2023 (2) TMI 1147 - HC - Indian Laws

Court directs protection of assets, property attachment, and forensic audits under KPID Act.

The Court issued various directions in response to a PIL seeking protection of attached assets, absolute property attachment, recovery of funds, and ... Attachment of Bank Accounts - public auction - equitable distribution among depositors of money realized from the assets - attachment of assets by public auction at optimum price - proportionate payment to the depositors of 4th respondent company under section 11 (2) (e) of the KPID Act 2004 - appointment of an expert for forensic audit of the 4th respondent company to unearth more assets - seizure of personal assets of directors and employees of the 4th respondent company - routing of of siphoning of remaining amount collected from the depositors by 4th respondent company - sale of newly attached assets by public auction for repayment to the depositors of 4th respondent - HELD THAT:- A person showing different identities of himself such as Sachin Naik @ Yogesh Chowdhary, Sumanthkumar Das, being MD of the company, attracted the depositors for investment. The unfortunate depositors fell prey to the attractive advertisements and the company lured nearly 3597 depositors and collected an amount to the tune of Rs.385 crore. When the depositors came to know that they are subjected to deceit mischief and breach of trust, they filed 60 complaints within the limits of Madiwala, Vidyaranayapura, Hennuru, HAL police station limits, Bangalore City. Considering the scope of mischief and offences whereby the provisions of the KPID Act were attracted, CID took over the investigation. In the investigation, it is revealed that there are as many as 13 accused persons including M/s.Dreamz Infra India Limited Company. During investigation, as many as 16 immovable properties were identified and subjected to action under the KPID Act, 46 sale agreements were recovered, movable properties worth Rs.9,46,74,030/- were seized which includes bank balance, mutual fund investment, car, etc. After conclusion of the investigation in 60 cases, project-wise 27 charge sheets were filed before the Competent Court – CCH No.1. The statements in the status report are supported by placing on record the copies of necessary notifications and the gist of the copies of the charge sheets filed before the Competent Court. The status report filed on 17.02.2023 includes a tabular statement under the caption ‘List of orders passed by the Hon’ble XCI Prl. City Civil and Sessions Judge (CCH-92), Bangalore in respect of Errant Financial establishment M/s. Dremz Infra Limited’. The cause raised in the PIL is duly addressed and redressed by the State Government by taking all necessary steps as per the requirement of law and now, it is for the Competent Trial Court to proceed with the trial and decide the matter - the charge sheets are filed before the Competent Court and in view of fact that if the parties to the proceedings before the Special Court make any application, the Competent Court would pass appropriate orders accordingly. As such, there are no reason to issue any separate directions to that effect. The perusal of record indicates that before filing of the charge sheets, certain orders were passed by the Civil Court. Being aggrieved by such orders, the aggrieved party had approached this Court by filing writ petitions and the order of the learned Single Judge are challenged in writ appeals. As the issue in the appeals can be separately dealt with, it is deemed appropriate to de-tag the present PIL from this pending appeals. Accordingly, the writ petition is de-tagged. Petition disposed off. Issues:1. Protection of attached assets for equitable distribution among depositors2. Making property attachment absolute3. Opening bank account and crediting remaining frozen account money4. Selling attached assets by public auction5. Inviting victims of fraud to submit claims online6. Recovering money from Decree Holders to prevent duplication7. Proportionate payment to depositors under KPID Act8. Forensic audit of the company for more assets9. Seizing personal assets of directors and employees10. Tracing siphoned money route11. Selling newly attached assets by public auctionDetailed Analysis:1. The petitioner filed a PIL seeking various directions, including protecting attached assets, making property attachment absolute, opening a bank account for remaining funds, selling assets by auction, inviting fraud victims to submit claims, recovering money from Decree Holders, proportionate payments to depositors, forensic audit, seizing personal assets, tracing siphoned money, and selling newly attached assets. The Court issued notices to respondents and directed investigations under the KPID Act. The Competent Authority took steps, filed charge sheets, and made provisional property attachments.2. The investigation revealed that the company attracted depositors through deceit, collected a significant amount, and faced multiple complaints. The CID took over, identified accused persons, seized properties, filed charge sheets, and appointed a Competent Authority for property disposal. The Government appointed officials to handle the case under the KPID Act, and the Competent Court is proceeding with trials based on the evidence presented.3. The Court acknowledged the State's actions in addressing the PIL's concerns, stating that the Competent Trial Court should now proceed with the trial and make decisions. The petitioner's requests for specific directions were deemed unnecessary as charge sheets were already filed, and the Competent Court could address any further applications appropriately.4. The Court noted that certain orders were challenged in writ petitions, which were being dealt with separately in pending appeals. To avoid overlap, the PIL was detached from the appeals. The Court concluded that the purpose of the PIL was served, addressing the petitioner's grievances, and subsequently disposed of the petition.5. With the disposal of the writ petition, no separate orders were needed for pending interlocutory applications, which were also considered disposed of. The judgment highlighted the State's actions, the Competent Authority's steps, and the progress in the legal proceedings, emphasizing the importance of addressing the concerns raised in the PIL for the benefit of the depositors affected by the fraudulent activities.