TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 307
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....of the State of Maharashtra, stating that the properties enlisted therein are attached under Sections 4(1) and 5(1) of the Maharashtra Protection of Interest of Depositors (in Financial Establishment) Act, 1999 (hereinafter referred to as 'MPID Act'). Petitioners have also challenged the direction given by respondent No.2 to respondent Nos. 5 and 6, whereby they were directed to make necessary entries in the revenue records regarding the properties of the petitioners. 2. Whereas, Letters Patent Nos.463 of 2015 to 464 of 2015 and 480 of 2015 to 481 of 2015 are filed under Clause 15 of Letters Patent against a common CAV order dated 24.02.2015 passed by the learned Single Judge in Special Civil Application No.4689 of 2014 and allied matters, whereby the learned Single Judge has dismissed the petitions without entering into the merits on the ground of 'forum conveniens' reserving liberty to the concerned petitioners to move the Bombay High Court or any Court subordinate thereto. 3. The issue involved in the aforesaid petitions as well as Letters Patent Appeals is similar and therefore this Court, by an order dated 03.03.2016, directed the Registry to place the papers....
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....r notice. As a result of the aforesaid crisis, many investors, who claimed to have invested their funds with NSEL, through the mode of Electronic Exchange of NSEL, did not receive back their money. As a result of which, a complaint is filed by one Mr. Pankaj Saraf. 4.3. On the basis of the complaint received from Mr. Pankaj Saraf, Senior Police Inspector, Unit- V, Economic Offences Wing, Crime Branch, Mumbai - respondent No.2, registered FIR being No.216 of 2013 against the Directors and key management personnel of NSEL, its borrowers and others under Sections 409, 465, 467, 468, 471, 474, 477A and 120B of Indian Penal Code. Thereafter, during the course of investigation, Sections 3 and 4 of Maharashtra Protection of Interest of Depositors (in Financial Establishment) Act, 1999 (hereinafter referred to as 'MPID Act') were added. Investigation of the said FIR has been carried out by the respondent No.2. 4.4. It is the case of the petitioners that certain disputes arose between NSEL and NKPL and therefore NSEL preferred an application being Arbitration Petition (L) No.1524 of 2013 under Section 9 of the Arbitration and Conciliation Act, 1996 before the High Court of Bombay ....
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....Constitution of India and Section 482 of the Code of Criminal Procedure, 1973 before the Bombay High Court seeking quashing of FIR being CR No.89 of 2013 qua them and as per the say of the petitioners the said matter is pending. 4.10. Yet another proceeding is pending at Bombay High Court being Suit No.173 of 2014 filed by one Modern India as a representative suit against NSEL, Future Technologies India Limited and other sister concerns including their promoter for recovery of approximately Rs. 5600 crores. In the said suit, third party notices were issued to several entities as per the procedure laid down under the Bombay High Court Rules. The learned Single Judge of the Bombay High Court passed an order on 02.09.2014 appointing three members committee purporting to facilitate settlements between the parties and NSEL and to ensure speedy recovery of the alleged dues. NKPL was not a party in the said proceedings and therefore NKPL challenged the order dated 02.09.2014 by filing Appeal(L) No.741 of 2014 along with Notice of Motion (L)2744 of 2014 before the Division Bench of Bombay High Court. The said appeal has been admitted and the Division Bench has stayed the operation of the ....
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....ngle Judge, by the common order dated 24.02.2015, dismissed the said petitions on the ground of 'forum conveniens' without going into the merits of the case. Therefore, against the said common order passed in Special Civil Application No.4689 of 2014 and allied matters, Letters Patent Appeal No.463 of 2015 and allied matters are preferred under Clause 15 of the Letters Patent. 5. Heard learned Senior Counsel Mr. K.S.Nanavati and learned Senior Counsel Mr. Mihir Joshi assisted by learned advocate Mr. Nandish Chudgar for Nanavati Associates for the petitioners as well as appellants in the respective petitions and the appeals, learned Senior Counsel Mr. P.K.Jani appearing for respondent Nos. 1 and 2, learned Senior Counsel Mr. Mihir Thakore appearing with learned advocate Mr. B.S.Raju for respondent No.9 and learned Senior Counsel Mr. Kamal Trivedi assisted by learned advocate Mr. Arjun Sheth for respondent No.10. 6. Learned Senior Counsel Mr. K. S. Nanavati and learned Senior Counsel Mr. Mihir Joshi appearing for the petitioners and appellants would contend that the impugned notifications are issued by a person who has no authority of law to issue an order to attach the pro....
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....d) of the MPID Act nor are promoters, directors, partners, managers or shareholders of the financial establishment i.e. NSEL. Therefore, the properties of the petitioners cannot be attached under Section 4 of the MPID Act. At this stage, learned counsels referred to the provisions contained in Sections 2(c) and (d), 3 and 4 of the MPID Act and submitted that the object and purpose of the MPID Act is to confiscate and sell the properties of a Financial Establishment held by it in its own name or Benami or standing in the names of the persons connected with the Financial Establishment in their capacity as promoters, directors, partner, manager or members of Financial Establishment. After referring to the impugned notifications, it is submitted that notification defines NSEL as a Financial Establishment and it is not alleged in the said notifications that the petitioners are the financial establishment. Therefore, the petitioners would be outside the purview of the MPID Act and hence the respondent No.1 has no authority under the MPID Act to attach the properties of the petitioners. At this stage, it is further submitted that MPID Act is not enacted to enable financial establishment t....
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....ed are the properties 'believed to have been acquired by the financial establishment' either in its own name or in the name of any other person from out of the deposits collected by the financial establishment and reasons for such satisfaction have been recorded in writing. It is contended that these conditions are not fulfilled in the impugned notifications. From the impugned notifications, it has been pointed out that the same does not contain reasons or grounds but only stated that the properties are 'alleged' to have been acquired. 6.5. It is further submitted that in the impugned notifications, the respondent Nos. 1 and 2 concluded that the schedule properties are acquired by the financial establishment and its Chairman/Director out of the deposits but no grounds/reasons for such conclusion are reflected in the impugned notifications. Thus, unless the condition precedent for exercise of powers is satisfied, the authority does not acquire jurisdiction to take the action and such an action would be null and void. In support of the aforesaid contention, learned counsel appearing for the petitioners have placed reliance upon the following decisions: (1) In Commis....
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....tion has arisen within the jurisdiction of this Court. It is submitted that the Head Office and Registered Office of NSEL is located in Mumbai. As per the agreed terms between the group of companies of the petitioners, agreed place of adjudication of dispute is Mumbai. Similarly, the State of Maharashtra has passed the impugned notifications/orders while exercising the powers under the MPID Act. The competent authority appointed by the State of Maharashtra is in Mumbai. Similarly, the designated Court at Mumbai itself is in charge of the subject matter and is appointed by the High Court of Bombay and the State of Maharashtra. Similarly the FIR is filed at Mumbai and same is investigated by the concerned investigating agency situated at Mumbai. Charge-sheet is also filed in the Court situated at Mumbai. The accused of the said FIR were arrested by the investigating agency and thereafter they are enlarged on bail by the concerned Court situated at Mumbai. Thus, it is submitted that the entire cause of action has arisen within the State of Maharashtra and therefore the present petitions are not maintainable before this Court. 7.1. Learned counsel would submit that the competent autho....
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....ositors as well as the defaulters are situated in different cities and different places of the country. They are located in Maharashtra, Andhra Pradesh, Rajasthan, Delhi, Punjab, Haryana and other states. Thus, on the basis of the principle of 'forum conveniens' the entire dispute in relation to the subject matter of the petitions could be heard and adjudicated by the Court situated in the State of Maharashtra. It is submitted that if the different proceedings are allowed to be proceeded in different States, there are all possibilities of inconsistent orders being passed by different Courts and inconvenience to all the parties is likely to be caused if the petitions are heard in different High Courts. Thus, it is submitted that on the principle of forum conveniens these petitions may not be entertained by this Court. In support of the aforesaid contentions, learned counsel Mr. Jani has placed reliance upon the following decisions: (1) In the case of Kusum Ingots & Alloys Ltd. v/s. Union of India and Another, reported in (2004) 6 SCC 254. (2) In the case of Ambica Industries v/s. Commissioner of Central Excise, reported in (2007) 6 SCC 769. (3) In the case of Alchemist ....
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....at the Deputy Secretary who has signed the impugned notifications was authorized to sign such notifications and issue the same. He, therefore, submitted that the submissions canvassed by the learned counsel appearing for the petitioners on this aspect are misconceived. 7.7. Learned Senior Counsel Mr. Jani further submitted that the State Legislation can have extra territorial operation, if the cause of action has arisen in that State or when there is sufficient territorial nexus in that State. In support of the said contention, learned counsel has placed reliance upon the following decisions: (1) In the case of R.M.D. Chamarbaugwala (supra). (2) In the case of Charusila Dasi (supra). 7.8. Learned counsel thereafter submitted that the provisions of MPID Act are attracted as NSEL is a financial establishment within the meaning of the MPID Act. That the group of companies of the petitioners are also financial establishments and they are within the parameters of definition of 'Financial Establishment'. These companies satisfy the test of 'Financial Establishment'. Promises and assurances were given to the depositors of fixed return and therefore the MPID Act is ri....
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....equired to be seen. Now, the investors have to recover from all 25 defaulters located in different parts of the country as per the terms of the contracts. Therefore, it is not convenient for the investors to file various proceedings in various parts of the country and hence this Court may not entertain the present petitions and the petitioners be relegated to Bombay High Court or the Court situated in Mumbai. In support of this contention, learned counsel has placed reliance upon the following decisions: (1) In the case of Kartar Singh v/s. State of Punjab, reported in (1994)3 SCC 569 (2) In the case of Kusum Ingots and Alloys Ltd. (supra) (3) In M/s. Sterling Agro Industries Ltd. (supra) 8.1. Learned counsel Mr. Trivedi has submitted that respondent No.9 - NSEL is located in Mumbai. T+2 and T+25 contracts were executed in Mumbai between investors/brokers and NSEL as well as between NSEL and members like NKPL. The investors got their monies deposited in the account of NSEL in Mumbai, where monies got deposited in the accounts of defaulters in Mumbai. The First Information Report is filed by the victim at Mumbai and therefore investigation of the said FIR is being carried out....
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....2) In the case of Satvinder Kaur v/s. State (Govt. of N.C.T. Of Delhi) and Anr. reported in AIR 1999 SC 3596 (3) Judgment dated 24.1.2014 of Hon'ble Andhra Pradesh High Court in case of Metkore Alloys (supra) 8.4. Learned counsel Mr. Trivedi further submitted that during the period between 31.07.2013 to 12.03.2015, the dates on which the impugned notifications have been issued, various developments have taken place. Learned counsel referred to the important events which have taken place during the said period and thereafter submitted that the respondent authority which has issued the impugned notifications has followed due procedure and while reading the notice dated 09.11.2013 issued by the Economic Offence Wing, Mumbai with the impugned notifications, it can be said that sufficient compliance as regard the requirement of recording the reasons in writing has been made. In support of the said contention, learned counsel has placed reliance upon the following decisions: (1) In the case of Commissioner of Sales Tax, U.P. (supra) (2) In the case of Assistant Commissioner of Income Tax v/s. Rajesh Jhaveri Stock Brokers Private Ltd. reported in (2008) 14 SCC 208. (3) In the cas....
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....w of the aforesaid, learned counsel Mr. Trivedi submitted that present petitions are devoid of any merits and therefore the same be dismissed and the order dated 24.02.2015 passed by the learned Single Judge in Special Civil Application No.4689 of 2014 and allied matters may not be interfered with and therefore the appeals filed against the said order may also be dismissed. 9. Learned Senior Counsel Mr. Mihir Thakore appearing for respondent No.9 - NSEL has supported the submissions canvassed on behalf of learned counsel Mr. P.K.Jani as well as learned counsel Mr. Kamal Trivedi appearing for the concerned respondents. It is submitted that MPID Act is a Special Act which provides for a complete mechanism for redressal of grievance of any aggrieved party by providing an appeal under Section 5 of the said Act before the Designated Court. Further, an appeal is also provided under Section 11 of the said Act and aggrieved party can file such appeal before the High Court. Thus, it is contended that if the petitioners are aggrieved by any action of the respondent authority, remedy is provided under the said Act and therefore the present petitions may not be entertained by this Court on th....
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....nts, in the rejoinder submitted that the Designated Court cannot examine the issue of validity and legality of the impugned orders/notifications. It is submitted that the Designated Court also cannot examine the issue of extra-territorial operation of the provisions of the MPID Act and its validity on that ground. Thus, when the Designated Court suffers from initial lack of jurisdiction, the petitioners cannot be subjected to submit themselves before a Court which lacks jurisdiction. Learned counsel would contend that the Designated Court derives its jurisdiction from the notifications/orders issued under Section 4 of the MPID Act and therefore when the order passed under Section 4 itself is bad in law and without fulfilling the conditions precedent for issuance of such an order under Section 4 of the MPID Act, the same can be said to be without jurisdiction and therefore Designated Court cannot exercise any jurisdiction for any matter whatsoever subsequent to the issuance of order under Section 4 of the MPID Act. In support of the said contentions, learned counsels have placed reliance upon the following decisions: 1. In Sheonath Singh (supra) 2. In the case of M/s. Ganga Saran....
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....iled by NKPL before the Division Bench of Bombay High Court. One quashing petition is filed by Mr. Nilesh Patel and Mr. Nimesh Patel in Bombay High Court for quashing of the FIR qua them. It is therefore submitted that merely because the said proceedings are pending before the Courts situated in Mumbai, the principle of forum nonconveniens cannot be applied in the facts of the present case. 10.4. Learned counsel for the petitioners have submitted that decision rendered by the Larger Bench of Delhi High Court in the case of M/s. Sterling Agro Industries Ltd. (supra) would not be applicable to the facts of the case and the learned counsel have tried to distinguish the facts of the present case. It is submitted that the doctrine of forum non-conveniens cannot be applied when almost entire part of the cause of action or when substantially large part of the cause of action arises within the Court whose writ jurisdiction has been invoked by the petitioners. 10.5. At this stage, learned counsel appearing for the petitioners pointed out that the respondent Nos. 1 and 2 filed a petition under Article 139A(2) of the Constitution of India before the Hon'ble Supreme Court for transfer of....
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....ioners be relegated to appropriate Court at Mumbai to avail such alternative remedy; and (iii) On the principle of 'forum conveniens' these petitions may not be entertained and the petitioners be relegated to file the proceedings before the forum convenience in the State of Maharashtra. 14. First preliminary objection is about territorial jurisdiction of this Court. Notice dated 09.11.2013 issued by the respondent No.2 shows that the properties of NKPL and other petitioners, details of which are given in the said notice, are situated within the territorial jurisdiction of this Court. The impugned notifications dated 12.03.2015 and 22.06.2015 issued under Sections 4 and 5 of MPID Act whereby the properties of the petitioners have been ordered to be attached and also letter dated 05.09.2015 addressed by the respondent No.2, suggest that the properties sought to be attached are situated in the State of Gujarat. Thus, when the properties situated in the State of Gujarat are sought to be attached, we are of the view that part of cause of action has arisen within the territorial jurisdiction of this Court and therefore we are not convinced with the submission as canvassed by le....
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....ise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order of proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point put to cut down this circle of forensic Whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. xxx xxx xxx 21.That being so, the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show cause notice issued to the appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the "TRIBUNAL". 16. In SJS Business Enterprises Pvt. Ltd. (supra), the Hon'ble Supreme Court has observed in para 14 and 15 as under: "14. Assuming that the explanation given by the appellant that the suit had been filed by one of....
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....e its remedies only under Article 226. The pleadings were also complete before the High Court. No doubt, the interim order which was passed by the High Court was obtained when the suit was pending. But by the time the writ petition was heard the suit had already been withdrawn a year earlier. Although the appellant could not, on the High Court's reasoning, take advantage of the interim order, it was not correct in rejecting the writ petition itself when the suit had admittedly been withdrawn, especially when the matter was ripe for hearing and all the facts necessary for determining the writ petition on merits were before the Court, and when the Court was not of the view that the writ petition was otherwise not maintainable." 17. In Ram And Shyam Company v. State of Haryana And Others, reported in (1985) 3 SCC 267, the Hon'ble Supreme Court has observed in para 9 as under: "9. Before we deal with the larger issue, let me put out of the way the contention that found favour with the High Court in rejecting the writ petition. The learned Single Judge as well as the Division Bench recalling the observations of this Court in Assistant Collector of Central Excise v. Jainson Ho....
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.... aud that by itself without anything more would be sufficient to set aside the judgment of the High Court." 18. There is no dispute with regard to the aforesaid proposition of law laid down by the Hon'ble Supreme Court. However, in the present case the competent authority appointed under the MPID Act has already moved an application before the Designated Court at Mumbai showing the list of properties which are attached. The Designated Court has issued notice to the owners. Petitioners are also served with such notice. In view of the provisions contained in the MPID Act, the Designated Court has power to lift, modify or confirm the order of attachment. Thus, the grievance of the petitioners can be addressed and adjudicated by the Designated Court at Mumbai before which the proceedings are pending. At this stage, it is also required to be noted that the life of the order of attachment is 30 days and thereafter it becomes subject to judicial proceedings wherein the order of attachment may be confirmed or modified or vacated as observed hereinabove. Sections 6 and 7 of the MPID Act provide as under: 6. (1) For the purposes of this Act, the Government may, with the concurrence of....
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....he money realised from out of the property attached. (5) If cause is shown or any objection is made as aforesaid, the Designated Court shall proceed to investigate the same and in so doing, as regards the examination of the parties and in all other respects, the Designated Court shall, subject to the provisions of this Act, follow the summary procedure as contemplated under Order 37 of the Civil Procedure Code, 1908 and exercise all the powers of a court in hearing a suit under the said Code and any person making an objection shall be required to adduce evidence to show that on the date of the attachment he had some interest in the property attached. (6) After investigation under sub-section (5), the Designated Court shall pass an order either making the order of attachment passed under sub-section (1) of Section 4 absolute or varying it by releasing a portion of the property from attachment or cancelling the order of attachment: Provided that the Designated Court shall not release from attachment any interest, which it is satisfied that the Financial Establishment or the person referred to in sub-section (1) has in the property, unless it is also satisfied that there will ....
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....ng before the various Courts at Mumbai i.e. FIR being No.216 of 2013 for the offences punishable under Sections 409, 465, 467, 468, 471, 474, 477A and 120B of Indian Penal Code and Sections 3 and 4 of the MPID Act is registered at Mumbai. The arbitration proceedings initiated by NSEL against the NKPL was also initiated at Mumbai. The bail application filed by Mr. Nilesh Patel and Mr. Nimesh Patel were also filed before the Bombay High Court. It is also not in dispute that NSEL has filed a suit being Suit No.432 of 2015 for recovery of outstanding amount of Rs. 969.89 crores against NKPL and 50 others including the petitioners before the Bombay High Court. It is not disputed that NSEL had filed a Writ Petition No.1403 of 2015 challenging the addition of the provisions of the MPID Act in the FIR filed against the accused before the Bombay High Court. Yet another petition being Writ Petition (Criminal) No.3342 of 2014 is filed Mr. Nilesh Patel and Mr. Nimesh Patel under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure before the Bombay High Court seeking quashment of the FIR qua the said petitioners and the said petition is pending. Peti....
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....espondents. 25. The principle of forum conveniens has been explained by the Hon'ble Supreme Court in various decisions and the larger Bench of Delhi High Court has also examined the said issue. Therefore, we would like to refer the said decisions. 26. In Kartar Singh (supra), the Hon'ble Supreme Court has observed in para 368(17), 426 and 428 as under: "368. The above are to maintain the higher rhythms of pulsating democratic life in a constitutional order. TO SUM UP (1) XXX XXX XXX XXX XXX (17) Though it cannot be said that the High Court has no jurisdiction to entertain an application for bail under Article 226 of the Constitution and pass orders either way, relating to the cases under the Act 1987, that power should be exercised sparingly, that too only in rare and appropriate cases in extreme circumstances. But the judicial discipline and comity of courts require that the High Courts should refrain from exercising the extraordinary jurisdiction in such matters; XXX XXX XXX 426. From the scheme of the Act therefore it is clear that the offenses created thereunder are exclusively triable by the Designated Court and conviction made or orders passed, whether fi....
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....ately came up before Central Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi in Appeal No.E/2792/02-NBC. The said Tribunal exercises jurisdiction in respect of cases arising within the territorial limits of the State of Uttar Pradesh, National Capital Territory of Delhi and the State of Maharashtra. 4. Having regard to the situs of the Tribunal, an appeal in terms of Section 35G of the Central Excise Act, 1944 was filed before the Delhi High Court. A Division Bench of the said Court relying on or on the basis of an earlier Division Bench judgment in Bombay Snuff Pvt. Ltd. Vs. Union of India 2006 (194) ELT 264 opined that it had no territorial jurisdiction in the matter. xxx xxx xxx 14. Furthermore, when an appeal is provided under a statute, Parliament must have thought of one High Court. It is a different matter that by way of necessity, a Tribunal may have to exercise jurisdiction over several States but it does not appeal to any reason that Parliament intended, despite providing for an appeal before the High Court, that appeals may be filed before different High Courts at the sweet will of the party aggrieved by the decision of the Tribunal. xxx xxx xxx 4....