High Court
Legal Reasoning
12 Cri. Appeal 547-2024.odtFinancial Establishment or the person referred to in sub-section (1) has in the property, unless it is also satisfiedthat there will remain under attachment an amount orproperty of value not less than the value that is requiredfor repayment to the depositors of such FinancialEstablishment.10.The learned Trial Judge has not recorded any satisfactionshowing that the properties attached are the properties acquiredfrom the funds of the society from deposits of the persons. It wasnecessary for the Court to see that proper procedure underSections 5 and 7 of the M.P.I.D. is followed and it is only thereafterthe Court could have granted permission to go for auction. Theapplication was not filed within 30 days as required under section5 of the Act.11.So far as judgment in the case of Nimish Satish Deopujari(supra) is concerned, there is no dispute that even personalproperties of the Directors can be attached, however, it must beshown to the satisfaction of the Court that the said properties areproperties acquired from the funds collected from deposits of thedepositors. So far as M.P.I.D. Act is concerned, this Court does notfind that it is applicable to the present facts. Though the learnedA.P.P. submits that the proceeding can be made time bound in 12 of 15 13 Cri. Appeal 547-2024.odtstead of setting aside the order this Court finds that, whenvaluable right of the present appellants is involved it is necessaryto deal with the order instead of directing to dispose of theproceedings within stipulated period.12.In the case of Balasaheb Eknath Ambedkar (supra), the saidcase is of condonation of delay in moving the application beyondperiod of 30 days. The said judgment would also not help therespondents in the present case. 13.In the case of State of Jharkhad and others (supra),paragraph No. 26 reads as under :“26.Whenever the statute prescribes that a particular act isto be done in a particular manner and also lays down thatfailure to comply with the said requirement leads to severeconsequences, such requirement would be mandatory. It isthe cardinal rule of the interpretation that where a statuteprovides that a particular thing should be done, it should bedone in the manner prescribed and not in any other way. It isalso settled rule of interpretation that where a statute ispenal in character, it must be strictly construed andfollowed. Since the requirement, in the instant case, ofobtaining prior permission is mandatory, therefore, non-compliance of the same must result in canceling theconcession made in favour of the grantee-the respondentherein.”14.In the case of Satpal Singh Bachan Singh Nagul (supra), in 13 of 15 14 Cri. Appeal 547-2024.odtthe said case the property was symbolically attached and stood inthe name of Government, however, at the same time it wasobserved that this was done without following procedure undersection 7 of the M.P.I.D. Act. It was observed that section 8 can beinvoked only when the properties are notified under section 4. Inthe present case, no such publication is shown and therefore,there is no question of invoking section 8.15.In the case of Chandrashekhar Vaman Patwardhan (supra),subject matter of the said appeal was not the property included inthe notification. It was not open for attachment. Permitting toattach and sell the properties would amount to nullifying severaltransactions made bonafide. It was further observed that, it wasnot the case of the Government that the property was transferredto avoid the liability.16.In the case of Ramchandra Keshav Adke (supra), thisjudgment is relied upon as regards as to whether how to read theprovision as to whether it is mandatory or directory.17.This Court is not satisfied with the affidavit in reply that acase is made out to reject the appeals. Considering above all, this 14 of 15
Arguments
1 Cri. Appeal 547-2024.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD CRIMINAL APPEAL NO. 547 OF 2024Sarjerao Naraynarao KotkarAge: 73 years, Occu. : Agriculture, R/o: Kotkar Mala, Kedgaon Tal. & Dist. Ahmednagar.. AppellantVersus1. The State of Maharashtra Through Police Station Officer, Kotwali Police Station, Tq. Dist. Ahmednagar. 2.Shirish Devidas Kulkarni Age: 58 years, Occu. : Special Auditor, R/o. 3rd Floor, Ahmednagar District-Central Cooperative Bank Building, Station Road Ahmednagar.. RespondentsMr. Z. H. Farooqui, Advocate h/f Mr. N. V. Gaware Patil, Advocate for the Appellant.Smt. Chaitali Choudhari-Kutti, APP for Respondent/State. WITHCRIMINAL APPLICATION NO. 637 OF 2025IN CRIMINAL APPEAL NO. 547 OF 2024Surekha Anil DigheAge : 47 years, Occu. : Household,R/o. House No. 1569, Near Dighe Brick Kline,Ambika Nagar, Kedgaon,Dist. Ahmednagar... ApplicantVersus 1 of 15 2 Cri. Appeal 547-2024.odt1. The State of Maharashtra Through Police Station Officer, Kotwali Police Station, Tq. & Dist. Ahmednagar. 2.Shirish Devidas Kulkarni Age: 58 years, Occu. : Special Auditor, R/o. 3rd Floor, Ahmednagar District-Central Cooperative Bank Building, Station Road Ahmednagar.3.Sarjerao Narayanrao KotkarAge : 73 years, Occu. : Agriculture,R/o. : Kotkar Mala, KedgaonTal. & dist. Ahmednagar... RespondentsMr. S. N. Gaikwad, Advocate for the Applicant.Smt. Chaitali Choudhari-Kutti, APP for Respondent/State. WITHCRIMINAL APPEAL NO. 580 OF 2024Dnyandev s/o Wamanrao Shinde,Age : 58 years, Occu. : Businessmen,R/o: Jagannath Nagar, KedgaonAhmednagar, Tq. & Dist. Ahmednagar.. AppellantVersusThe State of Maharashtra Through Police Station Officer, Kotwali Police Station, AhmednagarTq. & Dist. Ahmednagar. .. RespondentMr. D. R.Kale & Mr. A. A. Pawar, Advocates for the Appellant.Smt. Chaitali Choudhari-Kutti, APP for Respondent/State.WITHCRIMINAL APPLICATION NO. 3343 OF 2024IN CRIMINAL APPEAL NO. 547 OF 2024 2 of 15 3 Cri. Appeal 547-2024.odt1.Yogesh s/o Hiralal SetwalAge : 48 years, Occu. : Service,R/o. Nandanwan Nagar, Near Bistabag,Savedi, Ahmednagar.2.Asha w/o Sanjay BhadaneAge : 58 years, Occu. : Housewife,R/o. Shahu Nagar, Kedgaon,Ahmednagar.3.Ashok s/o Bhagchand MunotAge : 54 years, Occu. : Business,R/o. Balaji Colony, Kedgaon,Tq. & Dist. Ahmednagar.4.Ravi s/o Ramesh BansodeAge : 49 years, Occu. : Business,R/o. Mahdav Nagar, Kedgaon,Tq. & Dist. Ahmednagar... ApplicantsVersus1. The State of MaharashtraThough its Principal Secretary,Home Department, Mantralaya,Mumbai.2.Sarjerao s/o Narayanrao KotkarAge : 60 years, Occu. : Business,R/o. : Kedgaon,Tal. & Dist. Ahmednagar... RespondentsMr. N. B. Narwade, Advocate for the Applicants.Smt. Chaitali Choudhari-Kutti, APP for Respondent/State. CORAM : KISHORE C. SANT, J.Date on which reserved for order : 17th July, 2025.Date on which order pronounced : 26th September, 2025. 3 of 15 4 Cri. Appeal 547-2024.odtFINAL ORDER :- .The present appeals are filed challenging similar orders andtherefore, the appeals are taken up together for final disposal byconsent of the parties.2.By way of criminal appeals the appellants/original accusedpersons are challenging the legality and validity of impugnedorder dated 18.05.2024 passed under Section 7 of theMaharashtra Protection of Interest of Depositors (In FinancialEstablishments) Act, 1999 (hereinafter referred to as “M.P.I.D.Act”) by the learned Special Judge (MPID Act), Ahmednagar inSpecial Case No. 167/2019. The appellants are the Directors ofone Ambika Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit,Kedgaon, Tq. & Dist. Ahmednagar. The informant was appointedas authorized officer to conduct Government Test Audit of thesociety for a period from 01.04.2016 till 31.03.2018. Afterconducting audit he found some irregularities andmisappropriation of funds of Rs. 2,13,79,947/- (Rs. Two CroreThirteen Lakhs Seventy Nine Thousand Nine Hundred Forty Sevenonly). On the basis of his information an offence came to beregistered with Kotwali Police Station bearing Crime No. 4 of 15 5 Cri. Appeal 547-2024.odt393/2018 for the offences punishable under sections 406, 409,420, 467, 468, 471 r/w section 34 of the Indian Penal Code(hereinafter referred to as “I.P.C.”) and under section 3 of theM.P.I.D. Act. The offence came to be registered on 03.09.2018.The appellants are granted protection of anticipatory bail ondeposit of an amount of Rs. 5,00,000/- (Rs. Five Lakhs only).Now, the charge-sheet is also filed with the learned Special Court.Pending the trial, the Chief Secretary, Home Department directedto seize the properties of the society as well as the office bearersby order dated 30.12.2021. The said order is passed undersection 4(1) and section 5 of the M.P.I.D. Act. For that purpose heappointed learned Sub Divisional Magistrate as a competentauthority. After seizure of the properties the prosecution filed anapplication on 06.05.2024 and prayed to allow to auction theseized properties. The learned Trial Court allowed the saidapplication by impugned order dated 18.05.2024. The appellantsare therefore before this Court.3.It is commonly argued that the present appellants are onlythe Directors of the society. In Criminal Appeal No. 547/2024appellant happens to be a daughter of one of the director. It is her 5 of 15 6 Cri. Appeal 547-2024.odtcase that she also has a right in the property attached. The orderof attachment is passed when she is not an accused or direcotr ofthe society. The learned Trial Judge has hastily passed an order.No such order could have been passed by the learned Trial Court.There is no question of selling or disbursing of the propertiesattached of the Directors. There was no sufficient opportunitygiven to the appellants before passing the order. It is argued that,no proper procedure under section 5 of the M.P.I.D. Act isfollowed. The order of attachment came to be passed after twoyears . The notification for attachment was passed on 30.12.2021whereas, the application under section 7 of the M.P.I.D. Act is filedon 06.05.2024. It was expected of the Court to follow theprocedure under section 7. It is necessary for the Court to recordsatisfaction before passing the order. No such satisfaction isappearing in the order. The properties of the appellants are theancestral or self acquired properties and not the propertiesacquired from the funds allegedly from the amount of the offence.The property of the appellants which is attached is not shown inthe gazette. The Court without looking to this fact has passed anorder. It is mainly argued that it was necessary to apply within 30 6 of 15 7 Cri. Appeal 547-2024.odtdays to the Court for auction as per section 5. The impugnedorder therefore deserves to be quashed and set aside. 4.The learned A.P.P., on the other hand, vehemently arguedthat, sufficient opportunity was given to the appellants, however,in spite of opportunities they did not even file say to anapplication filed by the prosecution seeking permission tosell/auction the properties. The amount utilized for purchase ofthese properties is the amount of deposits kept in the society bythe depositors. She submits that the proper procedure is followed.Even personal properties of the Directors can be attached. So faras Criminal Appeal No. 547/2024 is concerned, the learned A.P.P.relies upon the judgment in the case of Nimish Satish DeopujariVs. The State of Maharashtra reported in 2021 (1) ALL MR 501.She further relies upon the judgment in the case of BalasahebEknath Ambedkar Vs. The State of Maharashtra and others inCriminal Appeal No. 960/2024 with other connected matters. Thelearned A.P.P. further relied upon affidavit in reply filed by therespondent-authority. She thus prays for rejection of the appeals.The learned A.P.P. has also filed on record affidavit in reply. 7 of 15 8 Cri. Appeal 547-2024.odt5.The parties rely upon the following judgments : (i) Satpal Singh Bachan Singh Nagul & Anr. Vs.State of Maharashtra & Anr. reported in 2019 ALLMR (Cri) 4237. (ii) State of Jharkhand and others Vs. AmbayCements and another reported in (2005) 1 SCC368.(iii)Sanjay Krushna Katkar Vs. State ofMaharashtra and another with other connectedmatters reported in 2023 SCC OnLine Bom 1834(Full Bench Judgment).(iv)Chandrashekhar Vaman Patwardhan Vs. TheState of Maharashtra and others in Criminal AppealNo. 1072/2021.(v)Ramchandra Keshav Adke (Dead) by Lrs. Andothers Vs. Govind Joti Chavare and others reportedin (1973) 1 SCC 559.6.Thus, it is necessary to see as to whether in the present casethe authorities have followed the procedure under sections 5 and7 of the M.P.I.D. Act.7.This Court has gone through the impugned orders. The 8 of 15 9 Cri. Appeal 547-2024.odtquestion before this Court, in view of the submissions and therecord is, (i) as to whether the procedure under sections 5 and 7of the M.P.I.D. Act is properly followed while attaching theproperties and passing the orders and (ii) as to whether case ismade out to allow the criminal appeals. 8.The learned Trial Judge considered that, the Governmentnotification shows that the Sub Divisional Officer i.e. SubDivisional Magistrate is a competent authority to attach and sellout the properties of the accused persons. An affidavit filed by theMagistrate is also considered. Further it is observed that, thepersons depositing the amount have deposited their hard earnedmoney in the society with a hope to get lucrative returns. Heconsidered the official gazette and granted permission to sell theproperties.9.In the case of Sanjay Krushna Katkar (supra), it is held that,when procedure under section 5 of the M.P.I.D. Act is notfollowed, further proceeding would stand vitiated. This Courtfinds that, even section 7 of the M.P.I.D. Act is not followed.Sections 5 and 7 of the M.P.I.D. Act reads as under : 9 of 15 10 Cri. Appeal 547-2024.odt5. Appointment of Competent Authority.— (1) TheGovernment may while issuing the order under sub-section (1) of section 4, appoint any of its officers notbelow the rank of the Deputy Collector, as the CompetentAuthority, to exercise control over the monies and theproperties attached by the Government under section 4, ofa Financial Establishment.(2) The Competent Authority shall have such other powersas may be necessary for carrying out the purposes of thisAct.(3) The Competent Authority shall, within thirty days fromthe date of the publication of the said order, apply to theDesignated Court, accompanied by one or more affidavitsstating the grounds on which the Government has issuedthe said order under section 4 and the amount of moneyor other property believed to have been acquired out ofthe deposits and the details, if any, of persons in whosename such property is believed to have been invested oracquired or any other property attached under section 4,for such further orders as found necessary.………..7. Powers of Designated Court regarding attachment.—(1) Upon receipt of an application under section 5, theDesignated Court shall issue to the FinancialEstablishment or to any other person whose property isattached and vested in the Competent Authority by theGovernment under section 4, a notice accompanied by theapplication and affidavits and of the evidence, if any,recorder, calling upon the said Establishment or the saidperson to show cause on a date to be specified in thenotice, why the order of attachment should not be madeabsolute.(2) The Designated Court shall also issue such notice, toall other persons represented to it as having or being likelyto claim, any interest or title in the property of theFinancial Establishment or the person to whom the noticeis issued under sub-section (1), calling upon all such 10 of 15 11 Cri. Appeal 547-2024.odtpersons to appear on the same date as that specified in thenotice and make objection if they so desire to theattachment of the property or any portion thereof, on theground that they have interest in such property or portionthereof.(3) Any person claiming an interest in the propertyattached or any portion thereof may, notwithstanding thatno notice has been served upon him under this section,make an objection as aforesaid to the Designated Court atany time before an order is passed under sub-section (4)or sub-section (6).(4) The Designated Court shall, if no cause is shown andno objections are made under sub-section (3), on or beforethe specified date, forthwith pass an order making theorder of attachment absolute, and issue such direction asmay be necessary for realisation of the assets attached andfor the equitable distribution among the depositors of themoney realised from out of the property attached.(5) If cause is shown or any objection is made asaforesaid, the Designated Court shall proceed toinvestigate the same and in so doing, as regards theexamination of the parties and in all other respects, theDesignated Court shall, subject to the provisions of thisAct, follow the summary procedure as contemplated underOrder 37 of the Civil Procedure Code, 1908 (5 of 1908)and exercise all the powers of a court in hearing a suitunder the said Code and any person making an objectionshall be required to adduce evidence to show that on thedate of the attachment he had some interest in theproperty attached.(6) After investigation under sub-section (5), theDesignated Court shall pass an order either making theorder of attachment passed under sub-section (1) ofsection 4 absolute or varying it by releasing a portion ofthe property from attachment or cancelling the order ofattachment:Provided that the Designated Court shall not release fromattachment any interest, which it is satisfied that the 11 of 15
Decision
15 Cri. Appeal 547-2024.odtCourt is convinced that, a case is made out to allow the appeals. 18.Therefore, criminal appeals are allowed in terms of prayerclause (B). The impugned orders are set aside.19.In view of disposal of criminal appeals, criminal applicationsalso stand disposed of. ( KISHORE C. SANT, J. ) P.S.B. 15 of 15