THE HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL No.1369 of 2010 AND CRIMINAL APPEAL No.414 of 2011 CRIMINAL APPEAL No.1369 of 2010 BETWEEEN: 1. V.Parvathi & 18 others. … Appellants AND 1. Chanumolu Narasimha Rao & 2 others. … Respondents CRIMINAL APPEAL No.414 of 2011 BETWEEEN: Chanumolu Narasimha Rao … Appellant AND 1. Shaik Khudan Saheb & another … Respondents THE HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL No.1369 of 2010 AND CRIMINAL APPEAL No.414 of 2011 JUDGMENT: Criminal Appeal No.1369 of 2010 is filed by 19 appellants who are stated to be Depositors of the Financial Establishment. Criminal Appeal No.414 of 2011 is filed by the 1st respondent who is the accused and whose property is under attachment. Both the appeals are directed against the order dated 06.10.2010 passed by the Metropolitan Sessions Judge, Vijayawada who is the Special Judge under the provisions of the A.P. Protection of Depositors of Financial Establishments Act, 1999 (in short, the Act). The 1st respondent herein filed Crl.M.P.No.155 of 2007 in the lower Court under Sections 190 and 200 Cr.P.C. read with Sections 3, 4, 5 and 10 of the Act to grant permission to him to deposit balance of sale consideration of Rs.70,00,000/- under the sale agreement dated 09.09.2000 executed by the 1st respondent/accused and to direct the 2nd respondent/Commissioner of Police, Vijayawada(Urban) to receive the same and to make preparations to execute and register valid and legal sale deed in his favour for the scheduled mention property. A brief reference to background of this case is necessary. Parties in this judgment are referred to as they are arrayed in the petition Crl.M.P.No.155 of 2007 in the lower Court. The 1st respondent/accused was doing finance business at Vijayawada under the names of Chanumolu Financiers and Chanumolu Chit Funds. Alleging that the 1st respondent collected huge deposits from public and felt to repay the deposits as well as interest thereon to the public, criminal case was booked against him and others for the offence punishable under Section 5 of the Act. Pending investigation, on the requisition of the Commissioner of Police, Vijayawada, the Government of A.P. passed G.O.Ms.No.221 dated 06.10.2001 of Home (General.B) Department attaching the properties of Chanumolu Financiers, Vijayawada mentioned in the annexure there to, in exercise of power under Section 3 of the Act. The properties attached under the said G.O. include Commercial Complex with three floors situated in Rajagopalachari Street at D.No.27-14-57, Buckinghampet, Vijayawada-2. In the G.O., approximate value of the said complex is noted as Rs.1 crore. It is located by the side of Buckinghampet Post-Office building. After issuing notices to the accused and others, who are shown as ostensible owners of the properties, the lower Court made the said ad-interim attachment absolute in the year 2002. Subsequently, the Government of A.P. passed G.O.Ms.No.262 Home (General.B) Department, dated 26.12.2005 empowering the Special Court (lower Court) to sale the attached properties of M/s.Chanumolu Financier, Vijayawada by auction and for distribution of auction proceeds among the depositors on priority basis. The Government also directed the competent authority namely Commissioner of Police, Vijayawada to file appropriate application before the Special Court under Section 6(1) of the Act there for. At that stage, the petitioner who is a third party approached the lower Court with the present petition Crl.M.P.No.155 of 2007 for the above mentioned relief. 2. It is the petitioners case that the 1st respondent/accused entered into an agreement for sale dated 09.09.2010 of the schedule property namely Chanumolu Commercial Complex/Chanumolu Complex for Rs.75,00,000/- and received advance of Rs.5,00,000/- there under from him and that balance of sale consideration of Rs.70,00,000/- has to be paid at the time of registration of sale deed and that the sale deed was agreed to be executed and registered after the litigation in respect of the property comes to an end. 3. During enquiry of Crl.M.P.No.155 of 2007 in the lower Court when seven of the depositors filed petition before the lower Court for impleading them as parties to that petition, the lower Court refused to implead them as parties to that petition, but permitted them to submit arguments in that petition. During enquiry of the petition in the lower Court, the petitioner examined himself as PW1 and marked Exs.P1 to P3. Ex.P1 is the agreement for sale dated 09.09.2000. Ex.P2 is office copy of registered notice got issued by the petitioner to the 1st respondent on 31.10.2006. Ex.P3 is postal receipt there for. Even though two other documents were appended to the petition, the petitioner did not choose to mark them as exhibits during enquiry in the lower Court. Those two unmarked documents are receipt dated 01.09.2003 and letter dated 30.12.2004. In the petition itself, it was stated by the petitioner that in the year 2003, the 1st respondent came to his residence and gave an acknowledgment towards receiving of taken advance amount of Rs.5,00,000/- and that in that letter, the 1st respondent has promised to execute and register valid and proper sale deed in his favour within a short period. It is not known why the 1st respondent gave receipt dated 01.09.2003 acknowledging receipt of taken advance amount of Rs.5,00,000/- to the petitioner. Ex.P1 agreement reads as if advance of Rs.5,00,000/- was paid by the petitioner to the 1st respondent out of agreed sale consideration of Rs.75,00,000/- on the date of the agreement itself. The fact that the alleged payment of Rs.5,00,000/- by the petitioner to the 1st respondent is noted not only in the agreement dated 09.09.2000, but also in receipt dated 01.09.2003, throws doubt as to on what date the said amount was paid and whether the said amount was really paid or not. Though Ex.P1 agreement is dated 09.09.2000 and though ad-interim attachment order was passed by the Government of A.P. on 16.10.2001 and though the lower Court made the said ad- interim attachment made absolute in the year 2002, the petitioner had chosen to approach the lower Court with the present petition only on 03.11.2006, three days after issuing Ex.P2 notice dated 31.10.2006. The petitioner claims that the whereabouts of the 1st respondent were not available during the interlagnam period. But even as per allegations in the petition, the 1st respondent approached the petitioner on 01.09.2003 and is stated to have passed a receipt for Rs.5,00,000/-. Neither the 1st respondent disclosed existence of Ex.P1 agreement in favour of the petitioner nor the petitioner came forward before the lower Court claiming interest in the subject matter under Ex.P1 agreement dated 09.09.2000. Ex.P1 is not a registered agreement and therefore, did not constitute notice thereof to any one. In that view of the matter, the lower Court did not give any notice to the petitioner under Section 7(3) of the Act before making the ad-interim attachment absolute in the year, 2002. 4. According to the depositors/appellants in Crl.A.No.1369 of 2010, they are aggrieved by the order in the lower Court as their interest in their deposited amounts is under jeopardy. Whether the depositors are necessary or proper parties to the petition filed by the petitioner in the lower Court or not, I am of the opinion that the depositors of a financial establishment are entitled to file appeal against the impugned order under Section 11 of the Act. Section 11 of the Act reads as follows: “11. Appeal :- Any person including the Competent Authority, if aggrieved by an order of the Special Court, may appeal to the High Court within thirty days from the date of such order.” 5. As per Section 11, any person aggrieved by any order of the Special Court may file appeal to the High Court. The aggrieved person need not necessarily be a party to the impugned order in the lower Court. The only pre-condition is that the appellant should have been aggrieved by the order of the Special Court. In this case, the appellants’ counsel contended that it is the depositors who suffer loss, in case the property goes out of the Special Court and that if the property is sold in public auction, then it is likely to fetch more than Rs.6 to 7 crores. It is further contended that though value of the depositors as in the year 1999 was around Rs.70,00,000/-, the said value as on today including interest comes to Rs.3 crores. On the other hand, the counsel for the 1st respondent/petitioner contented that interest may be around Rs.20,00,000/- or Rs.25,00,000/- on the deposit amounts. It is further contended that out of the 19 appellants herein, seven of them do not figure in the list of depositors before the lower Court. According to him, appellant Nos.9 to 12 and 17 to 19 do not figure as depositors in the list of depositors filed before the lower Court by the competent authority. At any rate, out of the 19 appellants, 12 appellants are admittedly depositors of the financial establishment concerned and they can maintain the appeal. It is not as if list of deposits prepared by the lower Court is final. Any other person whose name does not figure in that list will be at liberty to approach the lower Court and file proof of his deposit and request the lower Court to include his name in that list. 6. The senior counsel appearing for the appellant in Criminal Case.No.414 of 2011 contended that the petition filed in the lower Court by the petitioner is not maintainable in law and that the lower Court should not have passed the impugned order permitting the petitioner to deposit Rs.70,00,000/- in the lower Court. The operative portion of the impugned order of the lower Court reads as follows: “11. In the result, it is ordered that the petitioner is permitted to deposit the balance of sale consideration of Rs.70,00,000/- (Rupees seventy lakhs only) to the credit of the above Crl.M.P after appeal time is over and on such deposit, the attachment order passed against the petition schedule property shall be treated as cancelled and the petition schedule property be treated as released from attachment. In that event only, the first respondent should execute the regular registered sale deed in favour of the petitioner in respect of the agreement of sale dated 09.09.2000 at the expenses of the petitioner. This would come into force only after appeal time is over and if there is no stay. Further, the petitioner has to give notice to both respondents before depositing of the amount. Accordingly, the petition is ordered.” 7. When once ad-interim attachment made by the Government is made absolute by the Special Court, there is no provision in the Act either to cancel the attachment or to release the property from attachment. Neither Sections 190 Cr.P.C. nor Section 200 Cr.P.C. enables the Court to pass such an order. Section 3 of the Act empowers the Government to pass ad-interim attachment of properties incase of default in repayment of deposits etc. Section 4 of the Act prescribes competent authority and the duties of competent authority including approaching of the Special Court within 15 days of ad-interim attachment with a petition to make the ad-interim attachment absolute. Section 5 of the Act prescribes penalty for default in repayment of deposits etc. It is a penal provision. Section 7 of the Act prescribes powers of the Special Court regarding attachment; and it reads as follows: “7. Powers of Special Court regarding attachment:- (1) Upon receipt of an application under Section 4, the Special Court shall issue to the financial establishment or to any other person whose property is attached by the Government under Section 3, a notice accompanied by the application and affidavits and of the evidence, if any, recorded, calling upon to show cause on a date to be specified in the notice why the order of attachment should not be made absolute . (2) The Special 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 calling upon such person to appear on the same date as that specified in the notice and make objection, if he so desires, to the attachment of the property or any portion thereof on the ground that he has an 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 Special Court at any time before an order is passed under sub-Section (4) or sub-Section (6). (4) If no objections are made and no cause is shown on or before the specified date, the Special court shall forthwith pass an order making the ad interim order of attachment absolute. (5) If any objection is made or cause is shown as aforesaid, the Special Court shall proceed to investigate the same, and in so doing as regards the examination of the parties and in all other respects, the special Court shall, subject to the provisions of this Act, follow the procedure and exercise all the powers of Court in hearing a Suit under the Code of Civil Procedure, 1908 (Central Act V of 1908) and any person making an objection shall be required to adduce evidence to show that at the date of the attachment, he had some interest in the property attached. (6) After investigation under sub-section (5), the Special Court shall pass an order making the ad-interim order of attachment absolute or varying it by releasing a portion of the property from attachment or canceling the ad-interim order of attachment: Provided that the Special Court shall not 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 re-payment to the depositors of such financial establishment.” 8. The objection for attachment and the investigation to be made by the Special Court on such objection are subsequent to receipt of notice of ad-interim attachment and before making of the said ad-interim attachment absolute. The petitioner mainly based his prayer in the lower Court under Section 10 of the Act which reads as follows: “10. Administration of property attached:- The Special Court may, on the application of any person interested in any property attached under this Act, and after giving the Competent Authority an opportunity of being heard, make such orders as the Special Court considers just and reasonable for,- (a) Providing from such of the property attached as the applicant claims an interest in such sums as may be reasonably necessary for the maintenance of the applicant and of his family, and for expenses connected with the defence of the applicant where criminal proceedings have been instituted against him in the Special Court under Section 5; (b) Safeguarding so far as may be practicable the interest of any business affected by the attachment and particularly by in the interest of any partners in such business.” 9. Section 10 of the Act empowers the Special Court to pass orders relating to clauses (a) and (b) thereof and did not empower the Special Court to pass any order either canceling the absolute attachment or releasing any property from attachment. Thus, the impugned order passed by the lower Court is wholly outside the jurisdiction and powers of the lower Court as Special Court under the Act. 10. Even though the 1st respondent/accused filed counter in the lower Court admitting execution of Ex.P1 agreement for sale dated 09.09.2000 and expressing no objection to execute the registered sale deed in favour of the petitioner with the permission of the Court, the senior counsel appearing for the said appellant before this Court contended that when the law does not provide for passing the impugned order, the lower Court should not have passed the said order. It is contended that remedy of the petitioner is to approach appropriate Civil Court for specific performance of Ex.P1 agreement for sale, in which event the 1st respondent/accused can raise appropriate defences in the Suit by way of either limitation or refund of advance amount or payment of compensation and other defences available under Sections 14 and 16 of the Specific Relief Act and that the petitioner cannot be permitted to circumvent the procedure and obtain the relief of Specific performance through the Criminal Court. I am of the opinion that the petition filed by the petitioner as Crl.M.P.No.155 of 2007 in the lower Court is highly misconceived and is nothing but abuse of process of Court and that the lower Court is not legally empowered to entertain such a petition and to pass the impugned order under the provisions of the Act or under Cr.P.C. in general. 11. In the result, both the appeals are allowed setting aside the impugned order passed by the lower Court; and giving liberty to the petitioner/respondent herein to approach appropriate civil Court for appropriate relief’s on the basis of Ex.P1 agreement subject to rights of the competent authority and the depositors under the Act. _____________________________ SAMUDRALA GOVINDARAJULU, J Dated: 20.04.2011 ysk THE HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL No.1369 of 2010 AND CRIMINAL APPEAL No.414 of 2011 DATED: 20.04.2011 ysk avocations