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CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1072 OF 2021
Chandrashekhar Vaman Patwardhan .. Appellant
2 The Police Inspector, Economic
Offence Wing
3 The Hon’ble Collector, Mumbai.
4 The Office of Competent
Authority District Deputy Registrar, Co-op Societies, Mumbai-3
5 Manohar Maruti Majalkar
.. Respondents
…
Mr. Abhijeet Desai with Mr.Kuldip T. Pawar with Sarita N. Patil, Digvijay Kachare, Daksha Pungera, Karan Gajra, Mohini
Rehepade, Vijaysingh for the appellant.
Mr.Bhomesh Bellam with Mr.Karma Vivan for respondent no.1.
First Informant.
Mr.Shahaji Shinde, ‘A’ Panel Counsel with Mr.J.P. Yagnik, APP for the State.
JUDGMENT
1 Chandrashekhar Vaman Patwardhan, the appellant has filed the present Appeal under Section 11 of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999, (for short “MPID Act”) being aggrieved by order dated 26/11/2021 passed by the Special Judge in MPID Case No.28/2004, thereby rejecting his objection raised under Section 7(3) of the said Act, as a person claiming interest in the property i.e. Flat No.A-402, Sahjeevan CHSL, Dadasaheb Pendse Marg, Goregaon (East), Mumbai, which was attached in the wake of the notification issued by Government of Maharashtra under Section 4 of the MPID Act, published on 8/5/2015.
2 The appellant claim to be a close relative of one Smt. Mrunmayi Barve, who owned the subject flat, and it is his contention that she has been living with him during her life time and he has catered to her by attending to her daily needs as well as medical care. The subject flat located in Goregaon (East), Mumbai was purchased by Shri V.G. Barve, husband of Smt.Mrunmayi Barve on 15/1/1984 and on 26/9/1997, the shares of the said flat were transferred in his name. Shri V.G. Barve passed away on 11/3/1998 and the rights in the flat devolved upon Smt. Mrunmayi Barve, in the capacity as his wife. On 11/7/1998, Smt. Mrunmayi Barve bequeathed the flat to the appellant by Will dated 11/7/1998 and on 18/9/1998, she appointed the appellant as the nominee in the said flat. On 2/10/1999, Smt.Mrunmayi Barve was appointed as a Director of Parleshwar Finance Pvt. Ltd, and she continued to hold the said post till 15/4/2003 when she retired from the said post.
3 On 28/5/2004, C.R. No. 190/2004 came to be registered at the instance of one Manohar Majalkar, invoking Sections 406, 420 of IPC and Sections 3, 4 of the MPID Act, against the Directors of Parleshwar Finance Limited, alleging default in refund of their deposits. On 3/8/2004, Smt. Mrunmayi Barve was arraigned as accused, as she was also a Director of the said Company between 1999 to 2003. On 19/12/2007, she passed away and as a sequence to this event, the flat devolved upon the appellant through the Will executed by her on 11/7/1998 as her legal heir. On 8/5/2015, the State Government through it’s Deputy Secretary issued a notification under Section 4 of the MPID Act, and this notification covered several immovable properties, including the subject Flat A/402, of Sahjeevan CHSL. The notification referred to ‘Parleshwar Financial Establishment Pvt. Ltd’, Vile Parle, Mumbai, as the Financial Establishment, which is alleged to have accepted deposits from the investors, but complaints were received from the investors that the deposits were not refunded. Since the State Government was satisfied that the financial institutions and its Chairman/Directors are not likely to return their deposits, and since the State Government was desirous of protecting the interest of the investors, and since it is inferred that the property included in the Schedule has been purchased by the financial institution, and it’s Chairman/ Directors from the amount collected and deposited by the investors, and therefore, in exercise of the power conferred under sub-section (1) of Sections 4, 5, 8(1) and 12 of the MPID Act, 1999, the property set out in the Schedule belonging to the financial establishment and its Chairman/Director is attached and pursuant thereto, appropriate steps would be taken before the Special Court through the Competent Authority. A perusal of the notification which is accompanied with the Schedule has included five properties which include the subject property which is shown to be worth Rs. Sixty Lakhs. There is no mention about the owner of the subject property, except giving of its particulars including the approximate price thereof.
4 Upon the notification being published involving the subject property and receipt of the notice from the competent authority by the appellant, he raised an objection before the Competent Court in MPID Case No.28/2004 in December 2016, by specifically stating that late Mrs.Mrunmayi Barve was his aunt and she was the owner of Flat No.A-402, Sahjeevan CHS Ltd, Goregaon, Mumbai, and she had bequeathed the flat to him before her demise and which was transferred in his name in March 2008 and since then, he was the absolute owner and the occupier of the said flat.
5 In the objection raised, the attachment of the property at Serial no.3 in the notification published by the State Government was described to be suffering from non-application of mind, as the impugned notification was issued without ascertaining the correct position of the assets mentioned therein.
6 The objection raised is found to be worded as follows:- “(c) The impugned notification has been issued in total disregard to the legislative intent in so far as the legislature intended that those properties that have been acquired from the deposits collected by the Financial Establishment may be attached to secure the interests of the depositors.
(d) I say that before issuing the impugned notification the
Competent Authority ought to have investigated how and when the properties proposed to be attached were acquired and what was the status of those properties as on the date of issuing the Notification. I say that from the record, it appears that no such investigation or enquiry has been conducted by the Competent Authority before issuing the Notification and that by itself is enough to deny permission as prayed by the Competent Authority. (e) I say that there is no evidence that the Property at Sr. No.3 in Exhibit 1-A, has been acquired out of the deposits raised by the Financial Establishment. On the contrary, if enquiries had been made it would have come to notice of the Competent Authority that the flat in question was acquired much before the financial establishment even commenced business. (f) I say that since the case against Mrs.Mrunmayi Barve has abated and there is nothing to connect the financial establishment’s depositors money with the property in question there was no ground for issuing the Notification in respect of this particular property.”
7 Along with the application, the appellant also placed the relevant documents before the Court which included the agreement dated 15/1/1984 under which Shri Vinayak Barve purchased the subject property. A copy of the Share Certificate dated 1/5/1988 in the name of Shri Vinayak Barve as well as the maintenance bill dated 2/7/1998 was also included in the compilation of documents. A copy of the nomination form under the by-law no.34 addressed to the Chairman of the Sahjeevan Society, nominating the appellant, as the nephew of Smt. Mrunmayi Vinayak Barve along with the Will dated 11/7/1998, accompanied with the death certificate of Smt. Mrunmayi, also formed part of the compilation of documents.
8 The First Informant also responded to the objection raised by the appellant, by submitting that he cannot claim ownership when the property is already secured for attachment, and it is irrelevant that the property is not purchased from the proceeds of crime. In addition, the pleadings that the proceedings under section 3 were abated against Mrs.Mrunmayi Barve, was contested by submitting that she cannot be absolved of her liability which arose as per the proceedings initiated under Section 4 r/w Section 7 of the MPID Act, as Section 4 deals with default, and not with fraudulent default, and therefore, the civil proceedings cannot be said to be abated, though the criminal aspect of it may abate. It is this objection which came to be decided by the Designated Court under the MPID Act by order dated 26/11/2021, and we must reproduce the most pertinent observation in the said order which reads to the following effect:- “3 After going through the documents produced by the applicant in support of the objection, it establishes that the flat was purchased by Vinayak Barve on 15/01/2984. The name of Mrunmayi Barve was mutated against the said flat as a successor of Vinayak Barve. There is no material produced by the prosecution to show that said Mrunmayi Barve acquired the flat from out of the funds of the deposits. Therefore, it can be safely concluded that the flat was not purchased from out of the deposits collected by the FE.” Despite the aforesaid observation, the learned Judge formed an opinion that in the charge-sheet, it is claimed that the total misappropriated amount is to the tune of Rs.7,51,97,084/- (Rupees Seven Crore Fifty One lakhs Ninety Seven thousand and Eighty four only) and the Investigating Officer has annexed list of the properties secured by him for the purpose of repayment of the deposits and the valuation of the properties is also mentioned in Column no.4 of the chart annexed to the charge-sheet which is assessed at Rs.1,08,81,541/-. Recording that this amount is less than the misappropriated amount, and this include the flat which is the subject matter of the application, the learned Judge made reference to Section 7 of the MPID Act and in particular, the proviso appended thereto, as regards the release of the property. Based on the aforesaid provision in the statute, he record thus:- “In view of the above provision, the property can be released from attachment only upon a satisfaction that there will remain under attachment an amount or property of value note less than a value that is required for repayment to the depositors of such Financial Establishment. At the relevant time, the deceased Mrunmayi Barve was Director of the FE. For attachment of the properties under Section 4 of MPID Act, mere default in repayment of deposits by the FE is sufficient though there is no satisfaction to be recorded by Government of Maharashtra that is is fraudulent default. Section 4 of MPID Act empowers the Government of Maharashtra to attach the properties of Director of the FE if money or other property of the said FE is not available for attachment. Therefore, there was no illegality in the attachment of the flat by invoking provisions of Section 4 of MPID Act. Since, the value of secured properties is much less than the misappropriated amount, the objection cannot be allowed.”
9 Another point which the learned Judge has focused upon, is the objection that the notification under section 4 of the MPID Act is faulty, as it has been issued by an Officer below the rank of Secretary to the Government in Home Department. By referring to Article 166(1) of the Constitution, the impugned order record that clause (2) of Article 166 contemplate that orders and other instruments made and executed in the name of the Governor, shall be authenticated in such manner, as may be specified in the Rules to be made by the Governor and the validity of an order or instrument which is so authenticated, shall not be called in question, on the ground that it is not an order or instrument made or executed by the Governor, even the said objection was rejected.
10 We have heard Advocate Abhijeet Desai with Mr. Kuldip Pawar for the appellant, Advocate Bhoomesh Bellam for respondent no.5, the complainant, whereas respondent nos.[1] to 4 are represented by Mr.Shahaji Shinde, ‘A’ Panel Counsel along with learned APP Mr.J.P. Yagnik.
11 Mr.Desai representing the appellant has placed reliance upon the decision of the Apex Court in case of U. Subhadramaa & Ors Vs. State of Andhra Pradesh, represented by Public Prosecutor and Anr,[1] which is followed by the High Court of Andhra Pradesh in Gujjala Sreenu and ors Vs. State of Andhra Pradesh, represented by Dy. Secretary, Superintendent of Police[2]. We have perused the ratio of flowing from the decision of the Apex Court, which revolve around the aspect of continuation of criminal proceedings against a dead person with specific reference to the Criminal Law Amendment Ordinance, 1944 (Clauses 3, 4 and 13) relating to attachment proceedings. The facts unfolded before the Apex Court reveal that the appellants being legal representatives of one Ramachandraiah, who was accused of offences u/s. 409 and 468 r/w Section 471 of IPC had filed the appeal against the judgment and order of the High Court of Andhra Pradesh at
Hyderabad, dismissing their petition u/s.482 of Cr.P.C. Ramachandraiah, since deceased, was the husband of appellant no.1 and father of appellant nos.[2] and 3, was prosecuted in respect of the misappropriation of funds during the period 31/7/1987 to 29/6/1988 along with one Subbarayudu. U.Ramachandraiah expired during trial in October 1991 and thereafter, the trial Court acquitted the other accused Subbarayudu by judgment dated 25/10/1993. The Trial Court observed on the basis of oral and documentary evidence that Ramachandraiah alone committed the offence and no evidence was placed before the Court to show that the surviving co-accused assisted Ramachandraiah in committing the alleged offence and therefore, the trial Court found Ramchandraiah responsible for the offences though he could not be adjudged guilty since he had expired.
12 In 1997, the State moved the application under the Criminal Law Amendment Ordinance, 1944 (Ordinance No.38/1944) for attachment of the property of the appellant under the Criminal Law and the District Judge passed an interim attachment u/s.[4] of the Ordinance on the basis that Ramachandraiah had committed the scheduled offence and that he has procured money or the property in question from the proceeds in such offence. The District Judge issued noticed upon the appellants to show cause as to why the order of attachment should not be made absolute, and in this order, the District Judge observed that as many as 30 items mentioned in the Schedule were acquired by Ramachandraiah, either in his own name or his wife’s name or the name of his sons due to illegal amounts drawn by him. The District Judge recorded that the trial Court had found Ramachandraiah responsible for committing the offence and on 1/10/2002, made the order of interim attachment absolute, since it was found that the appellants have failed to prove that the properties mentioned in the Schedule are self acquired properties of Ramachandraiah. The appellants challenged the order of the District Judge in a petition under Section 482 of Cr.P.C and the learned Single Judge of the High Court held that Ramachandraiah alone had committed the offence and since he has misappropriated the amount, no benefit could be granted to the appellants. This constrained the appellants to approach the Apex Court.
13 Recording the argument on behalf of the appellant that the Criminal Law Amendment Ordinance 1944 did not permit the District Judge to confirm any attachment of property, though the criminal court had not validly convicted and found the accused or the person whose property is sought to be attached as guilty, it was alleged that no application for attachment could have been made as Ramchandraiah has expired in 1991 during trial and was never found guilty. This argument was opposed by the opponents, by submitting that the appellants may not be allowed to retain the property obtained by ill-gotten means and it was legal for the learned Judge to have passed the order of attachment in respect of the said property which was admittedly the subject matter of the charge-sheet. In this background facts, the question which arose for consideration, was formulated in the following words:- “It has therefore become necessary for us to examine whether the property of a person which was merely a case of an offence of misappropriation but who died during the pendency of the criminal trial can be attached in the hands or his legal representatives under the provisions of the Criminal Law Amendment Ordinance, 1944.”
14 Recording that as far as making the application for attachment is concerned, the law authorized the State Government to make such an application, even though the proceedings against the person, would have resulted in such conviction as Section 3 empowered the Government to make such an application, if it has reason to believe that any person has committed any scheduled offence, but since it contemplated making an application to the District Judge within the local limits of whose jurisdiction the said person ordinarily reside, or carry his business; clearly requiring the existence of such a person and this excludes the possibility of proceeding against a dead person. We deem it appropriate to reproduce the relevant observations of the said Law Report, which clearly concluded that no proceedings could have been continued against a dead person and it read thus:- “Section 13 requires the Government to inform the District Judge about the status of the criminal proceedings. It requires the Government to furnish the District Judge with a copy of the judgment or order of the trial court and with copies of the judgment or orders, if any of the appellate or revisional court thereon. Sub-clause 2 mandates that the District Judge shall forthwith withdraw any orders of attachment of property made in connection with the offence if (a) cognizance of alleged scheduled offence has not been taken or (b) where the final judgment and orders of the criminal court is one of acquittal. While, this clause is clear that the orders of attachment must be withdrawn if cognizance of the offence has not been taken or there has been an acquittal; the clause is silent as to the effect of abatement of prosecution. It is due to this silence that it is contended by the State Government in this case that the orders of attachment could not only have been continued but could also have been confirmed. It is not possible for us to accept the submission. If the law requires that the orders of attachment should be withdrawn upon acquittal it stands to reason that such orders must be withdrawn when the prosecution abates or cannot result in a conviction due to the death of the accused, whose property is attached. Concept of abatement of a trial could be subsumed in the clause where the final judgment and order of the Criminal Court is one of acquittal. In this context, the presumption of innocence of an accused till he is convicted must be borne in mind and there is no reason to consider this presumption to have vaporized upon the death of an accused. It may be noted that this Court has time and again reiterated the presumption of innocence of an accused till he is convicted.”
15 In conclusion, Their Lordships of the Apex Court recorded as below:-
16 This decision is followed by the Andhra Pradesh High Court when the Appeal was preferred against the order of Special Judge for trial of SPE and ACB cases, Kurnool, who granted ad-interim order of attachment of the assets relying upon the Criminal Law Ordinance, 1994 for attachment of assets standing in the name of the appellants therein, even while the case of the appellants, being arraigned as accused, and facing charge of ACB cases, was pending investigation and authorization was sought from the State Government. The CID opposed the stand of the appellant by contending that the Ordinance made it clear that the Investigating Agency or the State Government would be entitled to trace and attach all assets, which have been obtained out of the ill-gotten gains of criminal activity undertaken by an accused person and the State would be entitled to attach not only the property in the name of the accused, but also other property which can be traced to the money acquired by the accused in a crime.
17 The decision in case of U. Subbadramma cited by the appellant was tried to be distinguished, by submitting that the accused person had passed away during the course of the trial, but the trial continued and convicted a dead person. On a threadbare analysis of the Criminal Law Ordinance 1944, the learned Single Judge of the Andhra Pradesh High Court has observed thus:- “13 In the present case, the assets of the appellants have been attached. Three of these persons have been arrayed as accused in the main case. Appellants 4 to 6 are the family members of accused Nos.[1] to 3. The allegation against the appellants is that the properties in the name of the six persons were the properties acquired on account of commission of an offence. In such circumstances, it cannot be held that the attachment of the properties of appellants 4 to 6 is out side the scheme or the Criminal Law Ordinance, 1944. However, the question of whether the said assets have been acquired from the funds procured from the scheduled offence is a question of fact which has not yet been answered by the trial court.
14. It is the admitted case on both sides that the 4th appellant had passed away even before the application for attachment was made.
15. The Hon'ble Supreme Court in the case ofRavi Sinha and Ors., vs. State of Jharkhand, U. Subhadramma and Ors., vs. State of Andhra Pradesh and Anr.,[4] had taken the view that the institution or continuation of proceedings against a dead person under the Criminal Law Amendment Ordinance is not permissible and all such proceedings would have to be set aside. Even though, there are certain differences on the facts, the principle laid down by the Hon'ble Supreme Court, that such proceedings against dead persons are not permissible,is binding on this Court.
16. In the circumstances, the attachment of the assets of the 4th appellant is not permissible and the order of ad interim attachment passed by the trial Court on 04.08.2022, to the extent of the 4th Appellant, is set aside.
18 Drawing an analogy from the provision in the Income Tax Act, 1961, Mr.Desai has placed reliance upon the decision from the Apex Court in case of Shabina Abraham and ors Vs. Collector of Central Excise and Customs,[3] where in absence of the provision under the 1922 Act, for continuing the assessment and collection of tax from the estate of deceased person, it was held that it was not permissible to recover the tax from the estate of the deceased person. However, pursuant to the decision of the Bombay High Court, the legislature amended the Income Tax Act, 1922, by inserting Section 24B, introducing a specific provision to the effect that where a person dies, his executor, administrator, or the legal representative shall be liable to pay out of the estate of the deceased person to the extent of which the estate is capable of meeting the charge, the tax assessed as payable by such person or any tax which would have been payable by him under the Act, if he had not died. From reading of the said decision, where it is noted that there is no separate machinery provided by Central Excise and the Salt Act, to proceed against a dead person when it comes to assessing him to tax under the Act, and this was compared to the position under the Income Tax Act, 1922, where the position remained the same until Section 24B was introduced by the Income Tax (second amendment) Act of
1933.
19 Prior to the introduction of the said section, the Bombay High court had an occasion to deal with the definition of “assessee” contained in Section 2(2) of the 1922 Act, which stated that ‘assessee’ means a person by whom Income Tax is payable. Therefore, the Division Bench went on to say that the words “or by whose estate” are conspicuous by their absence and in absence of a provision in the charging section to suggest that a man who has once become liable to tax, can avoid payment of tax by dying before such tax has been assessed or paid, the Division Bench of the Bombay High Court had categorically held that the Court is not justified in straining the language in a taxing statute in order to hold a subject liable to tax. Noting that pursuant to this decision, Section 24B was added in the Income tax Act, 1922, and thereafter, the tax of a deceased could be recovered from his executor, administrator, or other legal representative on his death, to the extent to which the estate is capable of meeting the charge.
20 Relying upon the said pronouncement, it is the submission of Mr.Desai that in absence of a provision in a statute, the legal representative/successor cannot be foisted with a liability and since the appellant had come in occupation of the subject flat and continued to be in occupation, the order of attachment passed by the State Government under section 4 of the MPID Act, in absence of any conclusion being reached that it is purchased from the money collected from the investors, cannot be subjected to attachment. It is the specific submission of Mr.Desai that it is a well settled principle in law that the Court cannot read anything into a statutory provision, which is plain and unambiguous as statute is a edict of the legislature and the language employed in it, is the determinative factor of legislative intent. Relying upon the well settled principle of statutory interpretation to the effect that Courts are not entitled to read words into an Act of Parliament, unless clear reason for it is to be found in the four corners of the Act itself, and since a casus omissus cannot be supplied by the Court, except in case of clear necessity, it is his submission that no violence can be done to the Statute by reading the provision thereof, to suit the case of particular party.
21 The learned counsel Mr.Bellam who represent the complainant has invited our attention to the decision of the Apex Court in case of K.K. Bhaskaran Vs State of Tamil Nadu,[4] which has upheld the provisions of Tamil Nadu Protection of Interest of Depositors Act, which revolve around the Protection of Interest of Depositors. Referring to the observations in the said decision to the effect that one has to keep in mind the beneficial nature of the Act, along with the pari materia statute operating in the State of Tamil Nadu and Pondicherry being to protect the interest of small depositors who invest their life’s earnings and savings in the schemes for profit floated by unscrupulous individuals and companies, both incorporated and unincorporated, more often the investors end up losing their entire deposits.
It is the submission of Mr.Bellam that MPID Act of 1999 is the beneficial legislation and the Court ought to interpret the statute to be remedial and accord a purposive interpretation, so as to achieve the purpose which the statute seeks to serve. Drawing parity with the observation of the Apex Court in case of Bombay Anand Bhavan Restaurant Vs. ESIC Corporation,[5] while interpreting the provisions of the Employees State Insurance Act, a beneficial legislation and that it should receive a liberal construction so as to promote its objective, reliance is placed upon the following passage of the decision:-
24 On giving a thoughtful consideration to the counter arguments, we have no doubt in our mind as regards the object of the Act of 1996, being an act to protect the interest of depositors in the financial establishments and we are conscious of the background in which the Act of 1999 came to be enacted.
25 Section 3 of the Act provide penalty for a fraudulent default in repayment of deposit on maturity along with any benefit in the form of interest, bonus, profit, etc, by a financial establishment, or when a financial establishment fraudulently fails to render service, as assured against the deposit and in such a case, every person, including the promoter, partner, director, manager or an employee responsible for the management of, or conducting the business or affairs of financial establishment shall, on conviction be punished for a term prescribed therein and also be levied with fine which may extend to one lakh of Rupees. Section 4 of the Act which opens with a non obstante clause, provide for a contingency when the complaint is received from the depositors that the financial establishment has failed to return the deposit or pay interest or other assured 7 SJ No.337/1989 benefit or to provide the service promised and when the Government is satisfied to that effect, and has reason to believe that the financial establishment is acting in a calculated manner, detrimental to the interest of the deposits, with an intention to defraud them, then, it may take the steps contemplated in the said section. It is apposite to reproduce Section 4 of the MPID Act:- (4) (1) Notwithstanding anything contained in any other law for time being in force,-
(i) where upon complaints received from the depositors or otherwise, the Government is satisfied that any Financial Establishment has failed,- (a)to return the deposit after maturity or on demand by the depositor; or (b)to pay interest or other assured benefit; or (c)to provide the service promised against such deposit; or (ii)where the Government has reason to believe that any Financial Establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them;and 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 service against which the deposit is received, the Government may, in order to protect the interest of the depositors of such financial Establishment, after recording reasons in writing, issue an order by publishing it in the Official Gazette, attaching the money or other property believed to have been acquired by such Financial Establishment either in its own same or in the name of any other person from out of the 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.
26 Reading of the above provision make it evident that when the government is satisfied that the financial establishment is not likely to return the deposits or make payment of interest or other benefits to the investors/ depositors, then in order to protect their interest, it shall issue an order in writing attaching the money or other 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 the deposits collected by the financial establishment. The impugned order has categorically recorded that the flat in the hands of the appellant is not purchased by the money collected by financial establishment, which is now accused of not returning the deposits along with its Directors. The second contingency contemplated under Section 4 of the Act, when the State Government can attach the money or other property is, if it transpire that such money or other property, is not available for attachment or it is not sufficient for repayment of deposits then such other property of the financial establishment or the promoter, director, partner or manager or member, may be attached as the government may think fit.
27 In the scheme of the MPID Act, Section 4 contemplate attachment of the money or other property believed to have been acquired by the financial establishment out of the deposit collected by it, or when such money or other property is not available for attachment or not sufficient for repayment of deposits, then, such other property of the financial establishment or even the Director can be attached if the Government deems it fit. For exercising the second option available, it is necessary that when the State Government exercises this power of attaching the property, it must be the property of the Director or the promoter as the case may be. In the facts of this case, what is important to note is the sequence of events. The appellant is the nephew of Mrunmayi Brave who was the Director of Parleshwar Finance Pvt Ltd, Financial Establishment from 1999 to 2003, till she retired. The subject flat was purchased by her husband Shri V.G. Barve in the year 1984 and upon his demise, the property devolved upon Smt. Mrunmayi Barve, who bequeathed it to the appellant by Will dated 11/7/1998. On her demise on 19/12/2007, the flat devolved upon the appellant as on 25/9/2008. Admittedly, the Will/bequeath is not called in question by any individual and the bequeath has become final in favour of the appellant. As on 8/5/2015, when the notification is issued by the State Government, it is only premised on an assertion that the properties mentioned in the said notification which include the subject property at item no.3, have been acquired by the financial establishment and its Chairman/Director from the money collected from the depositors and the notification in no way, indicate that the attachment of the subject property, is for the reason that the property of the financial establishment, is insufficient to protect the interest of the depositors. Pertinently, all the five immovable properties described in the notification are included by merely describing that their attachment is necessary because they are the properties in the hands of the Chairman/Directors and they have been acquired through the money of the depositors, which is not a correct statement as regards the property no.3 mentioned in the Appendix. Even the impugned order has clearly recorded that the property is not acquired from the money of the investors/depositors. As on 8/5/2015, the property was no longer standing in the name of Mrunmayi Barve, as on 29/5/2008, it had devolved upon the appellant through a Will executed as her legal heir. It is difficult to accept that in the year 2015, the State Government could have attached this property and since the notification only indicate that the property is attached since it belong to the financial establishment/Director/Chairman, and it is purchased from the money invested by the depositor, which is a grossly incorrect statement.
28 We are not prima facie satisfied with the submission of Mr. Bellam about Section 3 and 4 of the MPID Act, being totally distinct with regard to its consequences against a dead person, though we find that they operate in distinct fields, independent of each other. However, since in the present case, we are satisfied that Section 4 notification by the State Government, has directed attachment of the subject property, only on the ground that it is purchased from the money of the investors, which is a completely incorrect finding, as the appellant has rendered sufficient evidence before the MPID Court in that regard, and even the Court has specifically rendered a finding to that effect, we find the attachment to be illegal. Further, since we have noted that the subject property on date of issuance of the notification by the State Government was not a property of Smt.Mrunmayi Barve, it was not open for attachment as, if it is permitted to be done so, then, it would be amounting to nullifying several transactions bonafide made, as in the present case, it is not the case of the State Government that the property was transferred to evade the liability by Smt. Mrunmayi Barve, but it was a bonafide transfer.
29 The decision of the Apex Court in U. Subbadrama (supra) squarely covers the case of the appellant, as in absence of a provision to continue with the proceedings against the property of a Director despite his/her demise, in the scheme of Sections 4 to 7 of the MPID Act, we do not see any reason how the property could have been attached by issuing a notification in the year 2015, as it is not the case of the respondents that to defeat the interest of the depositors, the property which was acquired through the money collected from the depositors, have been sought to be divested. In the facts of the case, in the wake of the wording of the notification issued by the State Government under section 4(1) restricting only to the properties mentioned therein, on the premise that they have been acquired from the money of the depositors, and also on the ground that on the date when the notification is issued, the subject property was not standing in the name of Smt. Mrunmayi Barve, but already stood vested in the wake of the bequeathed in his favour, we deem it appropriate to quash and set aside the impugned order dated 26/11/2021 and direct that the subject property mentioned at Serial No.3 in the notification dated 8/5/2015 issued by the State Government shall stand released from attachment. The issue raised by Mr. Bellam is however kept open by us, to be considered in appropriate proceedings. Appeal is allowed in above terms. (MANJUSHA DESHPANDE,J) (BHARATI DANGRE, J.)