of him to consider the matter thoroughly in terms of the law and pass an order either making the attachment absolute or by releasing a portion of the property from attachment or cancelling the attachment. The proviso to sub-section (6) of section 7 enables the Designated Court not to release from attachment any interest, which it is satisfied that the financial establishment or the person referred to in sub-section (1) has in the property, unless it is also satisfied that there will remain under attachment an amount or property of value not less than the value that is required for repayment to the depositors of such financial establishment. Thus, the release order should not be passed in the event this satisfaction is recorded or it could be a conditional release. We are required to pass this detailed order for one finds that the difference between malafide transfers and attachment of the property in terms of Government satisfaction are distinct matters.

26. As a result of the above discussion, we quash and set aside the impugned order to the extent of the property, namely, Sairaj Bar and Restaurant and direct that the objections of the appellants in both the appeals shall be decided afresh on merits and uninfluenced by the earlier observations and findings. However, we impose a condition on the appellant-Satyaprakash Laxmi Singh and because it is stated on oath that he is the owner, in seisin of the property, but presently has put a third party purely on leave and licence basis in possession, that no third party interest of whatsoever nature would be created by him during the pendency of the proceedings and until further orders of the Designated Court. We clarify that all those who deal with Mr.Satyaprakash Laxmi Singh shall do so at their own risk and costs as to all legal consequences.

27. With the aforesaid observations and directions, both the appeals are disposed of. The amount deposited in this court shall be transferred to the Designated Court by the Registry of this court with accrued interest. The deposit shall abide by the final orders of the Designated Court. Beyond impressing upon the court below, the factual and legal controversy, we have not expressed any opinion on the rival contentions.

Ordered accordingly.