TaxTMI 
TaxTMI 
2022 (9) TMI 643
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....ad Engineer. For Official Liquidator in App/85/2018. : Mr Prathamesh Kamat, with Sapana Rachure. ORAL JUDGMENT (Per GS Patel J) :- 1. The two Appeals, both disposed of by this common order and judgment, are by the State of Maharashtra. The appeals are on a matter of principle. Very shortly stated, the concern of the State Government, as voiced by the learned Advocate-General, Mr Kumbhakoni, is that as a result of the impugned orders dated 9th June 2017, the beneficial provisions of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act 1999 ("the MPID Act") are entirely denuded and reduced to meaninglessness when the financial establishment in question is a corporate entity in liquidation. In that situation, Mr Kumbhakoni argues, the assets of the company are vested in the Official Liquidator ("OL"). It is the OL who then invites claims and makes a distribution of the sale proceeds of the company's assets in order of priority prescribed by statute, that is to say by the Companies Act. Only whatever is left, and Mr Kumbhakoni says there is almost always nothing left, is then made available to the MPID Court for distribution amongst the haples....
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....the Companies Act. He held in paragraph 111 of the impugned order that the powers of the competent authority and the MPID court under the MPID Act could not prevail over the powers of the company court or of the OL. As he sharply pointed out, the MPID Court is entirely silent on any aspect of winding up of a company. It cannot take away powers conferred under the Companies Act. It cannot undermine duties, obligations and responsibilities demanded by the Companies Act. Dhanuka J said, and in our view correctly, that the two statutes must be construed harmoniously. He achieved precisely such a harmony by holding that, on winding up of companies that are 'financial establishments' under the MPID Act, all assets of these companies in liquidation would vest in the OL. All creditors (including depositors) could their lodge their claims before OL. The MPID Act did not contemplate a situation of winding up of financial establishment and for adjudication of claims of other creditors. Indeed, other creditors outside the purview of the MPID Act could not apply to the MPID Court for an adjudication or a realisation of their claims. For these reasons, and on this analysis, one that we have only....
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....n 5 of the MPID Act appointing a competent authority. On 12th January 2015, the authorities at the EOW informed the OL that the police had seized bank accounts with a balance in an aggregate of over Rs.12.51 crores, 43 acres of land in Rajasthan and another 27 acres in Thane. On 7th April 2015, the OL filed a Report No. 252 of 2015 for directions to the authorities to deliver custody, control and charge of the properties of Aryarup to the OL. 8. On 7th September 2015, the MPID authorities filed an Affidavit in Reply to this Official Liquidator's Report and submitted that it is those authorities under the MPID Act that should be allowed to continue exercising powers. On 12th May 2016 the State Government issued a notification attaching the properties. 9. Further Affidavits were filed. A total amount of about Rs 21 crores was said to be in the asset bank of Aryarup. The impugned order followed on 9th June 2017. 10. There is no doubt that for both Aryarup and for City Limouzines, deposits were been taken by the companies. In the City Limouzines case, the order of winding up was 1st October 2010. This was the order by which the provisional liquidator was appointed. On 3rd Dece....
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.... to in clause (b) of Section 2 of the Chit Funds Act, 1982 (40 of 1982); Explanation II.- "Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be a deposit for the purposes of this clause; (d) "Financial Establishment" means any person accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company defined under clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949)." 12. Notably, "financial establishment" does not mean only a company. It can even include an individual person. This is perhaps one of the most determinative aspects in the present Appeals. The MPID Act even conceptually is not limited to companies at all. We come now to Section 4, 5 and 6 of the Act which read thus: "4. Attachment of properties on default of return of deposits.- (1) Notwithstanding anything contained in any other law for the time being in force- (i) where upon complaints received from the depositors or otherwi....
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....ties attached by the Government under Section 4 of a Financial Establishment. (2) The Competent Authority shall have such other powers as may be necessary for carrying out the purposes of this Act. (3) The Competent Authority shall, within thirty days from the date of the publication of the said order, apply to the Designated Court, accompanied by one or more affidavits stating the grounds on which the Government has issued the said order under Section 4 and the amount of money or other property believed to have been acquired out of the deposits and the details, if any, of persons in whose name such property is believed to have been invested or acquired or any other property attached under Section 4, for such further orders as found necessary. 6. Designated Court.- (1) For the purposes of this Act, the Government may, with the concurrence of the Chief Justice of the Bombay High Court by notification in the Official Gazette, constitute on or more Designated Court in the cadre of a District and Sessions Judge for such area or areas or such case or class or group of cases, as may be specified in the notification. (2) No Court including the ....
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....n the guise of interpreting a statute we can inject words like this into the plain and unambiguous wording of the various provisions. The MPID Act is of 1999. The provisions of the Companies Act 1956 were long established and were in place before the MPID Act. The State Legislature must be presumed to have had those in mind at the time of enactment of the MPID Act. 15. Mr Kumbhakoni urges that it is the authorities under the MPID Act that actually set in motion and are most effective in harvesting or husbanding the assets of the defaulting company. This is done through the police agencies and then, as he somewhat colourfully put it, the OL swoops in and takes charge of all these assets. The result is that the depositors are left virtually without remedy or recourse. 16. The difficulty faced in one particular case, or even a dozen particular cases, cannot serve as a guide to interpretation of a statute. These situations, however heart-rending, will not suffice to achieve Mr Kumbhakoni's purpose before us today, which is nothing but to supplant the Companies Act with the MPID Act where a company is the financial establishment within the meaning of MPID Act. 17. Before....
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.... (3) Subject to clauses (1) and (2), the Legislature of any State [***] has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included [in a State] notwithstanding that such matter is a matter enumerated in the State List. 254. Inconsistency between laws made by Parliament and laws made by the Legislatures of States.- (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament, which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (....
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..... It can only extend to the laws operating in the same field. 25. A non obstante clause in Section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act was also interpreted in Central Bank of India v State of Kerala.(2009) 4 SCC 94. This decision inter alia also held that the two provisions would have to operate in the same field and something inconsistent in the other law had to be shown. Otherwise the two statutes would have to be construed harmoniously. 26. Both sides have drawn our attention to the decision of a Division Bench of this Court in Prabhakar D Gune & Ors v Vishnukant Bapurao Urankar.2013 SCC OnLine Bom 1111 : 2014 (1) Bom CR (Cri) 262. The Division Bench (SC Dharmadhikari and SB Shukre, JJ), which considered inter alia the MPID Act. The decision in Prabhakar Gune came after a Full Bench of this Court had held the MPID Act to be ultra vires in Vijay C Puljal v State of Maharashtra.2005 SCC OnLine Bom 1069 : 2005 (5) Bom CR 481 : (2005) 4 Mah LJ 5. The Prabhakar Gune Court noted that in K Baskaran a similar statute from Tamil Nadu had been upheld as being constitutional. One of the arguments before the Prabhaka....