TMI Blog2009 (2) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... r Smt. M.S. Saraswathamma purchased the schedule property, a BDA vacant site bearing No. 28 situated at H.S.R. Layout, Sector-I, Begur Hobli, Bangalore, under a registered sale deed dated 27-3-2006 for a consideration of ₹ 17.00 lakhs as per Annexure-B. Her name was entered in the encumbrance certificate, she was put in possession, katha was transferred in her name and she was paying the property tax till her death. She had put up a construction on the schedule property after obtaining sanctioned plan and licence from the BDA. She died on 30-11-2007, leaving behind the petitioner, his elder brother M.S. Rajendra Prasad, elder sister K.S. Ramalakshmamma and younger sister M.S. Geetamani as legal representatives. Thereafter among them a registered release deed came to be executed in pursuance of which the petitioner has become the absolute owner. The said property is now notified for sale under the Act. 3. The petitioner in W.P. No. 2428 of 2009, Mr. V.R. Ramesh contends that he purchased the schedule property, a vacant site bearing No. 3579, Domlur, BBMP, Jeevan Bheema Nagar Sub-Division (Ward No. 72) from M/s. N. Suresh Krishnamurthy and others under a registered sale deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Court, Bangalore. There is also an order of temporary injunction restraining the respondents 4 to 6 from alienating the property. As the said property is now brought to sale, he is constrained to approach this Court. 7. The petitioner in W.P. No. 3032 of 2009 Sri B.S. Mallikarjun contends that he has entered into an agreement of sale in respect of property bearing No. 1083 situated at 12th Main, 5th Cross, HAL II Stage Extension, Indiranagar, Bangalore, agreeing to purchase the said site from respondents 5, 6 and 7 for a consideration of ₹ 3,40,00,000/-. In fact, he and his family members have invested a sum of ₹ 8,02,00,000/- with the 5th respondent. Therefore, out of the said deposit the amount of ₹ 3,40,00,000/- is to be adjusted towards sale consideration. He has also filed a suit O.S. No. 726 of 2009 on the file of Additional City Civil Judge, Bangalore City, for specific performance of the agreement of sale and it is pending consideration. In the meanwhile, the said property is brought to sale by the impugned notification. 8. It is not in dispute that the petitioners in the first five writ petitions are the owners of the property which are now noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll these writ petitions is.- Whether the action of the respondents in bringing the properties claimed by the petitioners for sale by public auction is valid and is in accordance with the Act? 12. The Financial Establishments not covered by the Reserve Bank of India Act, 1934 were receiving deposits from the public, mostly middle class and poor classes on the promise of high rates of interest. After collecting huge amount on such representations they defaulted to return to the public, the deposits on maturity and thereby cheating the depositors of their legitimate amounts. On representations made by such depositors association and public, to have a legal mechanism to protect the interest of depositors and also the Reserve Bank of India to regulate such establishments primarily to protect the interest of the depositors, the Karnataka (Protection of Interest of Depositors in Financial Establishments) Bill, 2000, was introduced in the State Legislature and both the Houses approved the same. The President of India withheld his assent to the Bill on the ground that the amendments suggested by the Ministry of Finance Company Affairs (Banking Division) could not be carried out, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in its own name or in the name of any other person from and out of the deposits collected by the financial establishments, and where it transpires that such money or other property is not available for attachment or not sufficient for the repayment of the deposits, such other property of the said financial establishments, or the personal assets of the promoters, partners, directors, Managers or members or any other person of the said financial establishments. (3) The Government shall also notify the ad interim order made under Sub-section (2) in the Official Gazette and two newspapers having wide circulation and shall also cause to be affixed a copy of such order on some conspicuous place of the property so attached. (4) On the publication of the order made under Sub-section (2), all the properties and assets of the Financial Establishment and the persons mentioned therein shall forthwith vest in the Competent Authority appointed by the Government, pending further order from the Special Court. 13. A perusal of the aforesaid provision makes it clear that the Government or the District Magistrate, suo motu or on a complaint may cause investigation of a complaint or fraudul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India mandates that no person shall be deprived of his property save by authority of law. As the effect of such an order of attachment has a serious consequence of depriving the right of the owner in the said property, it is imperative that the procedure prescribed under law has to be strictly followed. Any violation of the procedure prescribed would render the order void and consequently there would not be any vesting of the property in the Competent Authority by virtue of such void order. 15. Section 5 of the Act, provides for appointment of an officer not below the rank of an Assistant Commissioner to be the Competent Authority, for the purpose of this Act through notification, by the Government. After the passing of an order under Section 3 by the Government and its publication in the two newspapers, the Competent Authority shall within thirty days from the date of receipt of the order, apply to the Special Court for order of attachment to be made absolute. The application to be made under Sub-section (2) of Section 5 shall be accompanied by an affidavit setting out the grounds of particulars as stipulated therein. The Competent Authority also may make an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under Sub-section (1), calling upon all such persons to appear on the same date as that specified in the notice and make objection if they so desire to the attachment of the property or any portion thereof on the ground that they have 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) The Special Court shall if no cause is shown and no objections are made on or before the specified date, forthwith pass an order making the order of attachment absolute, and issue such direction as may be necessary for realisation of the assets attached and for the equitable distribution among the depositors of the mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of an attachment of the property under Section 3 of the Act. Once the Competent Authority appointed under Section 5 of the Act makes an application to the Special Court seeking for the order of attachment to be made absolute, the proceedings before the Special Court commences. It is a judicial proceeding. The Special Court has to follow the following procedure.: (a) It shall issue notice to the financial establishment; (b) It shall issue notice to any other person, if any, whose property is attached by the designated authority under Section 3; (c) It shall also issue such notices to all other persons represented to it as having or being likely to claim, any interest or title to the property attached by the designated authority under Section 3; (d) Any person claiming an interest in the property attached or any portion thereof may notwithstanding that no notice has been served upon him under the Section can make an objection to the attachment at any time before an order is passed under Sub-section (4) or Sub-section (6). The notices should accompany copies of the application, affidavits and the record of evidence, if any. The notices should call upon such person to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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