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IN THE HIGH COURT OF KERALA AT ERNAKULAM
A.Muhamed Mustaque, ACJ., S.Manu, J.
Self Employers Service Society, Reg No K-705/97, Represented By, Its General Secretary, Kuruvila Thomas S/o. Thomas Pooppada - Appellant
Vs.
The Competent Authority, Secretary To The Government (Under Sec.7(3) Of Banning Of Unregulated Deposit Schemes (BUDS) Act 2019), Thiruvananthapuram - Respondent
WA No. 982 Of 2024
Decided On : 15-07-2024
BUDS Act - Provisional Attachment of Properties - Kerala Banning of Unregulated Deposit Schemes Act, 2019 (Sections 7(3), 14, 15(3)); Kerala Banning of Unregulated Deposit Scheme Rules, 2021 (Rule 4) - The court examined the legality of a provisional order under Section 7(3) of the BUDS Act, which allows for the attachment of properties without an exhaustive list at the time of issuance. It interpreted that while the competent authority must provide reasons for the order, the detailed list of properties can be submitted later, within the timeframe set by Section 14. The court emphasized that the provisional order does not suffer from illegality as the list can be prepared subsequently, thus affirming the procedural validity of the order.
Fact of the Case:
A charitable society challenged a provisional order issued under the BUDS Act, which attached its properties without listing them. The society argued that the order was illegal due to the absence of a property list.
Finding of the Court:
The court found that the provisional order was legally sustainable, as the detailed list of properties could be provided later, in compliance with the BUDS Act and its rules. The court clarified that the challenge to the order was premature.
Issues: Whether the provisional order of attachment without an exhaustive list of properties is legally sustainable under the BUDS Act and its rules.
Ratio Decidendi: The court held that while the competent authority must state reasons for the provisional order, it is not required to provide a complete list of attached properties at the time of issuance. The detailed list can be submitted within the statutory timeframe, thus maintaining the order's legality.
Final Decision: The writ appeal was disposed of, affirming the legality of the provisional order and clarifying the procedural requirements under the BUDS Act.
Certainly. Based on the provided legal document, here are the key points:
The competent authority under the BUDS Act has the authority to issue a provisional order of attachment without providing an exhaustive list of properties at the time of issuance, as long as the list is submitted within the statutory timeframe specified in the Act (!) (!) .
The provisional attachment order must state the reasons for the order; however, it does not require the detailed list of attached properties to be included immediately. The detailed list can be prepared and communicated later within the period allowed under Section 14 of the BUDS Act (!) .
The relevant rules prescribe that while passing the provisional order, the authority should mention the reasons and may initiate the process of preparing the list of properties, which can be communicated subsequently (!) (!) .
The order of provisional attachment is primarily a prohibitory order, and the detailed list of properties can be furnished later, within the prescribed timeframe, thus maintaining the procedural validity of the order (!) (!) .
The challenge to such provisional orders on the grounds of the absence of a property list is considered premature, as the law permits the list to be prepared and submitted within the statutory period (!) .
There is an identified ambiguity in the procedural form used for the list of attached properties, which the court has noted for possible clarification by the authorities but does not affect the legality of the provisional order passed (!) .
Overall, the court affirmed that the provisional order issued under the BUDS Act is legally sustainable even without an exhaustive property list at the time of issuance, provided that the detailed list is submitted within the statutory timeframe (!) .
The court clarified that once the provisional order is issued and the procedures under Section 14 are followed, the matter can be further addressed by the designated court, which can confirm, vary, or cancel the attachment as appropriate (!) .
The court disposed of the appeal, emphasizing that the challenge at this stage is premature and that the provisional order's procedural aspects are compliant with the law (!) .
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JUDGMENT :
A. Muhamed Mustaque, ACJ.
A charitable society called Self Employees Service Society, registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, approached this Court questioning the proceedings of the competent authority constituted under the Kerala Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act). The competent authority passed a provisional order invoking Section 7(3) of the BUDS Act, provisionally attaching all movable and immovable properties belonging to the society. A reasoned order has been passed. The question raised before the Court is that whether such a provisional order, without enlisting the movable and immovable properties, is legally sustainable and whether it is in the statutory form (Form 1) or not.
2. The learned Single Judge disposed of the matter relegating the appellant/petitioner to approach the Designated Court.
3. The learned counsel appearing for the appellant/petitioner argued in extenso and submitted that the impugned order is per se illegal as it does not contain the list of movable and immovable properties belonging to the society. It is further argued that Rule 4 of the Kerala Banning of Unregulated Deposit Scheme Rules, 2021 (BUDS Rules) prescribes the procedure to be followed for issuing such provisional order.
4. We also heard the learned Government Pleader and the learned counsel for the party respondents.
5. Section 7(3) of the BUDS Act refers to the power of the competent authority to pass provisional order attaching the deposits or any other property acquired by the deposit taker.
6. Section 14 of the BUDS Act states that the competent authority shall, within the maximum period of 60 days from the date of provisional order, file an application with such particulars as may be prescribed before the Designated Court for making the provisional attachment absolute and for permission to sell the property so attached by public auction or, if necessary, private sale.
7. The simple question in this case is the legality of the provisional order passed. Once the order is passed and the procedure under Section 14 of the BUDS Act is complied, the rest of the remedy lies before the Designated Court and the Designated Court can pass appropriate orders invoking Section 15(3) of the BUDS Act either by making attachment absolute, or varying it by releasing a portion of the property from attachment or cancelling the provisional order of attachment.
8. The BUDS Act is central legislation wherein the procedure to be followed in the matter of attachment is silent. However, under Section 38 of the BUDS Act, the State Government is empowered to prescribe the procedure and manner of provisional attachment to be effected by the competent authority under Section 7(3) of the BUDS Act. In exercise of the power, the State of Kerala framed BUDS Rules notified on 25.11.2021. It is appropriate to refer Rule 4 of the BUDS Rules here.
(2) A copy of the order of provisional attachment shall be served to the owner of the property or any person who claims to be in possession of the property or any other person who has an interest in the said property.
(3) After passing the provisional attachment order under sub-rule (1), the Competent Authority shall direct the officers appointed under sub-section (2) of section 7 of the Act, to prepare and maintain deta
The competent authority under the BUDS Act can issue a provisional order of attachment without an exhaustive list of properties, provided that the list is submitted within the statutory timeframe set....
Section 18(c) of the Act confers upon the Designated Court an independent power to order the taking of possession and disposal of assets to recover deposits, which is not conditional upon the prior a....
Under the Banning of Unregulated Deposit Schemes Act, 2019, the Competent Authority is empowered to attach assets acquired or renovated using proceeds of unregulated deposits, even when such assets a....
The provisions of Section 14(1) of the BUDS Act exclude the application of Section 5 of the Limitation Act, meaning that any delay in filing for confirmation of attachment beyond the specified period....
Judicial review mandates hearing all parties with interests in property before confirming attachment orders under PMLA.
Provisional attachments under the BUDS Act must be confirmed by the Designated Court within statutory timelines; failure to do so renders the attachment invalid.
The Banning of Unregulated Deposit Schemes Act allows for the attachment and sale of property to ensure repayment to depositors without requiring a prior conviction of the deposit takers.
The court established that provisional attachments under the Act must be confirmed within 60 days, as failure to do so results in the lapse of the attachment.
The High Court may issue a writ directing the Competent Authority under the BUDS Act, 2019 to timely consider and act upon representations regarding the identification and attachment of additional as....
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