IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 4.12.2008. CORAM THE HON'BLE MR.JUSTICE M.JEYAPAUL Crl.O.P.No.21711 and 35339 of 2007 and M.P.Nos.1, and 2 of 2007 Crl.O.P.No.21711 of 2007 1. P.S.Chellamuthu 2. C.Sumathi 3. Samiyathal Petitioners/Accused 3,4 & 6 in CC 31/2001. vs. 1. The State by Deputy Superintendent of Police, Economic Offence Wing-II, Coimbatore. (Cr.No.1/2000) 2. Abilash Auto Finance Matrum Subaswathi Investment Muthaleetalargal Sangam, No.14/3, V.C.S.Nagar, G.N.Mills Post, Coimbatore 641 029. rep by its President K.Natarajan Respondents/Complainant and 2nd Respondent Crl.O.P.No.35339 of 2007 1. J.Solochana 2. R.Saroja Petitioners/Accused No.13 & 14 vs. State of Tamil Nadu rep by Inspector of Police, District Crime Branch, Thiruvannamalai. Respondent/Complainant (Cr.No.5/2007) https://hcservices.ecourts.gov.in/hcservices/ Criminal Original Petitions filed under section 482 Cr.P.C. for direction as stated therein. For petitioners in Crl.O.P.No.21711/07 : Mr.V.Ayyadurai For petitioners in Crl.O.P.No.35339/07 : Mr.U.M.Ravichandran For R1 : (1) Mr.N.R.Elango, Addl.P.P. (2) Mr.R.Muniappa Raj Govt. Advocate (Crl. Side) For R2 in Crl.O.P. No.21711/07 : Mr.V.Bharathidasan ORDER Crl.O.P.No.21711 of 2007 is filed praying to quash the entire criminal proceedings in C.C.No.31 of 2001 on the file of the Sub Court (TNPID Act) at Chennai. Crl.O.P.No.35339 of 2007 is filed to quash the entire proceedings at the stage of investigation in Crime No.5 of 2007 on the file of the Inspector of Police, District Crime Branch, Thiruvannamalai. 2. The petitioners in Crl.O.P.No.21711 of 2007 have contended in the petition as follows:- One V.S.Velliyangiri lodged a police complaint dated 29.2.2000, alleging non payment of fixed deposit amount of Rs.25,000/= on its maturity. Following the said complaint, numerous other depositors started lodging similar complaints before the Inspector of Police EOW-II. The respondent, Deputy Superintendent of Police, EOW-II registered the complaints for the offence under section 5 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) (for short TNPID) Act, 1997 and under section 120 (B), 406 and 420 of the Indian Penal Code. The properties of the petitioners ranked as A3, A4 and A6 and that of the other family members were attached by way of interim attachment order dated 7.8.2001. The respondent laid a charge sheet before the Special Court constituted in terms of section 6 of the said Act at Chennai and the same was taken on file in C.S.No.31 of 2001 for the aforementioned offences. Now, the case stands posted to 25.7.2007 for framing of charges. The petitioners challenged the validity of the TNPID Act, but, the same was dismissed by a common order made in a batch of cases in W.P.No.7755 of 2006 by the Full Bench of this court on 2.3.2007. The entire investigation culminated in filing of https://hcservices.ecourts.gov.in/hcservices/ final report by the respondent and the cognizance taken based thereon by the Special Court are ex facie illegal. The Deputy Superintendent of Police, EOW-II, Coimbatore is not the competent authority. The institution of prosecution is contrary to the scheme, procedure and mandatory requirements contained in the TNPID Act, 1997. The said Act enacted for the purpose of protecting the deposits made by the public in the financial institutions has overriding effect on other laws, customs or usage which are in force in terms of section 14 of the Act. The Government is the competent authority to find out prima facie whether any offence was committed to attract the mischief of the Special Act. The competent authority contemplated under the TNPID Act has been empowered to effect compounding of offences either at pre-prosecution stage or after institution of prosecution case. The competent authority has been directed to render assistance to the Special Public Prosecutor in conducting the case in the Special Court. Therefore, the competent authority alone has got power to institute prosecution and to play the role of prosecutor in trying the offences under the Special Act. There is no express or implied provision in the TNPID Act conferring power on the police official either to investigate or to institute prosecution. By G.O. Ms.No.250 Home Department dated 21.3.2002, the Additional Commissioner for Land Administration was appointed as competent authority. The respondent, without having any jurisdiction or power under the Special Act, has registered the First Information Report and investigated the case and submitted final report before the Special Court. Therefore, the petitioners in Crl.O.P.No.21711 of 2007 pray for quashing the criminal proceedings in C.C.No.31 of 2001 on the file of the Special Court, TNPID Act at Chennai. 3. No counter was filed on the side of the respondent. 4. The petitioners in Crl.O.P.No.35339 of 2007 ranked as A13 and A14 in Crime No.5 of 2007 on the file of the Inspector of Police, District Crime Branch, Thiruvannamalai, has contended as follows:- The respondent has initiated criminal proceedings against the petitioners under sections 420, 409 and 120B of the Indian Penal Code read with section 5 of the TNPID Act, 1997. The petitioners were partners of Shri.Dhanalakshmi Financiers during 1981-84 and 1981-85 respectively. Thereafter, they retired from the partnership firm. The petitioners had no knowledge about the affairs of the financial establishment after their retirement from the partnership firm. The respondent police have acted contrary to the provisions of the TNPID Act without any jurisdiction. The competent authority constituted under the TNPID Act alone could initiate prosecution. The Additional Commissioner of Land Administration appointed as competent authority in G.O.Ms.No.1484 dated 9.10.1997 alone has got the competency to launch prosecution under the Special Act. Therefore, the petitioners https://hcservices.ecourts.gov.in/hcservices/ in Crl.O.P.No.35339 of 2007 seeks for quashment of the case in Crime No.5 of 2007 on the file of the respondent. 5. The respondent in Crl.O.P.No.35339 of 2007 filed counter stating that the complaint received by the Superintendent of Police, Thiruvannamalai District was entrusted to the respondent for the purpose of registration of the case and investigation of the matter. The witnesses examined by the respondent have stated that they deposited their money in Shri.Dhanalakshmi Finance. The District Registrar of the Registration Department has given statement to the effect that the petitioners herein also were partners of Shri.Dhanalakshmi Finance. The investigation would further reveal that the petitioners continued to be partners in the said Finance Company. No record is available to show that the petitioners resigned from the partnership firm. Therefore, the respondent has prayed for dismissal of the petition in Crl.O.P.No.35339 of 2007 seeking quashment. 6. Learned Senior Counsel appearing for the petitioners in both the matters would submit that section 14 of the TNPID Act starts with non obstante clause and it has got overriding effect over other laws including the provisions under sections 4 and 5 of the Code of Criminal Procedure. The main purpose of the TNPID Act is to protect the investors. Only in cases where the Special Court feels that any financial institution dishonestly intended to defraud the investors, they may be prosecuted under section 5 of the TNPID Act. The court cannot enlarge the scope of legislation, when the language of the provision is plain and unambiguous. A joint reading of sections 13 and 14 of the TNPID Act would exclude the applicability of the Code of Criminal Procedure with respect to the registration of the case and investigation of the matter. Section 4(2) of the TNPID Act makes it clear that the competent authority is empowered to carry out the performances of the Government. If the Special Court satisfies that any particular financial establishment has indulged in defrauding the investors, the Special Court has got suo motu power on the basis of the materials placed by the competent authority to order prosecution against all those persons. Conspicuously, the legislature did not specify that the investigation under Rules 3 to 5 is only for the purpose of attachment of the property of the defrauding financial establishment. Only when the Special Act provides for initiation of prosecution by taking cognizance on the basis of police report, does the police have power to investigate the offences following the procedure under the Special Act and not otherwise. The police would get jurisdiction under sections 4 and 5 of the Code of Criminal Procedure only when there is absence of provision in the Special Act restricting the applicability of the investigation procedure contemplated under the Code of Criminal Procedure. Even assuming without admitting that the provision of the Code of Criminal https://hcservices.ecourts.gov.in/hcservices/ Procedure is applicable, the police has no role in regard to investigation, enquiry and also in conducting trial. There is express exclusion of the role of police in the TNPID Act. If the intention of legislature is to give power to police in the matter of investigation, there is no need for conferring such power of investigation upon the competent authority in the Special Act. The competent authority has been empowered under the TNPID Act to assist the prosecution. The scheme of the TNPID Act is to safeguard the interest of the depositors and not to punish the erring financial institution indiscriminately. Absence of express provision authorising the police officer to investigate the offences would disentitle the police to investigate the offence under the Special Act. The learned Senior Counsel appearing for the petitioners would submit that the respondents have taken upon the investigation without any jurisdiction and therefore, quashment of the entire criminal proceedings in both the matters is warranted. 7. Learned Government Advocate (Criminal Side) appearing for the respondent would submit that there is no specific provision under the TNPID Act relating to the investigation of the case. The TNPID Act also does not specifically debar the application of the Code of Criminal Procedure in the matter of registration of the crime and investigation of the case. Sections 4 and 5 of the Code of Criminal Procedure, in the absence of any express provision in the Special Act restricting the applicability of the Code of Criminal Procedure, confer ample power on the respondent investigating agency based on the complaint they received from the public. The role of the competent authority appointed under the Special Act is not extended to the investigation of the case. A total misreading is given to the provisions of the TNPID Act to make it appear as though there is a clear exclusion of the applicability of the Code of Criminal Procedure in the matter of investigation of the offence under section 5 of the TNPID Act. It is his last submission that when there is no provision under the TNPID Act to deal with the investigation of the case and there is no express provision excluding the applicability of the provisions under sections 4 and 5 of the Code of Criminal Procedure, the investigation taken upon by the respondents in the respective cases for the offences under the TNPID Act is lawful. 8. Abilash Auto Finance Matrum Subaswathi Investment Muthaleetalargal Sangam has been impleaded as second respondent in Crl.O.P.No.21711 of 2007 as per the orders of this court in M.P.No.3 of 2007. 9. Learned counsel appearing for the second respondent therein would also contend that the police authority has every power to receive the complaint, register the case, investigate the matter and file final report before the Special Court constituted under the https://hcservices.ecourts.gov.in/hcservices/ TNPID Act. It is his further submission that even after the validity of the TNPID Act was upheld by the Full Bench of this court, the present petition has been filed just to drag on the criminal prosecution. Therefore, he would submit that there is no valid challenge to the investigation taken upon by the respondents as against the petitioners. The object of the enactment of the TNPID Act, 1997:- 10. It came to the notice of the government that many of the financial establishments, not covered by the Reserve Bank of India Act, 1934, received deposits from the innocent public on the promise of giving exorbitant interest and deceived the depositors without discharging their obligation to make payment of the deposit on maturity. On account of which, public resentment ran high which culminated in law and order problem in the State. Therefore, the Government thought it fit to come out with this public interest legislation to regulate the activities of such financial establishments. As there was no provision in the original Act for attaching the properties of the persons who borrowed money from the financial establishments and for sale of the properties in public auction and for equitable distribution of the sale proceeds to the depositors, an amendment was brought in by the Government of Tamil Nadu by Tamil Nadu Act 30 of 2003 so as to attach the properties of such person, appoint more than one competent authority, constitute Special Courts for different areas, appoint Special Public Prosecutors for each of the Special Courts, compound the offences punishable under the Act, sell the attached properties in public auction and distribute the sale proceeds among the depositors. 11. It is found that the primary object of the Act is to secure the interest of the depositors by attaching the properties on default to make payment on maturity and selling away the attached properties for the purpose of distribution of the sale proceeds among the depositors. Consequentially, the offence committed under section 5 of the Act is directed to be tried by the Special Court. The competent authority has been given the power to go in for compounding the offence with or without permission of the Special Court as the case may be. Punishing the defrauding financial institution is not the main object of the Government. But, the law has to take its own course if the default in repayment of deposits has culminated in the offence detailed under section 5 of the TNPID Act. Salient features of the TNPID Act, 1997:- 12. On receipt of complaints from a number of depositors alleging that a financial establishment has defaulted in returning the deposits even after the period of maturity or defaulted in paying https://hcservices.ecourts.gov.in/hcservices/ the interest on the deposits made by the investors, the Government would take serious note of such a complaint and would deal with the affairs of the financial institution to find whether the grievance of such depositors matches with the intention on the part of the financial establishment to defraud them. In case the Government comes to a decision that there is no likelihood of return of the deposit or non payment of the interest by the financial establishment concerned, the Government has power to pass an ad-interim order of attachment not only of the money but also of other properties procured either in the name of the financial institution or in the name of any other person from out of the corpus of the deposit made by the aggrieved investors. The Government has taken upon the responsibility by the special legislation to protect the interest of the depositors. Such a power of the Government to go in for ad- interim attachment of the properties of the defaulting financial establishments is provided under section 3 of the TNPID Act. 13. Under section 4 of the TNPID Act, the Government is empowered to appoint the competent authority to exercise control over the properties attached by the Government and transfer to the custody of the competent authority in terms of section 3 of the Act. It is true that section 4(2) of the Act reads that the competent authority shall have such other power as may be necessary for carrying out the purposes of the Act. The said provision does not mean that the competent authority shall have all the powers necessary for carrying out the purposes of this Act. The phrase "such other powers" has been purposely employed by the legislature to mean that he has authority to exercise his powers for equitable distribution of the proceeds of the properties attached and brought to auction. By no stretch of imagination, section 4(2) would mean that the competent authority, who is not versed in the nuances of investigation process, has been vested with the power to investigate the matter. As already pointed out, the main purpose of the Act is not to punish the defaulters in making repayment of the deposit on maturity. Section 5 is a necessary consequential evil arising out of the default made by the financial institutions. 14. The competent authority shall apply within thirty days on receipt of the ad-interim order of attachment passed by the Government to the Special Court for making the ad-interim order absolute. All the details of the default made and the properties procured by means of the deposits and the names of the persons in whose names such properties have been invested or purchased will have to be submitted to the Special Court in the application that is filed by the competent authority for making the ad-interim order of attachment absolute. Even if such matters are dealt with by another court, the competent authority has been empowered to make such application before such court. https://hcservices.ecourts.gov.in/hcservices/ 15. Though section 4(4) of the Act empowers the competent authority to deal with the defaulting financial institution and unearth the fraud committed by them, the powers of the competent authority has been restricted to deal only with the properties attached to the Government. Lodging of complaint by the competent authority or investigation of the case by the competent authority has not been spoken to under the relevant provision viz., section 4 of the TNPID Act. Therefore, it can be concluded effortlessly that the phrase "such other powers" employed in section 4(2) of the Act is restricted to the action to be taken over the properties attached by the Government. 16. Where any financial establishment makes default in returning the deposit or fails to pay interest on the deposit, every person responsible for the management of the financial establishment is punishable with imprisonment for a term which may extent to 10 years and with fine which may extend to one lakh rupees and such financial establishment is also liable for fine which may extend to one lakh rupees. Section 5 not only speaks about the nature of offence which is punishable under the special statute but also the nature of punishment that is awarded to the defaulters. It is to be noted that section 5 does not speak about the mode of giving complaint and the agency which would take up the complaint for investigation. 17. Under section 5A of the Act, the competent authority has every right to compound the offence even before the institution of the prosecution. But, in a case where prosecution has been instituted, the competent authority, of course, is empowered to compound the offence, but, it should be done with the permission of the Special Court. The pre-condition to compound the offence is payment of entire amount due to the depositors with or without interest. The criminal prosecution case comes to an end the moment the offence is compounded by the competent authority. 18. The Special Court manned by the District and Sessions Judge, has been constituted by the Government with the concurrence of the Chief Justice under section 6 of the Act. The Special Court has been empowered to try the offences under the Code of Criminal Procedure also while trying the offence specified in section 5 of the Act. Section 7 deals with the powers of the Special Court in regard to the attachment, sale, realisation and distribution of sale proceeds of the property attached. The Government has appointed Special Public Prosecutors for the purpose of conducting the case in the Special Court constituted under section 6 of the Act. 19. The committal proceedings usually taken up by the learned Judicial Magistrate concerned under the scheme of the Code of Criminal Procedure, 1973 has been dispensed with under section 13(1) https://hcservices.ecourts.gov.in/hcservices/ of the Act. The Special Court has been empowered to take cognizance of the offence without the accused being committed to it for trial. The Special Court shall resort to the procedure prescribed in the Code of Criminal Procedure, 1973 for the trial of warrant cases by Magistrates while trying the accused. 20. Section 13(2) of the Act would read that the provisions of the Code of Criminal Procedure 1973 shall, so far as may be, apply to the proceedings before a Special Court and for the purpose of the said provisions, a Special Court shall be deemed to be a Magistrate Court. As far as the trial before the Special Court is concerned, the Code of Criminal Procedure has been made applicable specifically for the trial of the accused before it. 21. Section 14 of the TNPID Act reads as follows:- "Act to override other laws — Save as otherwise provided in this Act, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any custom or usage or any instrument having effect by virtue of any such law." 22. The provisions of the TNPID Act shall have overriding effect despite the fact that there is some inconsistent provision found in the Code of Criminal Procedure or in any other law. It is to be noted that the mode of setting the law in motion and the agency who will take up the process of investigation have not been specifically spelt out in any of the provisions in the TNPID Act. In case a special provision has been made in the TNPID Act with reference thereof, section 14 of the Act will operate and the provisions in the Code of Criminal Procedure with respect to the mode of giving complaint and the agency which shall investigate the matter shall not have the effect on the special provisions of the TNPID Act. When there is no such specific provision under the Act, as far as mode of lodging the complaint and investigation of the matter is concerned, the Code of Criminal Procedure will have to be resorted to. Sections 4 and 5 of the Code of Criminal Procedure:- 23. For better appreciation, provisions under sections 4 and 5 of the Code of Criminal Procedure are incorporated:- "4. Trial of offences under the Indian Penal Code and other laws – (1) All offences under the Indian Penal Code (45 of 1860) shall be investigated, inquired into, tried, and otherwise dealt with https://hcservices.ecourts.gov.in/hcservices/ according to the provisions hereinafter contained. (2) All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. 5. Saving – Nothing contained in this Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force." 24. The investigation, enquiry and trial of all the offences under the Indian Penal Code shall be only in accordance with the Code of Criminal Procedure. But, in respect of the offences under any other law, such investigation, enquiry and trial shall also be only in accordance with the provisions of the Code of Criminal Procedure unless the same has been regulated in any special enactment. The provisions found in the Code of Criminal Procedure will not affect the special jurisdiction or special form of procedure prescribed in any other special enactment as per section 5 of the Code of Criminal Procedure. 25. The entire reading of the TNPID Act would go to show that no procedure has been contemplated with respect to the investigation and enquiry of the complaint arising hereunder. As far as the trial of the case is concerned, the Special Court has been directed to follow the procedure prescribed under the Code of Criminal Procedure under section 13 of the TNPID Act. When no special procedure with regard to the investigation and enquiry is prescribed by the special law, the general procedure laid down in the Code of Criminal Procedure should be necessarily followed. The application of the Code of Criminal Procedure to