IMPORTANT POINT
Properties purchased with depositor funds are subject to attachment under the Tamil Nadu Protection of Interests of Depositors Act, regardless of subsequent transfers.

JUDGMENT :

These appeals have been filed under Section 11 of the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997 (for short, the Act) against two separate orders both dated 19.5.2023 made respectively in O.A.Nos.2 and 3 of 2012 on the file of the Special Court under the Act, Chennai-104 dismissing the applications filed by the appellants under Section 7(3) of the Act to raise the orders of interim attachment pertaining to the properties owned by the respective appellants.

2. The case of the appellants leading to filing of these appeals is as follows :

(i) One Mr.A.Arjunan was doing real estate business along with one Mr.K.Elamvazhuthi. They purchased certain properties for development into house sites and for selling the same to the prospective purchasers. They came to know that the fourth respondent was owning the subject properties. The fourth respondent purchased the subject properties through registered sale deeds dated 27.6.2006. In turn, the fourth respondent executed two power of attorney documents both dated 24.4.2008 in favour of (i) the said Mr.A.Arjunan (four properties) and (ii) the said Mr.K.Elamvazhuthi (three properties). By using the said two power of attorney documents executed in their favour, the said Mr.A.Arjunan and the said Mr.K.Elamvazhuthi sold each other the subject properties as reflected in the power of attorney documents by way of two separate sale deeds dated 28.7.2008.

(ii) A first information report came to be registered in Crime No. 3 of 2009 on the file of the Deputy Superintendent of Police, Economic Offences Wing, Chennai against M/s.Suprabath Chits and Investments Private Limited on 29.9.2009 on the allegation that the fourth respondent and his family members were running a finance company and that they failed to pay back to the depositors. Pursuant to that, the Government issued G.O.Ms.No.215 Home (Police XIX) Department dated 23.2.2010 attaching several properties, which also included the subject properties belonging to the said Mr.A.Arjunan and the said Mr.K.Elamvazhuthi. However, no notice was issued to the said Mr.A. Arjunan and the said Mr.K.Elamvazhuthi at the time of passing the orders of interim attachment.

(iii) When it came to light, the said Mr.A.Arjunan and the said Mr.K.Elamvazhuthi filed O.A.Nos.2 and 3 of 2012 respectively before the Special Court to raise the orders of interim attachment. Further, the second respondent namely the Competent Authority-cum-District Revenue Officer, Collector's Office, Chennai filed a counter to O.A.No.2 of 2012. The third respondent namely the Deputy Superintendent of Police, Economic Offences Wing-II, Chennai filed a counter to O.A.No.3 of 2012. During the pendency of O.A.No.2 of 2012 before the Special Court, the said Mr.A.Arjunan died and hence, his legal heirs were brought on record. Ultimately, these applications were dismissed by the Special Court by the impugned orders both dated 19.5.2023. Aggrieved by that, the legal heirs of the said Mr.A.Arjunan and the said Mr.K.Elamvazhuthi have filed these appeals before this Court.

3. Before this Court, the third respondent namely the Deputy Superintendent of Police, Economic Offences Wing-II, Chennai filed two separate counters in both the appeals wherein he had taken a stand that the fourth respondent and his family members were running a finance company, that they collected huge deposits, that the money was not paid back to the depositors, that a first information report came to be filed in Crime No.3 of 2009 on the file of the Deputy Superintendent of Police, Economic Offences Wing, Chennai dated 29.9.2009, that the fourth respondent utilized the deposits that were collected and purchased the subject properties in the year 2006, that during the course of investigation, it came to light that there are 1197 depositors and a sum of Rs.34,52,04,228/- was collected from the depositors. It was under those circumstances, the subject properties were identified and