Full Text
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 491 OF 2003
1. Smt. Madhu Deepak Gogri
Age 53 years, Occ. Housewife, R/at: B/107, Raj Crystal C.H.S.
Ltd. Royal Complex, Eksar
Road, Borivali, Mumbai.
2. Mayank Deepak Gogri
Age: 30 years, Occ. Business, R/at: Door No. 40-25-43, Flat No. 9, 5th floor, Hemlatha
Enclave, K Chenna Kesvavrao
Street, Petamatalanka Vijaywada
- 520010 A.P. ….Appellants
(At the instance of GBCD)
CID, Mumbai.
2. Joseph D. Vaz
3, Vaz Bungalow, J.C. Colony, Boriwali (W), Mumbai 400103
(At present in custody)
Yerwada Central Prison Pune
3. The Competent Authority
Administrative Building near
Chetana College, Government
Colony, Bandra (East),
Mumbai – 400 051 ...Respondents
Mr. Sandeep R. Karnik a/w Mr. Rohan Bhosale for appellants
Mrs. P. P. Shinde, APP for the State
JUDGMENT
1. This appeal is preferred by the owners of the property, as their property is attached pursuant to the orders passed by the learned Special Judge, designated under The Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (‘MPID’ Act), making the show cause notice of attachment absolute by exercising powers under Section 8 of the MPID Act. Brief Facts:
2. The appellants are the owners of the property in question, i.e. Shop Nos. 1 and 2 in the building known as Prem Bhanu Apartment, IC Colony, Borivali (West) (‘said shops’). FIR came to be registered on 15th February 2000 against M/s Technology Connection and M/s. Techcons Shelterettes Ltd. The allegation was that one Mr Joseph Dennis Vaz, his wife and his son were running the said alleged financial establishments. The case of the prosecution is that there was a scheme of recruiting candidates to the Gulf countries, but later on, the accused set up a scheme for giving homes to the aged and homeless senior citizens. The appellants are not arraigned as accused in the case. During the investigation, the police sealed the said shops and took possession of them as per directions of the designated court, on the ground that the accused was in possession of the said shops pursuant to a leave and licence agreement executed by the owner.
CASE OF APPELLANTS:
3. The appellants' case is that the said shops were initially standing in the name of M/s. Deepak Constructions, which was a partnership firm. Subsequently, the partnership firm was dissolved and said shops were handed over to Deepak Gogri (“original owner”), the partner of the said partnership firm. The present appellants are brought on record of the appeal as the heirs and legal representatives of the said Deepak Gogri after his demise pending the appeal. The said shops were given on leave and licence basis to the accused by executing an agreement for leave and licence on 26th June 1991, which was renewed up to the year
1999. Since there was default in payment of rent, possession of the said shops was taken over by the owner in March 2000.
4. Said shops were attached pursuant to the orders passed by the Special Judge, MPID Court, as the said shops were given on leave and licence basis to the accused. The original owner was served with a show cause notice dated 11th November 2002 for attachment of the said shops under section 8 of the MPID Act. Hence, the original owner had raised his objections opposing the attachment by filing an application numbered as MA No. 622 of 2002. In the said application, the original owner contended that the said shops were initially owned by M/s. Deepak Constructions and requisite share certificates bearing nos. 19 and 20 were issued in the name of M/s. Deepak Constructions. The said M/s. Deepak Constructions had entered into a leave and licence agreement on or about 26th June 1991 with Mr Joseph Vaz for two years, and the said agreement was renewed for a further period up to 25th June 1999. It was the contention of the original owner that after the expiry of said leave and licence agreement, the licensee did not vacate the said shops; however, finally, in March 2000, possession of the said shops was handed over to the original owner. Thus, the original owner contended that he was the owner of the said shops and was a member of the registered cooperative society with respect to the said shops. The original owner contended that there was no other transaction with respect to the said shops either by the original owner or M/s. Deepak Constructions in favour of the accused.
5. It was the contention of the original owner that he was a partner of M/s. Deepak Constructions who had constructed 18 flats and 5 shops. The original owner, being a partner of the said construction company, retained the said shops, a garage and a flat on the first floor. Thus, the original owner contended that there was no malafide transaction with respect to the said shops and that the accused had no right, title or interest in the said shops. The accused was occupying the said shops only as a licensee, and after the expiry of the licence period, he handed over possession of the said shops to the original owner. The original owner had also produced copies of the leave and licence agreement as well as share certificates in support of his objections.
6. By the impugned order dated 26th November 2002, the learned Special Judge of the MPID Court rejected the objections raised on behalf of the original owner and the show cause notice was made absolute.
CASE OF RESPONDENT NO. 1:
7. In the present appeal, an affidavit is filed on behalf of the respondent no. 1-State. It is stated in the said affidavit that after registration of the FIR, the prime accused Mr Joe Vaz-respondent NO. 2, was arrested and is still in jail custody. It is further stated that during the investigation, the police had sealed and taken possession of four properties of the accused, which included the said shops. It is further stated that during the investigation, the police sealed and took over possession of the said shops as per the directions of the Court. It is submitted that the contention of the appellant that the accused had handed over possession of the said shops is not tenable, in as much as after registration of offence on 15th February 2000, all the accused were absconding and, therefore, there was no question of handing over of possession of the said shops. It is thus submitted that the impugned order is rightly passed to protect the interest of the investors.
STATUS PENDING APPEAL:
8. This appeal was admitted, and by way of interim relief, respondent no. 1 was directed to remove the seal of the said shops and the original owner was directed to file an undertaking stating that he would not create third-party rights in the said shops nor part with possession. Accordingly, the original owner filed an undertaking, and the seal of the said shops was removed, and possession was handed over to the original owner. Appellants are brought on record in this appeal as heirs and legal representatives of the deceased original owner. By way of amendment, the accused was made party respondent no. 2. It appears that the notice issued to respondent no. 2 was returned unserved; however, the order dated 27th November 2013 records that it was submitted on behalf of the appellant that he could not trace the address of respondent no. 2; hence, the learned APP submitted that he would direct the nearest police station to locate the address. Office remarks show that as per the report received from Yerawada Central Prison, respondent no. 2 is not confined in the said prison. Office remarks further indicate that as per the order dated 27th November 2013, information regarding the address of respondent no. 2 is not been received from the PP office and that as per the order dated 25th June 2013, learned APP had submitted that the State would initiate proceedings under section 82 of CrPC within two weeks from date of the Order. However, we have not been shown any compliance with the said order. Pending this appeal, the State Government issued a notification dated 29th March 2016 under section 4 of the MPID Act. By way of amendment, Competent Authority is added as party respondent no. 3, and the appellants have also challenged the notification qua the said shops. Office remark shows that the Appeal was ready for final hearing. Hence, we heard Mr. Sandeep Karnik for the appellants and Mrs. Shinde for respondent no. 1 – State and respondent no. 3 – the Competent Authority. None appeared for respondent no. 2.
SUBMISSIONS ON BEHALF OF APPELLANTS:
9. The learned counsel for the appellants submitted that the entire case of the prosecution with respect to the said shops is only based on the ground that the accused had possession of the said shops. He submitted that the prosecution does not dispute the ownership of the original owner and the present appellants. He submitted that it is not even the prosecution case that any right, title or interest was ever created in favour of the accused regarding the said shops. Even otherwise, the accused had handed possession of the said shops to the original owner after the leave and licence period expired.
10. Learned counsel further submitted that the attachment notice is made absolute by the learned Special Judge on an erroneous ground. He submitted that the finding recorded by the learned Judge disbelieving the handing over of the possession is baseless and erroneous. It is not disputed by the accused that the possession of the said shops was handed over by the accused to the original owner. Learned counsel submitted that during the pendency of this appeal, the State Government issued a notification dated 29th March 2016 under section 4 of the MPID Act for attaching the properties of the accused, including the said shops. He submitted that perusal of the notification indicates that the State Government has not recorded any reasons for the attachment of the said shops. He submitted that despite an interim relief granted in the present appeal, the State Government, by ignoring the same, has included the said shops in the said notification. He, therefore, submitted that the present appeal be allowed by quashing and setting aside the impugned order, and the notification dated 29th March 2016 be quashed and set aside qua the said shops.
SUBMISSIONS ON BEHALF OF RESPONDENTS 1 AND 3:
11. Learned APP supported the impugned order and the impugned notification. She submitted that the said shops were included in the notification as the same are attached pursuant to the impugned order. Learned APP submitted that it is not disputed that the accused was in possession of the said shops. She thus submitted that the attachment notice is rightly made absolute by the impugned order, and thus, the notification issued with respect to the said shops is also valid and legal. She submitted that during the investigation, it was revealed that the possession of the said shops was continued with the accused, and thus, possession is deemed to have been continued until shown otherwise. She submitted that the case of the original owner, that the possession was handed over without any consideration, is not believable. She, therefore, submitted that there is no substance in the grounds raised on behalf of the appellants.
CONSIDERATION OF SUBMISSIONS AND FINDINGS:
12. We have considered the submissions made by both parties. A perusal of the impugned order indicates that the learned Judge has rejected the objections raised on behalf of the original owner on an unfounded ground that surrender of a commercial premises in Mumbai merely upon default on payment of licence fees for nine months is unheard of. Learned Judge has further recorded that no notice was produced showing that the accused was called upon to hand over possession and that no suit was filed for recovery of possession. Learned Judge, thus, disbelieved the case of the original owner that the possession of the said shops was handed over by the accused. The learned Judge further observed that the case of the original owner was impossible to accept that it was a gratuitous abandonment of possession. The learned Judge observed that in the absence of any proof of handing over possession on payment of any compensation to the accused or upon some settlement of accounts or adjustment of the deposit amount being produced by the original owner, the handing over of the possession by the accused to the original owner was not believable. The learned Judge, therefore, recorded a finding that transfer by way of surrender by handing over peaceful possession without the payment of consideration is malafide and hit by section 8 of the MPID Act. Thus, with these observations, the learned Judge rejected the objections raised on behalf of the original owner and the notice for attachment was made absolute.
13. Perusal of the leave and licence agreement and the share certificate indicates that no right, title or interest was created in favour of the accused. It is not disputed that the accused was in possession of the said shops only pursuant to the leave and licence agreement. It is a specific case of the original owner that the possession was handed over by the accused after the expiry of the leave and licence period. No document on record shows that the license period was extended. The accused has nowhere placed on record any claim on the said shops. The accused has further not disputed the fact of handing over possession to the original owner. Even otherwise, the execution of the leave and licence agreement and the possession of the accused pursuant to the leave and licence agreement does not amount to creation of any right, title and interest in favour of the accused. It is not even the case of the prosecution that any right, title, or interest was at any time created in favour of the accused with respect to the said shops. Thus, in our view, the reasons recorded by the learned Trial Judge being unfounded and imaginary, cannot be sustained.
14. In the present case, the learned Trial Judge, exercising the powers conferred under sub-section (1) of Section 8 of the MPID Act, issued a show cause notice to the original appellant, calling upon him to show cause as to why the said shops should not be attached as malafide transfer. As stated in the above paragraphs, the original appellant, in response to the show cause notice, filed objections stating that he is the original owner of the said shops. It is neither the case of the prosecution that the original appellant is the transferee of the said shops nor it is their case that the said shops were the property of the financial establishment and were transferred otherwise than in good faith and for consideration. The only case made out by the prosecution is that the accused was in possession of the said shops; the same were sealed, and possession was taken over as per the court's directions. Thus, we see no reason for holding that there was any malafide transfer as contemplated by Section 8; hence, there is no question of invoking powers under Section 8 for the attachment of the said shops.
15. The leave and licence agreement does not create any right, title or interest in favour of the alleged financial establishments or the accused person who was occupying the said shops pursuant to a leave and licence agreement. There is no reason to disbelieve the appellants' case that on the expiry of the leave and licence agreement period, the accused have handed possession to the original owner. The present appellants, being heirs and legal representatives of the original owner, are in possession of the said shops. We do not see any reason to connect the said shops with the accused or the financial establishments except the accused being in possession as licensee. Thus, there is no question of any malafide transfer. Admittedly, neither the original owner nor the present appellants are arraigned as accused in the MPID case. In such circumstances, we see no reason to attach the said shops by exercising powers under section 8 of the MPID Act. Thus, we find that the findings recorded by the learned Trial Judge in the impugned order cannot be legally sustained.
16. So far as the notification under section 4 is concerned the same was issued by the State Government on 29th March 2016; however, a show cause notice under section 8 of the MPID Act was issued in 2002. In the present case, when show cause notice was served upon the original owner, and even when the attachment notice was made absolute under section 8 of the MPID Act, there was neither any order issued by the State Government by exercising powers under section 4 of the MPID Act nor there was any competent authority appointed. The State Government has issued orders under section 4 (1) of the MPID Act only during the pendency of the present appeal. Perusal of the notification shows that the same is bereft of any reasons to believe that the said shops were required to be attached. The affidavit filed on behalf of the State Government is also bereft of any reasons for attaching the said shops. The State Government, in its affidavit, has stated that the said shops were sealed and possession was taken over pursuant to the directions issued by the Court. The State Government has failed to show any reasons to believe that the said shops were acquired by the accused/financial establishments, either in the name of financial establishments or in the name of any other person out of the deposits of the investors collected by the financial establishments. There is nothing shown to us as to in what manner the accused is concerned with the said shops for including them in the properties attached under Section 4(1) of the MPID Act.
17. So far as the challenge to the notification under section 4 of the MPID Act is concerned, we had called upon the learned APP to place on record the further steps taken by the Competent Authority pursuant to the Notification issued under section 4 (1). The learned APP has placed on record a copy of the notification under section 4(1), and a copy of an affidavit dated 1st June 2016 of the Competent Authority submitted before the MPID Court. A perusal of the said affidavit reveals that the Competent Authority was appointed by notification dated 17th April 2014. However, a copy of the said notification is not placed on record for our perusal. The said affidavit further makes a request to make the attached property absolute. The learned APP, on instructions of the Competent Authority, submitted that neither any further steps are taken nor the MPID Court has passed any further order and that the proceedings before the MPID Court are still pending. The learned APP, on instructions of the Competent Authority, submitted that in the event this appeal is allowed and the impugned order is quashed and set aside, the Competent Authority shall take steps for deleting the said shops from the notification dated 29th March 2016 issued under section 4(1) of the MPID Act and release it from the attachment made under the notification dated 29th March 2016.
18. The designated court, i.e. the MPID Court, is empowered to make the attachment absolute or vary it by releasing a portion of the property from attachment or cancelling the order of attachment of the properties notified under sub-section (1) of Section 4 of the MPID Act, by exercising powers under section 7 of the MPID Act. Since, during the pendency of the appeal, the State Government has appointed the Competent Authority and also issued a notification under Section 4(1) of the MPID Act, ordering the attachment of the said shops along with other properties, the said shops vest in the Competent Authority in view of sub-section (2) of section 4 of the MPID Act. Such vesting is subject to further orders by the designated court.
19. In the present case, the Designated Court, i.e. the MPID Court, by the impugned order, has made the attachment absolute by exercising powers under section 8. However, we have already held for the aforesaid reasons that the impugned order passed in the exercise of the powers under section 8 is not sustainable. Hence, we are inclined to allow the appeal and quash and set aside the impugned order. So far as the challenge to the notification under section 4(1) is concerned, it cannot be quashed and set aside in this appeal, which is filed under Section 11 of the MPID Act. Section 11 of the MPID Act provides for an appeal against any order passed by the designated court, i.e. the MPID Court. However, the learned APP, on instructions of the Competent Authority, has made a statement that the Competent Authority shall take steps for deleting the said shops from the notification dated 29th March 2016 issued under section 4(1) of the MPID Act in the event this appeal is allowed and the impugned order is quashed and set aside. The statement made by the learned APP on the instructions of the Competent Authority is accepted.
20. Hence, for the reasons recorded above, the following order is passed:
(i) The impugned order dated 26th November 2002, passed by the learned Special Judge of the MPID Court, in MA No. 622 of 2002 in CR No. 14 of 2000, is quashed and set aside;
(ii) The attachment of the said shops being, Shop Nos. 1 and 2 in the building known as Prem Bhanu Apartment, IC Colony, Borivali (West) pursuant to the said order dated 26th November 2002 stands cancelled and the said shops are released from the said attachment.
(iii) The Competent Authority to take steps within a period of four weeks from today to comply with the statement made by them, for deleting the said shops from the notification dated 29th March 2016 and releasing the said shops from the attachment made under the notification dated 29th March 2016.
(iv) Appeal is partly allowed in the above terms and is disposed of.
(v) List the Appeal on 19th January 2024 for recording compliance of the statement made by the Competent Authority. All parties to act on the authenticated copy of this order.