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2024 Supreme(Online)(Bom) 8051
HIGH COURT OF BOMBAY
HON'BLE SMT. JUSTICE BHARATI DANGREHON'BLE JUSTICE SMT MANJUSHA AJAY DESHPANDE
CHANDRASHEKHER VAMAN PATWARDHAN – Appellant
Versus
THE STATE OF MAHARASHTRA AND ORS. – Respondent
APEAL/1072/2021
For the Appellants/Petitioners: Abhijeet Desai, Kuldip T. Pawar, Sarita N. Patil, Digvijay Kachare, Daksha Pungera, Karan Gajra, Mohini Rehepade, Vijaysingh
For the Respondents: Bhomesh Bellam, Karma Vivan, Shahaji Shinde, J.P. Yagnik
Attachment of property under deposit protection statutes is contingent upon proof that the assets were acquired from the proceeds of criminal activity. Attachment of property belonging to a legal heir, which lacks a nexus to any fraudulent activity or illicitly collected funds, is legally unsustainable.
Headnote:(A) Protection of Interest of Depositors Act - Sections 4 and 7 - Attachment of property - Property held by legal heir - Whether attachment of property acquired with legitimate funds is permissible - Court held that attachment is unsustainable when it is not demonstrated that the property was acquired from the proceeds of fraudulent acts or deposits. (Paras 26, 27)
(B) Criminal Procedure - Proceedings against deceased persons - Principles of criminal jurisprudence - Attachment of property of deceased - Absence of specific statutory provision allowing recovery from the estate of a deceased person without linkage to proceeds of crime - Principle of presumption of innocence persists. (Paras 14, 15, 29)
Facts of the case:
The appellant challenged an order passed by a designated court which refused to release a residential property from attachment. The property was formerly owned by a deceased director of a financial establishment and had devolved upon the appellant through a testamentary instrument. The state authority had attached the property under the belief that it was acquired using money collected from depositors. The appellate court examined whether such property could be attached when no evidence existed to link the acquisition to the alleged fraudulent activities of the establishment.
Findings of Court:
The court observed that the documentation established the acquisition of the property by the predecessor took place long before the financial establishment commenced operations. The prosecution failed to provide material evidence linking the property to the misappropriated funds. The court further noted that the property had already vested in the legal heir at the time the attachment notification was issued, rendering the basis of the state's action factually incorrect.
Issues: (1) Whether the attachment of assets held by a legal representative is permissible under the statute if there is no nexus to the proceeds of the alleged offence. (2) Whether legal proceedings for attachment can be sustained against the estate of a deceased person in the absence of a specific governing provision or evidence of illicit acquisition.
Ratio Decidendi: The court held that the power to attach property under the statute is contingent upon the property being acquired through illegal proceeds or funds collected from depositors. In the absence of such a nexus, and considering that the property was lawfully inherited by a third party before the attachment, the state lacks the authority to deprive the legal successor of the asset. The court emphasized that it cannot read into a statute powers that are not explicitly provided, especially when the attachment is based on fundamentally incorrect factual premises.
Result: Appeal allowed. The impugned order is quashed and set aside, and the property is released from attachment.
2024:BHC-AS:50670-DB IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1072 OF 2021 Chandrashekhar Vaman Patwardhan .. Appellant Versus
1 The State of Maharashtra .. Respondents
2 The Police Inspector, Economic Offence Wing
3 The Hon’ble Collector, Mumbai.
4 The Office of Competent Authority District Deputy Registrar, Co-op Societies, Mumbai-3
5 Manohar Maruti Majalkar …
Mr. Abhijeet Desai with Mr.Kuldip T. Pawar with Sarita N. Patil, Digvijay Kachare, Daksha Pungera, Karan Gajra, Mohini Rehepade, Vijaysingh for the appellant.
Mr.Bhomesh Bellam with Mr.Karma Vivan for respondent no.1.
First Informant.
Mr.Shahaji Shinde, ‘A’ Panel Counsel with Mr.J.P. Yagnik, APP for the State.
CORAM: BHARATI DANGRE &
MANJUSHA DESHPANDE,JJ.
RESERVED ON : 5th SEPTEMBER, 2024 PRONOUNCED : 23rd OCTOBER, 2024 JUDGMENT :- (Per Bharati Dangre, J)
1 Chandrashekhar Vaman Patwardhan, the appellant has filed the present Appeal under Section 11 of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999, (for short “MPID Act”) being aggrieved by order dated 26/11/2021 passed by the Special Judge in MPID Case No.28/2004, thereby rejecting his objection raised under Section 7(3) of the said Act, as a person claiming interest in the property i.e. Flat No.A-402, Sahjeevan CHSL, Dadasaheb Pendse Marg, Goregaon (East), Mumbai, which was attached in the wake of the notification issued by Government of Maharashtra under Section 4 of the MPID Act, published on 8/5/2015.
2 The appellant claim to be a close relative of one Smt. Mrunmayi Barve, who owned the subject flat, and it is his contention that she has been living with him during her life time and he has catered to her by attending to her daily needs as well as medical care.
The subject flat located in Goregaon (East), Mumbai was purchased by Shri V.G. Barve, husband of Smt.Mrunmayi Barve on 15/1/1984 and on 26/9/1997, the shares of the said flat were transferred in his name.
Shri V.G. Barve passed away on 11/3/1998 and the rights in the flat devolved upon Smt. Mrunmayi Barve, in the capacity as his wife.
On 11/7/1998, Smt. Mrunmayi Barve bequeathed the flat to the appellant by Will dated 11/7/1998 and on 18/9/1998, she appointed the appellant as the nominee in the said flat.
On 2/10/1999, Smt.Mrunmayi Barve was appointed as a Director of Parleshwar Finance Pvt. Ltd, and she continued to hold the said post till 15/4/2003 when she retired from the said post.
3 On 28/5/2004, C.R. No. 190/2004 came to be registered at the instance of one Manohar Majalkar, invoking Sections 406, 420 of IPC and Sections 3, 4 of the MPID Act, against the Directors of Parleshwar Finance Limited, alleging default in refund of their deposits. On 3/8/2004, Smt. Mrunmayi Barve was arraigned as accused, as she was also a Director of the said Company between 1999 to 2003. On 19/12/2007, she passed away and as a sequence to this event, the flat devolved upon the appellant through the Will executed by her on 11/7/1998 as her legal heir.
On 8/5/2015, the State Government through it’s Deputy Secretary issued a notification under Section 4 of the MPID Act, and this notification covered several immovable properties, including the subject Flat A/402, of Sahjeevan CHSL. The notification referred to ‘Parleshwar Financial Establishment Pvt. Ltd’, Vile Parle, Mumbai, as the Financial Establishment, which is alleged to have accepted deposits from the investors, but complaints were received from the investors that the deposits were not refunded.
Since the State Government was satisfied that the financial institutions and its Chairman/Directors are not likely to return their deposits, and since the State Government was desirous of protecting the interest of the investors, and since it is inferred that the property included in the Schedule has been purchased by the financial institution, and it’s Chairman/ Directors from the amount collected and deposited by the investors, and therefore, in exer
