The attachment and sale of property under the Banning of Unregulated Deposit Schemes Act do not require a prior conviction of the accused, and only the Court has the authority to deal with mala fide transfers.

J U D G M E N T

T his appeal under Section 19 of the Banning of Unregulated Deposit Schemes Act, 2019 (the Act) has been filed by respondents 48 and 50 in CMP No.7108/2023 on the file of the Designated Court (the Court), that is, the Court of Session Thalassery, aggrieved by the order dated 25/07/2024, by which the provisional order of attachment passed under Sub-Section (3) of Section 7 of the Act has been confirmed.

2. CMP No.7108/2023, an application under Section 14 of the Act was filed by the District Collector, Kannur, an Officer appointed under Sub-Section (2) of Section 7 to assist the Competent Authority appointed under Sub-Section (1) of by the Government for confirmation of the provisional order of attachment passed and seeking permission to sell the property attached by way of public auction or by private sale. According to the petitioner, the respondents therein 50 in number, had formed a Company by name 'Fashion Gold Jewellery and Associates' and thereafter collected deposits from the public promising high returns, profits, and dividends. Contrary to the promise, the respondents misappropriated the amounts collected. The deposits were collected in contravention of the provisions of the Act. The statement of the witnesses recorded by the investigating officer in the crimes registered would clearly show that the respondents/accused persons had formed different companies, namely, Fashion Gold International Pvt.Ltd., Qamar Fashion Gold Pvt. Ltd.; Fashion Ornaments Pvt. Ltd. and New Fashion Gold International and collected huge amounts of deposits and misappropriated the same.

3. Notice was issued to all the respondents including respondents 48 and 50, the appellants herein. Though notice was served on respondent no.50/the 2 nd appellant, he never appeared before the Court to show cause or to file objection. Respondent no.48/the 1 st appellant filed objection contending that her property, that is, item no.4 was not liable for attachment and therefore the petition seeking confirmation of the provisional order of attachment was liable to be dismissed. According to her, she was never an employee or member of the Director Board of the Companies or a shareholder of the same. She was not responsible for the deposits alleged to have been received by the said Group of Companies and its office bearers. The respondent acquired the property as per partition deed no.2711/2019, SRO Thrikaripur dated 25/10/2019. The respondent, the absolute owner of the property, is in possession of the same. The property was not acquired by utilizing the proceeds of the crime alleged and the same was acquired much before the occurrence of alleged crime. The attachment of the property by the petitioner under Sub-Section (3) of Section 7 is per-se illegal and therefore liable to be released from attachment.

4. The Court after hearing both sides, by the impugned order confirmed the provisional order of attachment and sale of property no.4 standing in the name of respondents 48, 50 (the appellants herein) as well as respondent no.9, who is one of the accused in the crimes registered. Aggrieved, respondents 48 and 50 have come up in appeal.

5. It is submitted by the learned counsel for the appellants that though the property can be attached, the same cannot be sold as till date there has been no finding of guilt by a competent court. Before a finding of guilt of the accused in the crimes is arrived at, if the property is sold, the appellants would be left without any remedy. Secondly, the appellants herein are not accused in the crimes. The property was settled in the name of the appellants by their father before the crimes were registered and hence the property is not liable to be attached. Thirdly, it was submitted that the petitioner/District Collector under Sub-Section (3) of Section 7 had no jurisdiction to order provisional attachment of the property. If at all it was liable to