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2016 Supreme(MP) 1127
IN THE HIGH COURT OF MADHYA PRADESH
RAJENDRA MAHAJAN, J.
JKV Multi State Credit Co-Operative Society Ltd. and Another – Petitioners
Versus
State of M.P. and Another – Respondents
M. Cr. C. No. 13281 of 2015
Decided On : 09-12-2016
Advocate Appeared:
For the Petitioners: Owais A. Pechkar, Subodh Kumar Gupta.
For the Respondent: Pramod Kumar Pandey.
The Act is enacted to protect the interest of gullible depositors and the provisions of the Act will be interpreted in a broad perspective to achieve this objective.
Headnote:
Financial Establishment - Jurisdiction of the Act - Madhya Pradesh Nikshepakon Ke Hito Ka Sarankshan Adhiniyam, 2000 (Act No. 39 of 2002) - Section 2(c), Section 5(1), Section 3(4), Section 11 - The court interpreted the Act to protect the interest of depositors and held that the Society falls under the definition of financial establishment as per Section 2(c) of the Act. It also ruled that the Society's acceptance of deposits without the necessary approval violated the RBI Act. The court further held that the Collector's order and the subsequent proceedings were valid and dismissed the petition under Section 482 of the Criminal Procedure Code.
Fact of the Case:
The petitioners sought to quash orders passed by the Collector and the Sessions Judge under the Madhya Pradesh Nikshepakon Ke Hito Ka Sarankshan Adhiniyam, 2000 (the Act) in relation to the JKV Multi State Credit Co-operative Society Ltd. The Society was accused of violating the Act by accepting deposits without necessary approvals.
Finding of the Court:
The court found that the Society fell under the definition of financial establishment as per the Act and had violated the RBI Act by accepting deposits without necessary approvals. It held that the Collector's orders and subsequent proceedings were valid and dismissed the petition under Section 482 of the Criminal Procedure Code.
Issues: The main issue was whether the Society fell under the definition of financial establishment as per the Act and whether the Collector's orders and subsequent proceedings were valid.
Ratio Decidendi: The court interpreted the Act to protect the interest of depositors and held that the Society fell under the definition of financial establishment as per Section 2(c) of the Act. It also ruled that the Society's acceptance of deposits without the necessary approval violated the RBI Act. The court further held that the Collector's order and the subsequent proceedings were valid.
Final Decision: The court dismissed the petition, holding that the Society fell under the definition of financial establishment, had violated the RBI Act, and that the Collector's orders and subsequent proceedings were valid.
ORDER :
1. By moving this petition under section 482 of the Criminal Procedure Code, the applicants have prayed for quashing the orders dated 30-7-2014 and 12-1-2015 passed by the respondent No. 1 and orders dated 2-3-2015 and 29-6-2015 passed by the Sessions Judge and Special Judge Sidhi under the Madhya Pradesh Nikshepakon Ke Hito Ka Sarankshan Adhiniyam, 2000 (for short ‘the Act’) in Special Case No. 1/15 and subsequent proceedings in the said case.
2. The background facts for adjudication of this petition in brief are as under:-
2.1. The JKV Multi State Credit Co-operative Society Ltd. (for short ‘the Society’) Headquarters at Lucknow is registered with the Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation under section 7 of the Multi State Cooperative Societies Act, 2002 (Act No. 39 of the 2002), hereinafter called the ‘the MSCS Act’ and the rules framed thereunder. The activities of the Society are controlled and supervised by the Central Registrar of Co-operative Societies. The Society carries out welfare activities for its shareholder members through providing them with loans and credits. The Society does not accept the deposits of money from the public at large. The areas of operation of the Society are the States of Uttar Pradesh, Bihar, Uttarakhand, Rajasthan and Madhya Pradesh. Applicant No. 1 Pravhal Kaushik is the elected Chairman of the Society and applicant No. 2 Rajnesh Shukla is the Branch Manager of the Society at Sidhi.
2.2. Vide the common order dated 12-5-2014 passed in Writ Appeal No. 596/2011 and other connected writ appeals and writ petitions, a Division Bench of the High Court of M.P. at Jabalpur has directed the State Authorities to proceed against the companies or persons in relation to the irregularities/illegalities committed by them in respect of the provisions of the Act. In pursuance of the said directions, the State Government of Madhya Pradesh issued a communication dated 28-5-2014 directing all the District Collectors of the State, who are the Competent Authorities in terms of section 5(1) of the Act, to take appropriate actions in this regard. Thereafter the District Collector Sidhi (for short ‘the Collector’), having exercised the powers of the Competent Authority vested in him by virtue of section 5(1) of the Act, issued a letter No. 311/Parivad/2014/Sidhi dated 26-7-2014 to the Society and five other financial establishments operating in District Sidhi to provide information on the points given in the letter and to appear before him on 28-7-2014 to record their statements in connection with the activities being carried out by them in the territorial jurisdiction of Sidhi district. The Society submitted a written reply dated 22-7-2014 and Sanjeev Mishra, the AGM Compliance & Audit of the Society, recorded his statement on 28-7-2014 before the Collector in connection with the activities of the Society. Thereafter, the Collector issued an official order dated 30-7-2014, the impugned order, appointing various officers working under him with directions to each of them to make a detail enquiry into the working and functioning of a financial establishment assigned to him. The Society was one of the six establishments. Shailendra Singh, the SDM of Sub-Divsion Gopad Banas, was assigned to conduct enquiry in respect of the Society. To comply with the order, with his inspecting team he visited the office of the Society and made a thorough enquiry by inspecting records of the Society. The team seized all the movable properties and records of the Society preparing a Panchnama (the seizure memo). He submitted his report to the Collector. Later, the Collector registered a case against the Society bearing No. 28/B-121/2014-2015 titled State of M.P. vs. JKV Multi State Credit Society. In that case, on 12-1-2015, the impugned order, the Collector passed an ad-interim order of attachment of the properties owned by the Society. He has also given a direction in the order to
