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TMI Blog2013 (9) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant fact would separately be laid in the judgment. 2. Tripura Protection of Interests of Depositors (in Financial Establishments) Act, 2000 has been enacted by the Tripura Legislative Assembly having the object of protecting the interests of depositors of the financial establishments and for matters connected therewith and incidental thereto. The word deposit has been defined in Section 2(c) of Tripura Protection of Interests of Depositors (in Financial Establishments) Act, 2000, hereinafter would be referred to as the Principal Act as under: "(c) "deposit" includes and shall be deemed always to have included any receipt of money of acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in case or in kind in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include -- (i) amount raised by way of share capital or by way of debenture or by bond or any other instrument covered under the guidelines given, and regulations made by the SEBI established under the securities and Exchange Board of India Act, 1992 ; (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the remedies thereof is extracted hereunder: "Conviction for Fraudulent Default 3. Any Financial Establishment which (i) fraudulently defaults any repayment of deposit on maturity along with any benefit in the form of interest, bonus, profit or in any other form as promised; or (ii) fraudulently fails to render service as promoter, partner, director, manager or any other person or conduct of the business or affairs of such Financial Establishment shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to one lakh of rupees and such Financial Establishment also shall be liable for a fine which may extend to one lakh of rupees: Provided that in the absence of special and adequate reasons recorded in the judgment of the court, the imprisonment shall not be for less than three years and the fine shall not be less than one lakh of rupees. Explanation : For the purpose of this section, a Financial Establishment, which- (i) commits defaults in repayment of such deposit with such benefits in the form of interest, bonus ,profit or in any other form as promised or fails to render any specified service promi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such a manner as it involves inherent risk in recovering the same when needed, shall be deemed to have committed a default fraudulently or failed to render specific service fraudulently." 7. Apart that, after Section 3 of the Principal Act, a new Section has been asserted as Section 3A by the said amendment Act. 8. It is noteworthy that by way of the said amendment, Section 14 of the Principal Act has been substituted. The new Section 14 of the act provides as under: "Notwithstanding anything to the contrary contained in any other Act, except the Act or Acts enacted by Parliament and the rules framed thereunder, the provisions of this Act shall apply." 9. It is to be further noted that in exercise of the powers conferred by Sub-Section (1) of Section 16 of the Principal Act, the Tripura Protection of Interest of Depositors (In Financial Establishments) Rules, 2007 was made, hereinafter referred to as the Principal Rules. The important legislative change has further been brought about by means of the Tripura Protection of Interest of Depositors (In Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other property attached under section 4 for such further orders as may be found necessary. (4) The Competent Authority, may also make an application to any Special Court or Designated Court or any other judicial forum established or constituted or entrusted with the powers by any other State Government for adjudicating any issue or subject matter pertaining to any money or property or assets of a Financial Establishment under any similar enactment in respect of money or property or assets belonging to or ostensibly belonging to a Financial Establishment or any person notified under this Act situated within the territorial jurisdiction of that Special Court or Designated Court or any judicial forum, as the case may be, for passing appropriate orders to give effect to the provisions of this Act." 11. For purpose of this case, Section 5(1) of the Principal Act has got relevance inasmuch as in exercise of that power, the State Government has declared the Sub-Divisional Magistrate of each revenue sub-division as the competent authority for purpose of carrying out the obligations thereof as provided in the Principal Act and the purpose of the act and the rules made thereunder. 12. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be deemed to be deposit for the purposes of this clause;]" 13. Section 45-I(bb)(v)(d) of the RBI Act, according to the petitioner provides for an advance against the orders for goods, properties or services. The petitioner's activities are wholly within that ambit. Thus the State cannot have any jurisdiction over that subject matter. But no challenge has been thrown against any provision of the state act on repugnancy. The reference is therefore has to be understood in the context of non-obstante clause provided by Section 14 of the state act. Further, Section 45-I(c) of the RBI Act defines the financial institutions as under: (c) "financial institution'' means any non-banking institution which carries on as its business or part of its business any of the following activities, namely:-- (i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own: (ii) the acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature: (iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, under any scheme or arrangement or in any other manner or lending in any manner, previous approval of the Central Government by notification in the gazette along with the certificate of registration as the Non-Banking Financial Company is the pre-requisite for such business. Section 45-IA is reproduced hereunder for reference: [45-IA. Requirement of registration and net owned fund.- (1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no non-banking financial company shall commence or carry on the business of a non-banking financial institution without-- (a) obtaining a certificate of registration issued under this Chapter; and (b) having the net owned fund of twenty-five lakh rupees or such other amount, not exceeding two hundred lakh rupees, as the Bank may, by notification in the Official Gazette, specify. (2) Every non-banking financial company shall make an application for registration to the Bank in such form as the Bank may specify: Provided that a non-banking financial company in existence on the commencement of the Reserve Bank of India (Amendment) Act, 1997 shall make an application for registration to the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th monetary stability, economic growth and considering such other relevant factors which the Bank may, by notification in the Official Gazette, specify; and (g) any other condition, fulfillment of which in the opinion of the Bank, shall be necessary to ensure that the commencement of or carrying on of the business in India by a non-banking financial company shall not be prejudicial to the public interest or in the interest of the depositors. (5) The Bank may, after being satisfied that the conditions specified in sub-section(4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose. (6) The Bank may cancel a certificate of registration granted to a non-banking financial company under this section if such company-- (i) ceases to carry on the business of a non-banking financial institution in India; or (ii) has failed to comply with any condition subject to which the certificate of registration had been issued to it; or (iii) at any time fails to fulfill any of the conditions referred to in clauses (a) to (g) of sub-section (4); or (iv) fails-- (a) to comply with any direction issued by the Bank under the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same group; (iii) all other non-banking financial companies; and (2) the book value of debentures, bonds, outstanding loans and advances (including hire- purchase and lease finance) made to, and deposits with,- (i) subsidiaries of such company; and (ii) companies in the same group, to the extent such amount exceeds ten per cent of (a) above. (II) "subsidiaries" and "companies in the same group" shall have the same meanings assigned to them in the Companies Act, 1956." 16. The writ petitioner has contended that the monitoring of operation of a Non- Banking Financial Company (the NBFC in short) has been entirely been vested to the jurisdiction of Reserve Bank of India (RBI) by an act of parliament in exclusion of the other authorities. Thus there cannot be, according to the petitioner, any effect of provision as made under Sections 3A (1), 3A (2) and 3A (3) of the said State Act. Even though such submission has apparently been advanced for attracting to the provisions of Article 246(1) of the Constitution of India, the writ petitioner nowhere has claimed by way of any document or even by means of averments that the writ petitioner falls within the category of the NBFC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not available for attachment or not sufficient for repayment of the deposits, such other property of the said Financial Establishment or the promoter, Director, partner or manager or member of the said Financial Establishments the Government may think fit." 18. Whereas the provisions of Section 45JA (1) of the RBI Act deals with NFBCs, the provision of Section 4(1)(2) of the said act deals with the financial establishments as defined in the State Act. The purview of operation of the respective sections is quite distinguishable. If any proposed action is found to be within the ambit of the RBI Act, the State Act by the non-obstante clause excludes the jurisdiction of the competent authority as defined in the State Act. It has been also asserted by the petitioner that Section 45K of RBI Act has provided the Reserve Bank of India the general powers for directing every non- banking institution to furnish information as to the deposits or particulars related to the deposits received by the non-banking financial institutions as may be specified by the said bank by general or special order. There cannot be any amount of doubt that Section 45K of the RBI Act has given the general statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the company, has been issued by the company in such form and in such manner as may be [prescribed, and] [(c) the company is not in default in the repayment of any deposit or part thereof and any interest thereupon in accordance with the terms and conditions of such deposit.] (3)(a) Every deposit accepted by a company at any time before the commencement of the Companies (Amendment) Act, 1974 in accordance with the directions made by the Reserve Bank of India under Chapter IIIB of the Reserve Bank of India Act, 1934 (2 of 1934), shall, unless renewed in accordance with clause (b), be repaid in accordance with the [terms and conditions of such deposit]. (b) No deposit referred to in clause (a) shall be renewed by the company after the expiry of the term thereof unless the deposit is such that it could have been accepted if the rules made under sub- section (1) were in force at the time when the deposit was initially accepted by the company. (c) Where, before the commencement of the Companies (Amendment) Act, 1974, any deposit was received by a company in contravention of any direction made under Chapter IIIB of the Reserve Bank of India Act, 1934, repayment of such deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than an amount equal to the amount of the deposit so accepted; (ii) where such contravention relates to the invitation of any deposit, with fine which may extend to ten lakh rupees but shall not be less than fifty thousand rupees; (b) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to five years and shall also be liable to fine. (7)(a) Nothing contained in this section shall apply to - (i) a banking company, or (ii) such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf. (b) Except the provisions relating to advertisement contained in clause (b) of sub-section (2), nothing in this section shall apply to such classes of financial companies as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf. (8) The Central Government may, if it considers it necessary for avoiding any hardship or for any other just and sufficient reason, by order, issued either prospectively or retrospectively from a date not earlier than the commencement of the Companies (Amendment) Act, 1974, grant extension of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit up to which, the manner in which and the conditions subject to which the deposits may be invited or accepted by a company either from the public or from its members. Only thereafter, the company can invite or accept such deposits. The provisions incorporated under Section 58A of the Companies Act have been so made in no uncertain terms. It has been also provided that every deposit accepted by a company after the commencement of the Companies (Amendment) Act, 1988, shall, unless renewed in accordance with the rules made under sub-Section (1), be repaid in accordance with the terms and conditions of such deposit. In failure of making of repayment the company shall be punishable with fine which shall not be less than twice the amount in relation to which the repayment of the deposit has not been made, and out of the fine, if realized, an amount equal to the amount in relation to which the repayment of deposit has not been made, shall be paid by the Court, trying the offence, to the person to whom repayment of the deposit was to be made, and on such payment, the liability of the company to make repayment of the deposit shall to the extent of the amount paid by the Court, stand dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detrimental to the interest of investors or securities market; or to secure the proper management of any such intermediary or person. It may issue such directions: "(a) to any person or class of persons referred to in section 12, or associated with the securities market; or (b) to any company in respect of matters specified in section 11A, as may be appropriate in the interests of investors in securities and the securities market." 23. The power of the investigation and further action has been provided in the SEBI Act so far the CIS is concerned. Even though the petitioner has not referred to the provisions of Section 11 under Chapter IV of the SEBI Act where the functions of the Board have been provided but it would be apposite to read Section 11(4) of the SEBI Act which reads as under: "(4) Without prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3) and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely:-- (a) suspend the trading of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEBI Act, has observed that: "…it would be quite reasonable to presume that the legislature deliberately intended the legislation to be open-ended to ensure that people with limited financial means are not ruined in the process of trying to get rich quickly and at the same time, no company would have the freedom to fleece. This being the object of the 1999 Amending Act, I feel it is not only the duty of the judiciary to show deference to the legislative judgment but to zealously thwart any attempt by any company to wriggle out of the regulatory mechanism by ingenious legal arguments." 25. It has been further contended by the petitioner that the SEBI has the competence to ascertain as to whether a company is engaged in the business of the CIS and such power has been exclusively vested to the SEBI. As the petitioner has categorically stated that they are not engaged in any such business covered by the CIS and hence the SEBI cannot have any competence to inquire or to investigate into the nature of business or pass necessary directions in terms of the powers as provided under the SEBI Act. If by express provision the SEBI is conferred the power to make investigation and dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall send a report to the Competent Authority after conducting any inspection or examining any statement or books of account under Section 3A of the Act. (5) Appeal against the orders passed by the Competent Authority shall be heard under Section 3A(9) of the Act by the Secretary In charge of the Finance Department, Government of Tripura." 27. It is apparent that the said provisions are subject to the provisions of Section 14 of the said Act. Sub-Section 3 of Section 3A of the Amendment Act provides that: "In order to prevent continuation of such fraudulent act or default or non cooperation at the time of inspection with reference to sub- section 4 or on detection by the inspecting officer that such business is not being conducted as per relevant law with permission or sanction of the authority empowered by that law or such business is dressed in any form for misleading or cheating the depositors, the competent authority may also pass such interim order as he may consider appropriate to restrain that establishment form operating in that area, freeze the bank accounts and restrain it from sale, transfer or alter any moveable or immoveable property of that establishment pendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estrained from taking any new booking, renewal of old bookings and other financial collection from the public but they would continue to open their business offices for making payment on maturity or not to the public on their demand. The petitioner has further been restrained from making transfer of their cash, movable or immobile properties. The said interim order dated 31.05.2013 reads as under: Interim Order "I, Shri, Dr. Sandeep N. Mahantme, Sub- Divisional Magistrate, Gandacherra Sub- Division do hereby pass this interim order for regulating the business of Rose Valley Marketing India Ltd. Gandacherra Branch operating under Gandacherra sub-division area. The order is passed after conduct of hearing on 31st May 2013 wherein the manager of the said branch office/company is present as per provisions of the Tripura Protection of Interest of Depositors (Amendment) Act and Rules, 2011. On the basis of hearing, the following irregularities have been detected, therefore, the business is found to be of illegal in nature and against the provisions of the Tripura Protection of Interest of Depositors (Amendment) Act and Rules, 2011. The below mentioned irregularities were found: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a copy of the order to be endorsed to this office. (3) Also, a Public Notice to be issued that from 31.05.2013, Rose Valley Marketing India Ltd. Gandacherra shall stop accepting any new bookings, renewal of old bookings and other financial collections from the public. (4) It is also hereby ordered that, the Rose Valley Marketing India Ltd. Gandacherra Branch shall continue to open its office like earlier business hours and continue to give payments on maturity as well as pre Maturity withdrawals to the public on demand basis. They should not refuse payments to anyone if he has invested in the company and is eligible. (5) It is also ordered that the Branch office shall not transfer its Bank Balance or moveable assets as reported in their reports to other branches or other places. They can also make maturity and pre-maturity withdrawal payments to the customers from the Bank balance. This Interim Order given by the Competent Authority i.e. Sub-Divisional Magistrate, Gandacherra under Act. This Order can be appealed to the Appellate Authority i.e. Secretary Finance, Govt. of Tripura within 1(one) month of passing this order. Apart that, memorandum dated 31.05.2013, the griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus illegal. And It is found that by changing the mode of collection of money from the public, they are infect directly dealing with financial investment. The product of reality business plot booking, tourism and reedemable preference share is just a ploy to escape the illegal. And As they have been collecting from the public and thus dealing with finances, they have been asked to submit their permission for such practice, but no license from SEBI or clearance from the RBI could be produced with regard to their financial business. And Whereas, sub section 4 of Section 3A of the amendment Act prohibits involvement of business like real estate, plantation, tour & travels, supply of valuable goods and services also the company is found dealing with this restricted and illegally continuing their activities. After examine the contents of the letter received from you end carefully and found not satisfactory at all. And It is hereby ordered that, the Rose Valley , Sonamura Branch shall continue to open its office like earlier business hours and continue to give payments on maturity as well as pre maturity withdrawals to the public on their demand basis. They should not ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-division area. The order is passed after verification of documents by investigation team wherein the Manager/Branch-in-Charge of the said branch office/company is asked to present in hearing to be held on 27.06.2013 at 11 am in the chamber of the undersigned, if he demands against the said order. The interim order is issued as per provisions of the Tripura Protection of Interest of Depositors (In Financial Establishments) (Amendment) Act and Rules, 2011. On examination of documents of the Rose Valley Industries Ltd., the following irregularities have been detected, therefore, the business is found to be of illegal in nature and against the provision of the Tripura Protection of Interest of Depositors (In Financial Establishments) (Amendment) Act and Rules, 2011. The below mention irregularities were found: 1) As per the report submitted in respect of intimation of business in Form No.5 the company claims to be collecting advance booking for Hotels & Entertainments offered by the company and making payments to the customers after a certain period of time in the name of cancellation of the booking. This practice of collecting money from the public goes against the existing fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall continue to open its office like earlier business hours and continue to give payment on maturity as well as prematurity withdrawal to the public on demand basis. They should not refuse payments to anyone if he/she has invested in the company and is eligible. (5) It is also ordered that the branch office shall not transfer its Bank Balance or moveable assets as reported in their reports to other branches or other places. They can only make maturity and prematurity withdrawal payments to the customers from the Bank balance. This Interim Order given by the Competent Authority i.e. Sub-Divisional Magistrate, Kamalpur under Act. This Order can be appealed to the Appellate Authority i.e. Secretary Finance, Govt. of Tripura within 1(one) month of passing this order. The said interim order dated 20.06.2013 is primarily under challenge. But in this writ petition some other ancillary reliefs have been sought. In W.P.(C) No.212 of 2013 33. In this writ petition, the grievance of the petitioner is against the show cause notice 06.06.2013 (Annexure-P/1 to the writ petition) issued by the designated authority, the Sub-Divisional Magistrate, Khowai, Tripura asking why for their illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he booking. This practice of collecting money from the public goes against the existing financial rules and is thus illegal. On the other hand after getting showcause notice from this office, you have submitted a reply where you have mentioned that all related documents are maintained by Regional Office and Head Office at Agartala and Kolkata respectively and you also mentioned that you need 10(ten) days time for submitting the same. You company doing business in this Sub- Division but company's papers are not available which are not acceptable. 2) It is found that by changing the mode of collection of money from the public, they are infact directly dealing with financial investment. Hotel booking is just a ploy to escape the legal bindings of existing laws. 3) As they have been collecting money from the public and thus dealing with finances, they have been asked to submit their permission for such practices, but no license from the SEBI or clearance from the RBI could be produced with regard to their financial business. 4) They deny the allegations of the term 'Financial Establishment' labeled to them. But from their activities, it is apparent and obvious that they fall with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Branch Manager and other office staffs of Rose Valley, Khowai Branch at present position should not left the Khowai Sub- Division without prior permission of the Competent Authority or Police Authority (Authorized Officer). In this context no resignation shall be entertained. The Interim Order given by the Competent Authority i.e. Sub-Divisional Magistrate, Khowai under the aforesaid Act. This Order can be appealed to the Appellate Authority i.e. Secretary Finance, Govt. of Tripura within 1(one) month of passing this order. The said interim order dated 04.07.2013 is primarily under challenge. But in this writ petition some other ancillary reliefs have been sought. In W.P.(C) No.213 of 2013 34. The grievance of the petitioner in this writ petition emanates from the notice of show cause dated 18.05.2013 (Annexure- P/1 to the writ petition) issued by the designated authority, the Sub- Divisional Magistrate, Sadar, West Tripura whereby it has been observed that several illegal activities of the petitioner have been observed and a specific case has been registered by West Agartala Police Station on 11.05.2013. On elaborately describing the nature of the illegal activities, the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucrative returns entailing unsustainably high interest yields. AND WHEREAS, offering of such impracticably high, commercially unviable and unsustainable rates of interests on the deposits being collected by Rose Valley, Agartala, from public is apprehended to be a fraudulent business operation having an inherent risk of failure to redeem its maturity payment liabilities, as envisaged under the Sec. 3(iii) of the Tripura Protection of Interests of Depositors (in Financial Establishments), At, 200, as stands amended in 2011. AND WHEREAS, during the inspection it transpired that such the de facto Collective Investment Schemes are being operated by the Rose Valley, Agartala, in contravention of the relevant statutory provisions, in particular the Regulation 3 of the collective Investment Regulations, 1999, read with Section 11AA of the SEBI, Act, 1992. AND WHEREAS, such camouflaging of actual business operation of the Rose Valley, Agartala, is liable to be held as a fraudulent act, aimed at misleading and cheating depositors by misrepresenting facts involving its business operations, within the meaning assigned under Section 3A(4) of the Tripura Protection of Interests of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims of its depositors in due time. AND WHEREAS, such actions of the Rose Valley, Agartala, and the manner in which its business operations is being carried on, irresistibly leads to a grave apprehension about the safety and security of the huge public deposits collected by it. AND WHEREAS, a Notice to Show Cause was served upon the Rose Valley, Agartala, vide No.F.15(19-LVI)-SDM/SDR/SS/2013/1555-60, dated 18.05.2013, seeking to elicit its response on the irregularities detected during the inspection, and to afford it an opportunity of being heard before taking any summary action under the provisions envisaged in Sec.3A(7) of the Tripura Protection of Interests of Depositors (in Financial Establishments) (Amendment) Act, 2011; AND WHEREAS, a reply to the aforesaid Show Cause Notice was received from the Rose Valley, Agartala on 27.05.2013, after passage of 2(two) days from the last date prescribed; AND WHEREAS, even after having received late, the contents of the reply so received from the Rose Valley, Agartala have been taken into due consideration and meticulously examined. AND WHEREAS, from the reply is borne out a calculated attempt of the Rose Valley, Agarta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtala, will certainly be a at a great peril to the interests of its present and prospective depositors, and that immediate measures are called for to shield the interests of such depositors. THEREFORE, I hereby pass the following Order ad interim imposing upon the Rose Valley, Agartala, the restrictions specified below, in exercise of the power conferred on me under Sec. 3A (7) of the Tripura Protection of Interests of Depositors (in Financial Establishments) (Amendment) Act, 2011: 1. The Rose Valley, Agartala, is henceforth restrained from collecting or mobilizing any kind of monetary deposits from the public under any of the plan or schemes of the Rose Valley Hotels and Entertainments Ltd., or of any other subsidiary companies comprised in the Rose Valley Group, until requisite statutory registrations, licenses and permissions are obtained, and produced to the satisfaction of the Competent Authority as defined under the Tripura Protection of Interests of Depositors (in Financial Establishments) (Amendment) Act, 200, and until such restriction is revoked by a subsequent Order. 2. The Rose Valley, Agartala shall make all due payment of entitlements of all its existing deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Branch Office is present as per provision of 'The Tripura Protection of Interest of Depositors (In Financial Establishments) (Amendment) Act, 2011'. On the basis of hearing, the following irregularities have been detected, therefore, the business is found to be of illegal in nature and against the provisions of 'The Tripura Protection of Interest of Depositors (In Financial Establishments) (Amendment) Act, 2011'. The below mentioned irregularities were found: 1) As per the report submitted in respect of intimation of business in Form No.5 the company claims to be collecting advance booking for Hotels & Entertainments offered by the company and making payments to the customers/investors after a certain period of time in the name of cancellation of the booking. This practice of collecting money from the public goes against the existing financial rules and is thus illegal. 2) It is found that by changing the mode of collection of money from the public, they are infact directly dealing with financial investment. Hotel booking is just a ploy to escape the legal bindings of existing laws. 3) As they have been collecting money from the public and thus dealing with fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any claim of any investor invested in the Rose Vally, Teliamura Branch. (5) It is also ordered that the Branch office shall not transfer its Bank Balance or moveable assets as reported in their reports to other branches or other places. They can only make maturity and prematurity withdrawal payments to the customers from the Bank balance. (6) It is also hereby ordered that the Branch Manager and other office staffs of Rose Valley, Teliamura Branch at present position should not left the Sub-Division without prior permission of the Competent Authority or Police Authority (Authorized Officer). In this context no resignation shall be entertained. This Interim Order given by the Competent Authority i.e. Sub-Divisional Magistrate, Teliamura under the aforesaid Act. This Order can be appealed to the Appellate Authority i.e. Secretary Finance, Govt. of Tripura within 1(one) month of passing this order. The petitioner was restrained from all activities relating to collection of any form of money subscription and also from transferring the bank balance or moveable assets as reflected in the statement submitted by the petitioner. But the petitioner also has been permitted to continue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er collection of money is transected under the above said scheme henceforth from July, 10, 2013 and should not be restrained under Sec. 3A(7) of the Tripura Protection of Interest of Depositors (In Financial Establishments) (Amendment) Act, 2011 from selling, transferring or altering any moveable or immoveable property of your organization." The said communication dated 26.07.2013 is primarily under challenge. But in this writ petition some other ancillary reliefs have been sought. In W.P.(C) No.275 of 2013 37. The grievance of the petitioner in this writ petition emanates from the impugned interim order dated 12.08.2013 (Annexure-P/1 to the writ petition) issued by the designated authority, the Sub-Divisional Magistrate, Longtharai Valley, Chailengta, Dhalai Tripura by means of which the SDM, Longtharai Valley after hearing the petitioner on 25.06.2013 observed that there are serious irregularities in the business of the petitioner which have been detailed in the said order dated 12.08.2013. Ultimately, the petitioner has been restrained from all activities relating to collection of any form of money/subscription and from transferring the bank balance, moveable or immoveable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishment' as any person/company/office accepting deposit under any scheme or arrangement or any other manner but does not include a Corporation or a Co- operative Society owned or controlled by any State Government or the Central Government or a Banking Company as defined under Clause (c) of section 5 of the Banking Regulation Act, 1949 ( 10 of 1949). As such the company has been dealing with illegal finance investment without obtaining any permission from concerned authority. In this case RBI & SEBI. 5) Also, Sub-section 4 of section 3A of the Amendment Act prohibits involvement of business like Real Estate, Plantation, Tour & Travels, supply of valuable goods and services. Also, the company is found dealing with this restricted trade and illegally continuing their activities. Therefore, from the above conclusions, Interim Order is hereby passed to the following effect -- (1) Rose Valley Marketing India Ltd. LTV Branch shall stop all activities relating to collection of any form of money/subscription w.e.f. the date of passing of this Interim Order. (2) All the agents operating under their branch should be informed in writing within 5 days from the date of passing of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter affording hearing to the petitioner on 16.08.2013, the petitioner has been restrained from all activities relating to collection of any form of money/subscription and from transferring the bank balance, moveable or immoveable properties which are consolidated and furnished to the designated authority, the Sub-Divisional Magistrate, Ambassa Sub-Division, Ambassa, Dhalai Tripura. The petitioner has been directed to continue to make payment of the maturity value or value even if the subscription has not matured on demand of the subscribers. By the order dated 10.07.2013 (Annexure- P/2 to the writ petition) the SEBI has disclosed that they have started inquiring into the nature of the business of collecting the deposits being carried out by the petitioner. By an interim protection, the similar types of restraints have been imposed by the SEBI. The designated authority should have passed a separate order on subsequent date in view of the order passed by the SEBI. However, since the petitioner is not prejudiced in any manner by the impugned interim order dated 17.08.2013 for existence of the principal order of the SEBI, this Court is not required to interfere with the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a Co- operative Society owned or controlled by any State Government or the Central Government or a Banking Company as defined under Clause (c) of section 5 of the Banking Regulation Act, 1949 ( 10 of 1949). As such the company has been dealing with illegal finance investment without obtaining any permission from concerned authority. In this case RBI & SEBI. 5) Also, Sub-section 4 of section 3(A) of the Amendment Act prohibits involvement of business like Real Estate, Plantation, Tour & Travels, supply of valuable goods and services. Also, the company is found dealing with this restricted trade and illegally continuing their activities. Therefore, from the above conclusions, Interim Order is hereby passed to the following effects-- (1) Rose Valley Marketing Ltd. Ambassa Branch shall stop all activities relating to collection of any form of money/subscription. (2) All the agents operating under their branch should be informed in writing within 2 days from date of passing of this order, a copy of the order to endorsed to this office. (3) Also a Public Notice to be issued that from 17/08/2013 Rose Valley Marketing India Ltd. Ambassa shall stop accepting any new bookings, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order dated, July 10, 2013 imposing restriction on M/S Rose Valley Hotels & Entertainment Ltd. from carrying its business through out the country under the Rose Valley Holiday Membership Plan (copy of order enclosed herewith) which will speak for itself. Now, you are instructed that no further collection of money is transected under the above said scheme henceforth from July, 10, 2013 and should not be restrained under Sec. 3A(7) of the Tripura Protection of Interest of Depositors (In Financial Establishments) (Amendment) Act, 2011 from selling, transferring or altering any moveable or immoveable property of your organization." The said order dated 26.07.2013 is primarily under challenge. But in this writ petition some other ancillary reliefs have been sought. In W.P.(C) No.29 of 2014 40. By means of this petition, the petitioner has questioned the legality of the notice of show cause dated 29.05.2013 (Annexure-P/1 to the writ petition) which was issued on the basis of a report dated 27.09.2013 submitted by a team constituted by the designated authority, the Sub-Divisional Magistrate, Amarpur, Gomati Tripura for examining the nature of the deposits collected by the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of your company against the show cause issued by this office vide No.4(43)/DM/AMP/F/13 dated 29.05.2013 is not at all satisfactory. Therefore, you are hereby directed to take any more deposit/collection/booking (new & renewal) etc. from the public henceforth and until further from this end. This is for information and strict compliance." The said order dated 25.07.2013 is primarily under challenge. But in this writ petition some other ancillary reliefs have been sought. 41. Mr. S. Lodh, learned counsel appearing for the petitioner has submitted that extraneous materials have been considered for passing the impugned orders and as such there was violation of provisions of the Principal Act and the Amendment Act where it has been provided that the action can be taken after giving reasonable opportunity to the financial establishment in accordance with law. But no such reasonable opportunity has been granted to the petitioner. 42. Mr. B.C. Das, learned Advocate General appearing for the respondents has submitted that the petitioner nowhere stated that on what capacity they are collecting the deposits or collecting the subscriptions form the individuals and/or publishing adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise, Chandan Nagar, West Bengal vs. Dunlop India Ltd. and others, reported in (1985) 1 SCC 260, the apex court observed as under: "In Titaghur Paper Mills Co. Ltd. vs. State of Orissa, (1983) 2 SCC 433 A.P. Sen, E.S. Venkataramiah and R.B. Misra, JJ. held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the Tribunal and thereafter to have the case stated to the High Court, it was not for the High Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution ignoring as it were, the complete statutory machinery. That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Article 226 is not meant to short- circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill- suited to meet the demand of extraordinary situations, as for instance where the very vires of the statute is in question or whether private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o take active role in the proceedings and reach at the truth, which is the foundation of administration of justice. Therefore, the truth should become the ideal to inspire the courts to pursue. This can be achieved by statutorily mandating the Courts to become active seekers of truth. To enable the courts to ward off unjustified interference in their working, those who indulge in immoral acts like perjury, prevarication and motivated falsehood, must be appropriately dealt with. The parties must state forthwith sufficient factual details to the extent that it reduces the ability to put forward false and exaggerated claims and a litigant must approach the Court with clean hands. It is the bounden duty of the Court to ensure that dishonesty and any attempt to surpass the legal process must be effectively curbed and the Court must ensure that there is no wrongful, unauthorised or unjust gain to anyone as a result of abuse of the process of the Court. One way to curb this tendency is to impose realistic or punitive costs." 47. For the reasons as stated, all the writ petitions stands dismissed. Apart that, if any proceeding has been initiated by the SEBI, after institution of the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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