Mandatory attachment procedure before sale of property under depositor-protection law is essential to valid action

The Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 requires a mandatory sequence before attached property can be sold: attachment by Government order, publication of the order, notice to interested parties, adjudication of objections by the Special Court, and an order making the attachment absolute or varying it. Only after that stage does the power to sell under Section 11 arise. If publication, notice, or confirmation of attachment is omitted, the statutory conditions are not met and any proposed sale is without jurisdiction. The text also emphasises that strict compliance is necessary because deprivation of property engages Article 300A.

---

---

Issues: Whether the respondents could lawfully bring the petitioners' properties for sale by public auction without first following the statutory procedure under the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004, including publication of the attachment order, issuance of notice, and making the attachment absolute by the Special Court.

Analysis: The Act contemplates a sequence of steps before any attached property can be sold: the Government may order attachment under Section 3, the order must be published as prescribed, the Competent Authority must move the Special Court under Section 5, and the Special Court must issue notice to the financial establishment and to persons claiming an interest in the property under Section 12. If objections are raised, the Special Court must investigate them following the summary procedure contemplated under Order 37 of the Civil Procedure Code, 1908, and only thereafter can it make the attachment absolute or vary it. The power to sell attached assets under Section 11 arises only after an order of attachment has been made absolute. Since the attachment order had not been published, notice was not issued to the property holders, and no order making the attachment absolute had been passed, the statutory preconditions were not satisfied. Given the serious consequence of deprivation of property, strict adherence to the prescribed procedure was mandatory under Article 300A of the Constitution of India.

Conclusion: The action of bringing the properties for sale was invalid and without jurisdiction.

Final Conclusion: The writ petitions succeeded, the impugned notifications were quashed, and the respondents were left free to proceed only in accordance with the statutory scheme.

Ratio Decidendi: Where a statute requires prior attachment, notice, adjudication of objections, and an order making attachment absolute before sale of property, any sale initiated without strict compliance with those mandatory steps is void and without jurisdiction.

---