Under the Banning of Unregulated Deposit Schemes Act, 2019, the Competent Authority is empowered to attach assets acquired or renovated using proceeds of unregulated deposits, even when such assets are titled in the names of third parties, provided a clear nexus between the illicit funds and the assets is demonstrated.

JUDGMENT :

The order in Crl.M.P. No.4093/2023 dated 15.05.2024 on the files of the Additional Sessions Court-IV, Thalassery (the Designated Court) under the Banning of Unregulated Deposit Schemes Act, 2019 [hereafter referred as ‘BUDS Act, 2019’ for short] is under challenge in this appeal filed under Section 19 of the BUDS Act, 2019, at the instance of respondent Nos.1 and 2 in the above petition. As per the order impugned, the learned Designated Court allowed Crl.M.P. No.4093/2023 filed under Section 14 of the BUDS Act, 2019 to make the provisional attachment order issued by the Competent Authority as absolute.

2. Heard the learned counsel for the appellants, the learned Public Prosecutor and the learned counsel appearing for the additional 3^rd respondent. Perused the order under challenge and relevant materials available.

3. The genesis of the case would throw light on the facts that, the accused persons formed a company named Kannur Urban Nidhi Limited and collected unauthorised deposits from large number of common depositors. In order to siphon of the huge amount of money collected, they have also created another company named ATM Private Limited. The huge amount of money collected from the common depositors were misappropriated by the accused persons.

4. While assailing the impugned order, the learned counsel for the appellants argued that, as per Section 7(3) of the BUDS Act, 2019, the Competent Authority notified by the Government is empowered to provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed, but Section 7(3) does not empower the Competent Authority to attach the property, for which the deposit taker has not right.

5. It is also submitted by the learned counsel for the appellants that, as per Rule 4(2) of the Banning of Unregulated Deposit Schemes Rules, a provisional attachment shall be published in the news paper. In the instant case, no such publication has been effected. According to the learned counsel for the appellants, when a third party’s property is attached under the BUDS Act, 2019, the Designated Court cannot confirm the attachment by invoking power under Section 15 of the BUDS Act, 2019 on getting application filed under Section 14 of the BUDS Act, 2019. Therefore, the properties attached as Serial Nos.1 and 2 in the instant case are not liable to be attached under the provisions of the BUDS Act, 2019. Therefore, the confirmation of the attachment as per the order impugned is liable to be revoked and set aside.

6. The learned Public Prosecutor taken attention of this Court to paragraph Nos.12 to 16 of the order impugned to contend that, the learned Designated Court found that Serial Nos.1 and 2 properties were assets held by the deposit taker in the name of other persons i.e. the appellants herein, who are none other than the wives of Sri.Abdul Jaleel and Sri.Shoukathali, arrayed as accused in large number of cases relating to misappropriation of money in Kannur Urban Nidhi Limited. Therefore, Serial Nos.1 and 2 properties, for which confirmation of attachment was granted by the Designated Court under the BUDS Act, 2019, are properties which would come within the purview of Section 7(3) of the BUDS Act, 2019 and the attachment order is liable to be confirmed.

7. Sri.Aroon Kumar P.K, who is one among the depositors, got impleaded as the additional 3^rd respondent. The learned counsel appearing for the additional 3^rd respondent submitted that the findings of the Designated Court to treat Serial Nos.1 and 2 properties as the properties held by the deposit taker in the names of his relatives could be justified from the findings entered into by the learned District Judge and also from the conclusions reached by the Investigation Agency in S.C. No.141/2025 filed before the Special Court under the Pr