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2020 Supreme(Online)(KER) 31837
HIGH COURT OF KERALA
P.SOMARAJAN, J
N.RAJAMMA – Appellant
Versus
STATE OF KERALA, – Respondent
WP(C)/18793/2020
ADV. SRI.SANJAY THAMPI, R6-8 BY ADV. SRI.C.S.MANU
The BUDS Act encompasses unregulated deposit schemes and mandates timely CBI investigations despite the absence of designated courts, emphasizing the need to protect depositors.
Headnote:
BUDS - Unregulated Deposit Schemes - Banning of Unregulated Deposit Schemes Act, 2019 - Sections 3, 30 - The Act prohibits unregulated deposit schemes and allows for CBI investigation, asserting its jurisdiction over state laws despite the lack of designated courts.
Fact of the Case:
The writ petitions involved actions against the Popular Group of Companies for running unregulated deposit schemes, causing significant financial loss to depositors. The case also addressed requests for CBI investigations and the application of the Banning of Unregulated Deposit Schemes Act, 2019.
Finding of the Court:
The court found that the actions of the Popular Group constituted unregulated deposit schemes under the BUDS Act and determined that the CBI should investigate despite the absence of designated courts, emphasizing the need for timely intervention to prevent further injustice.
Issues: The key issues included the applicability of the BUDS Act to past deposits, the authority of the state and central governments regarding CBI investigations, and whether provisions under the BUDS Act could be enforced before the establishment of designated courts.
Ratio Decidendi: The ratio emphasized that the BUDS Act has an overriding effect over state laws like the KPID Act, enabling the CBI to conduct investigations based on the magnitude of public interest involved and the nature of the deposit schemes.
Final Decision: The court ordered the state to frame implementation rules for the BUDS Act and allowed CBI to investigate the unregulated deposit scheme involving substantial financial losses.
COMMON JUDGMENT
The issues involved in all these writ petitions are pertaining to the conduct of an “Unregulated Deposit Scheme” by Popular Group of Companies and its office bearers, directors,promoters etc.
2. The reliefs sought in W.P.(C)No.20828/2020, 20864/2020, 20902/2020 includes a direction to respondent No.2 to notify a Designated Court under Section 8 of the Banning of Unregulated Deposit Schemes Act, 2019 ( for short BUDS Act) and issue a direction commanding the 3rd respondent to make necessary reference to the first respondent under Section 30 of the BUDS Act and further command the first respondent to transfer the investigation to the 4th respondent CBI, besides the relief of writ of mandamus directing respondent No.5 to 8 to ascertain the scheme, if any, floated by Popular Finance Group of Companies and to initiate proceedings under the BUDS Act.
3. The reliefs sought in Writ petition Nos.18490/2020, 18397/2020, 19025/2020, 18712/2020 and 18852/2020 are (1) issue a direction to initiate proceedings under the Kerala Protection of Interest of Depositors in Financial Establishment Act, 2013 ( Act 7 of 2015) ( for short KPID Act)as against the owners, directors and promoters of Popular Group of Companies and Firms, including respondent No.7 to 14, (2) for an interim order commanding the first respondent to attach all properties including bank lockers and deposits of the Popular Group of Companies and Firms and its branches in the State of Kerala along with all movable and immovable properties, including the properties of respondents 7 to 14, (3) issue a direction to appoint competent authority and special court under the said Act, (4) issue direction to the 6th respondent to take action against the said firm and the respondents 7 to 14, in terms of Reserve Bank of India Act, 1934 and other relevant provisions and (5) direct respondents 1 and 6 to initiate steps in accordance with law for recovery and return of deposit amount and such other reliefs.
4. Among the other reliefs, petitioners in W.P.(C)NO.22687/2020 and 18716/2020 sought direction to the State Government to frame Rules as mandated under Section 38 of BUDS Act, 2019, to direct Forensic Audit into the affairs of accused in their business concerns, joint ventures, LLPs etc. under the BUDS Act by appointing a forensic auditor to trace out various channels of money siphoned off both in and outside India and to direct the State Government to frame Rules based on KPID Act.
5. The main relief sought in W.P.(C)No.20770/2020, 20794/2020, 20834/2020, 20824/2020, 18199/2020, 18302/2020, 18498/2020, 18860/2020, 18793/2020, 18754/2020,25491/2020 and 18781/2020 are substantially same with the other writ petitions which includes a direction to hand over the investigation to Central Bureau of Investigation and to register separate crimes based on the complaints.
6. W.P.(C)No. 22970/2020 is by accused No.1 seeking a direction to consolidate all the FIR registered treating Ext.P1 crime No.1740/2020 of Konni Police Station as the leading case and to file supplementary report in all other connected crimes, for a declaration that the Konni Police Station has jurisdiction to investigate all the crimes registered and other consequential reliefs.
7. The petitioners are the various depositors in Popular Finance, a financial establishment having its head office at Popular Towers, Vakayar, Konni, Pathanamthitta. It is owned and managed by respondent No.7 to 14 in W.P.(C)No.18490/2020. Advertisements were made in the official website of the establishment referring their concern as “Indias Emerging Gold Loan Company” and promised alluring rates of interest on deposits. Under that guise, they have received deposits from various persons including the petitioners. It was originally a partnership firm commenced in the year 1955. Deposits were received from general public by offering tempting rates of interest over and above the bank rate. There are altogether 258 branches by the name Popula
