J. Vijayan vs R. Ruthirasekaran Deputy Superintendent of Police, Economic Offence Wing-2, Chennai - 40

K. Chandru

These two Writ Petitions arose out of the Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, 1997. Admittedly

the two Writ Petitioners are borrowers from Chromepet Saswastha Nidhi Limited. Since the said Nidhi Limited have not paid back the dues to the

depositors, the complaints were made and action has been initiated under the above Act. During the course of investigation, it transpires that some

of the documents have also defaulted to the Nidhi. One such attachment was made in favour of R.Seshadri. He moved this Court in

C.M.A.No.2231 of 2007, wherein Nidhi was impleaded as 2nd respondent. The learned Judge of this Court by order dated 30.8.2011 gave

directions to the Investigating Officer, namely the Deputy Superintendent of Police, Economic Offences Wing II, Chennai. In paragraph No.12.3, it

was stated that the authority also should recover amounts from the borrowers to the extent of default committed by them. It is pursuant to the said

direction, notice has been issued to both the petitioners, stating that they are not only defaulters but their properties are liable to be attached by the

authorities. Notice has been issued by the respondent, whose name has been shown in the individual capacity and not as official respondent. But

the relief is not claimed against the individual but claimed against the office of the respondent.

The contention raised was that they are not defaulters and their properties are not liable to be attached. Such contention is not warranted. u/s 8

of the Act, attachment of property of malafide transferees is also available. In this case, the authorities are also issued with the power of attachment

as per the direction issued by this Court in the case of one R.Seshadri, referred to above.

In the counter affidavit filed by the respondent, it is stated that the petitioners have been directed to appear with all records to satisfy the

authorities about the nature of default committed by them. At this stage, the Writ Petition cannot be entertained.

Further, constitutional validity of the Act came to be upheld by the Full Bench of this Court in S. Bagavathy vs. State of Tamil Nadu represented

by its Secretary, Law Department, Chennai and another reported in 2007 (2) MLJ 526. The Full Bench after upholding the Act stated that in case

of attachment, the remedy open to the aggrieved persons is to move the appropriate court in terms of Section 7 of the Tamil Nadu Protection of

Interest of Depositors (in Financial Establishments) Act, 1997. The Act also provides for compounding the offence u/s 5A. The judgment of the

Full Bench came to be upheld by the Supreme Court and the Supreme Court held that in case of increased default of payment of the depositors,

such an enactment is admittedly necessary for the authorities to recover the amount to pay to the depositors who have been defrauded by the

Financial Establishments. In the light of the above, no case is made out to entertain the two Writ Petitions. It is for the petitioners to approach the

investigating officer and satisfy them that they were not in actual default and their default is only to the extent which has to be established by the

documents produced by them. Even thereafter if any attachment is made, it is open to the petitioners to move the competent criminal court to raise

the attachment. When the Act provides for sufficient safeguard, the question of entertaining the two Writ Petitions will not arise. Hence, both the

Writ Petitions stand dismissed. Consequently, connected Miscellaneous Petitions are closed. No costs.