Supreme Court upholds property attachment of defaulting Tamil Nadu firm
New Delhi: The Supreme Court has upheld the interim order passed by the Tamil Nadu government in December 2012 attaching the immovable properties of the partners of Financial Establishment (Global Capital Trading Services) under the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act.
A Bench of Justices N.V. Ramana and Prafulla C. Pant set aside a judgment of the Madurai bench of the Madras High Court which had quashed the attachment order and permitted the competent authority to proceed further in accordance with law. Allowing an appeal from the State, the Bench said the Statement of Objects as well as the relevant provisions of the Tamil Nadu Act shows that its object was to ameliorate the situation of thousands of depositors from the clutches of financial establishments which deceive the investors by offering high rates of interest on deposits and committed deliberate fraud in repayment of the principal and interest after maturity of such deposits.
Writing the judgment, Justice Ramana said, respondents K.S. Palanichamy and others were conjointly running a financial establishment in the name of Global Capital Trading Services at Madurai, offering high rate of returns on investments. Based on the assurance given by the respondents, huge deposits were made by the public. It was alleged that Palanichamy has returned only a part of the deposited amount to the complainant and thereafter absconded and hence the attachment order was passed.
The Bench said Tamil Nadu enacted this statute to protect the interest of innocent investors. Therefore as per the procedure envisaged under Section 3 and 4 of the Act unequivocally the power to set the process into motion vests with the State Government by passing an ad-interim attachment order and thereafter act mandates appointment of competent authority to take further recourse as per the procedures laid down under Section 4 of the Act.
The bench said whenever complaints are received from a number of depositors against financial establishment, which defaults or fails to return the deposits or fails to provide services for which the deposits have been made by the depositors, then the State Government is empowered to initiate proceedings by passing ad-interim order for attachment of the properties of the financial establishment.
In this case, the Bench said the order passed by the State Government attaching the immovable properties standing in the name of respondents, based on the complaint of investors and directing the competent authority (District Revenue Officer, Madurai District) to take recourse as per the procedures is valid and is very much in consonance with the provisions of the Act.
