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In the High Court of Judicature at Hyderabad
M.S. RAMACHANDRA RAO, J.
Garnet Finance Limited, Rep. by its Managing Director Challa Sudhakar – Appellant
Versus
Commissioner of Police, Hyderabad City – Respondent
Crl.A. No. 1045 of 2014
Decided On : 03-03-2015
Andhra Pradesh Protection of Depositors of Financial Establishment Act, 1999 – Section 11 – Deposits – Payment of principal or payment of interest – Criminal Appeal is filed under Section 11 of Andhra Pradesh Protection of Depositors of Financial Establishment Act, 1999 – Company was accepting deposits from onwards it had stopped collecting the deposits; from onwards till there were no complaints either for payment of principal or payment of interest; thereafter, it had stopped taking deposits; and it had offered the depositors to take back the deposited amounts as per term deposit certificates. According to the appellants, some of the depositors requested for the return/refund of the deposited amounts and accordingly the same was refunded to them. However, some of the depositors intended to invest their amounts in the share capital of the Company to share its profits/dividends and on the request of the investors, shares were allotted to individual investors. So, according to the appellants, though originally the Company collected the amount towards fixed deposits, subsequently at the request of the shareholders, the amounts deposited by the individuals were converted into shares; that the individuals had given applications requesting the appellants to convert their amounts toward shares of the Company; on such application made by individuals, the accused No.1 had allotted shares to them by issuing share certificates after informing the Registrar of Companies, Income Tax Dept – Held, learned Public Prosecutor, the question arose as to whether the application under Section 6 Act seeking sale of the properties attached under Section 3 and 4 of the Act can be filed by the depositors also apart from the competent authority although only the competent authority is mentioned in the said provision as the person who can file such application. This Court held that enabling only the competent authority to file such application would be a very narrow interpretation and would defeat the very purpose for which the Act had been promulgated; that depositors may also come forward and file an application requesting the Special Court to pass appropriate orders so that the properties under attachment are sold and the depositors are paid. In fact, in that case the accused themselves came forward and filed an application seeking sale of the attached properties so that the amount realized may be paid to the creditors. The Court held that the Special Court ought not to have rejected it as not maintainable – It set aside the order of the Special Court and directed that the properties attached to be sold and the amounts realized be paid to the depositors. In my opinion, the issue which arose for consideration in that case is totally different and the ratio therein cannot be applied to the present case – Criminal Appeal is allowed.
1. This Criminal Appeal is filed under Section 11 of the Andhra Pradesh Protection of Depositors of Financial Establishment Act, 1999 (for short ‘the Act’) challenging the order dt.28.08.2014 in Cr.M.P.No.693 of 2007 in Cr.No.42 of 2006 of CCS, DD, Team-III, Hyderabad in C.C.No.1 of 2011.
2. The appellants herein are accused Nos.1, 4 and 5 in C.C.No.1 of 2011.
3. Complaints were received by the Commissioner of Police, Hyderabad City that accused Nos.4 and 5, who were directors in A.1-Company, had collected deposits in the name of A.1, M/s.Garnet Marketing (P) Ltd., Hyderabad (A2) Companies and Sri G. Ramakrishna Rao and Company and had not refunded their deposits amounting to Rs.66.71 lakhs and interest thereon as agreed and they have committed an offence under the said Act and the IPC.
4. On 24.03.2006, a case in Cr.No.42/06 of Team III, CCS, DD was registered and was taken up for investigation. A charge-sheet was filed and the same was taken on file by the Metropolitan Sessions Judge, Hyderabad in C.C.No.1/2011 on 14.02.2011.
5. In the meantime, on the basis of material collected during investigation, the Commissioner of Police, came to the conclusion that the accused had committed an offence under Section 3 of the Act, that they had also diverted the deposited amounts for purchasing certain moveable and immoveable properties in the names of the accused and in the names of the above mentioned companies. He therefore, requested the Government to pass an ad interim order for attachment of the properties of A.4 and 5, who were directors of A.1, and A.2 under Section 3 (ii) of the said Act.
6. Thereafter, G.O.Ms.No.98 Home (General.B) Department dt.14.05.2007 was issued by the Government under Section 3 of the Act for attachment of the properties shown in Annexures 1 and 2 of the said G.O.
7. Under Section 4 (3) of the Act, upon receipt of orders of the Government under Section 3, the competent authority shall apply within (15) days to the Special Court constituted under the Act for making the ad interim order of attachment absolute.
8. On 29.05.2007, Crl.M.P.No.693 of 2007 was filed by the Commissioner of Police, Hyderabad city, who was the competent authority designated under the Act, before the Court of the Metropolitan Sessions Judge, Nampally, Hyderabad to make the ad interim order of attachment made in G.O.Ms.No.98 Home (General.B) Department dt.14.05.2007 by the Government, as absolute.
9. Counter-affidavit was filed by the appellants herein in the said application opposing the said request of the Commissioner of Police. They denied the allegations made against them by the de facto complainants that they had committed any offence under Section 5 of the Act besides offences under IPC. Their specific plea was that:
(i) A1 company was accepting deposits from 1986 onwards till 2001; thereafter it had stopped collecting the deposits; from 1986 onwards till 2001 there were no complaints either for payment of principal or payment of interest; thereafter, it had stopped taking deposits; and it had offered the depositors to take back the deposited amounts as per term deposit certificates. According to the appellants, some of the depositors requested for the return/refund of the deposited amounts and accordingly the same was refunded to them. However, some of the depositors intended to invest their amounts in the share capital of the Company to share its profits/dividends and on the request of the investors, shares were allotted to individual investors. So, according to the appellants, though originally the Company collected the amount towards fixed deposits, subsequently at the request of the shareholders, the amounts deposited by the individuals were converted into shares; that the individuals had given applications requesting the appellants to convert their amounts toward shares of the Company; on such application made by individuals, the accused No.1 had allotted shares to them by issuing share certificates after informing t
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